STEM help / Training

Exercise 25: Accounting for redundant units

We have learnt how to migrate customers ahead of time to the new DSL shelf 2 resource. Now we turn our attention to the redundant units of the original DSL shelf resource.

Save the model as WiMAX-DSL25

Redundant unit write-off

  1. Go to the Advanced/Other Details dialog for the original DSL shelf resource and set the input Redundant Unit Decommissioning Prop. = 1.0.

Save and run the model

Accelerated depreciation

  1. Draw the graph Resource Installed Units for the original DSL shelf. See how this drops abruptly to zero in 2011.
  2. Experiment with intermediate values for the Decommissioning Prop., if there is time. With only three shelves installed, the options are fairly limited, just like the migration.
  3. Draw the graph Resource Depreciation and Amortisation. (Again you may prefer to set consolidation to Annual.) See how this now peaks in 2011 as all the remaining value is written off.

Comparing results of two models

  1. Select Open Results… from the File menu in the Results program, choose the previous results, WiMAX-DSL24.smr, and click Open. STEM will ask, ‘The results of another model are already loaded. Do you want to close the current workspace before proceeding?’
  2. Click No to load the previous results alongside the new results in the current workspace.
  3. Draw the graph Resource Operating Charge for both models on the same graph, choosing the original DSL shelf and checking Apply to all scenarios to make the same selection automatically for both models.
  4. Right-click the chart and show a separate table. Sum the previous figures from 2011–14 and compare this to the new result in 2011. Can you explain the difference?
  5. Go back to the chart and press <F2>, or select Draw Precedents… from the Graphs menu.
  6. Select both models and click OK. The Operating Charge result is now broken down into its constituent results, and the difference should be evident!

  1. Press <F2> again and choose just WiMAX-DSL24. You will see that the only operating cost is the maintenance cost, which of course continues if the equipment is not removed, as it is in WiMAX-DSL25.

Maintenance cost is generated irrespective of utilisation. You can use the separate Operations Cost input for costs in proportion to usage.

Difference graph

  1. Draw the Resource Operating Charge for both models on the same graph again, but this time select Difference in the Operation box in the Choose Scenarios and Sensitivities to draw dialog, making sure to choose WiMAX-DSL24 as the base model.

This difference chart shows the extra charge in 2011 compared to leaving the old equipment in the network, and the subsequent savings.

Things that you should have seen and understood

Redundant unit write-off, accelerated depreciation, comparing two models, difference graphs
Redundant Unit Decomm. Prop, Draw Precedents

 

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