An Optimal Timing of Engine Remanufacturing – A Real Option Approach☆

A real option approach for determining the optimal timing of engine remanufacturing is proposed based on the average environmental impacts values Fi by numerical analysis. Life cycle assessment method is conducted to calculate the total environmental impact EItotal of the four life cycle stages, including original manufacturing, first time usage, remanufacturing, and second time usage. Accumulative environmental impacts of the usage periods are calculated by the integral method. Fi is calculated by dividing EItotal by total driven mileage. Theoretical minimum of Fi (Fmin) indicates the best environmental benefit and Fmin can be obtained by numerical curve fitting. A case study of a diesel engine is conducted with the approach and result shows that Fmin is achieved when the engine is remanufactured after driving it for 3.315×105 kms.