# Updated Equipment Acquisition & Simulation Algorithm

This document outlines the refactored logic for equipment acquisition cost calculation and simulation forecasting, implemented in February 2026.

## 1. Timeline Definitions

The simulation follows a strict temporal alignment to ensure consistency across the fleet:

| Parameter | Value | Description |
| :--- | :--- | :--- |
| **Base Year** | `2015` | The target year for all "Value of Money" (Net Present Value) calculations. |
| **Forecasting Start** | `2015` | The year from which future predictions and Economic Life reports begin. |
| **Calculation Start** | `2014` | The technical sequence start ($seq = 0$) used to establish an initial state. |

---

## 2. Capital Cost Adjustment (Value of Money)

To account for the time value of money, both the **Initial Acquisition Cost** and the **Replacement Cost** are normalized to the **2015 Base Year** using the project's inflation rate.

### 2.1 Adjustment Formula

The value of any cost $V$ at a specific $Year$ is adjusted to its equivalent value in $2015$ using the following formula:

$$V_{2015} = \frac{V_{Year}}{(1 + r)^{(Year - 2015)}}$$

Where:
- $V_{2015}$ = Adjusted value in 2015 terms.
- $V_{Year}$ = Raw cost recorded in the database or Maximo.
- $r$ = Inflation rate (from `lcc_ms_master`, defaults to $0.05$ if undefined).
- $Year$ = The year the cost was recorded ($Y_{acq}$ or $Y_{replace}$).

### 2.2 Total Acquisition Cost

The total capital cost $C_{total}$ stored in the master data is the sum of the adjusted initial cost and the adjusted first detected replacement cost:

$$C_{total} = \frac{C_{initial}}{(1+r)^{(Y_{acq} - 2015)}} + \frac{C_{replace}}{(1+r)^{(Y_{replace} - 2015)}}$$

---

## 3. Maintenance Cost Suppression Logic

A specific business rule is applied to prevent "double counting" or distorted maintenance records during major equipment replacement years:

### 3.1 Replacement Year Rule
In the **first year** where a `replace_cost > 0` is detected in Maximo ($Y_{replace}$):
- All **Material Costs** are set to $0.0$.
- All **Labor Costs** (and labor hours) are set to $0.0$.

### 3.2 Logic Rationale
The replacement cost is treated as a capital expenditure (CAPEX) that restarts the equipment's life cycle. Standard maintenance (OPEX) for that specific year is ignored because the replacement action supersedes regular repair tasks.

---

## 4. Implementation Reference

The logic is primarily contained in:
- `src/equipment/service.py`: `check_and_update_acquisition_data()` (Cost adjustments).
- `src/modules/equipment/insert_actual_data.py`: `query_data()` (Timeline and cost suppression).