Coordinating Failed Goods Collecting Policies and Repair Capacity Policies in the Maintenance of...

Coordinating Failed Goods Collecting Policies and

Repair Capacity Policies in the Maintenance of

Commoditized Capital Goods

Henny P.G. van Ooijen

J. Will M. Bertrand

Nasuh C. Büyükkaramikli

2

OUTLINE

• Background• Commoditized systems• Repair shop• Collecting policies• Capacity policies

• Model

• Computational study

• Conclusions

February 2012

3

COMMODITIZED SYSTEMS

• High number of end users• Low technological/financial barriers -> easy

entry of repair market• Short term availability of substitutes (e.g.

by leasing)

February 2012

4

REPAIR SHOP

• Repair shop (Maintenance Service Provider)• Maintenance service for commoditized systems

− failure due to (sub-)system failure• Defective systems are replaced by rented systems

for a fixed time• Responsible for downtime• Repair shop characteristics

− capacity of the shop determines the speed of repair;capacity level: the processing rate

February 2012

5

Collecting Policies

• Immediate collection• Periodic collection (milk run)

February 2012

6

Capacity Policies

• Availability based policy:• There is always a fixed amount of capacity

available

• Usage based policy• Periodic capacity contract

− A specific amount of capacity is available at the start of a period

− Only paid for in proportion to the hours the capacity is used during the period

February 2012

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Research Question

• For what environments does periodic collection whether or not in combination with a usage based capacity policy lead to “overall” benefits?

February 2012

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Problem

• Given • An overall failure rate λ,• transportation costs tc

• capacity costs (permanent cp, contingent cc) • machine downtime costs B• system rental costs (hτ),• a capacity sell-back ratio R,

minimize total costs by decisions on:• transportation policy• capacity policy

− terms of the capacity contract (level, period length)

• rental period L

February 2012

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Model I: tranportation costs

• Immediate collection:

• Periodic collection

February 2012

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Model II: capacity costs

• Availability based:• Repair shop: M/M/1

• Usage based:• Repair shop: DX/M/1

February 2012

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COMPUTATIONAL STUDY (I)

• Cost price system: € 200.000• Normalized arrival rate: λ=1 per time unit

(week/day) defects• System renting cost: h=€11, €15, €20

per hour• Downtime cost: B=€5000, €10000,

€20000 per unit down per week

• Capacity costs: cp= €2400 per unit• Sell-back parameter: R=0.2, 0.5, 0.8• Transportation costs: €90, €120 per hour• Area size: 300.000 sqm, 1.000.000

sqm

•

February 2012

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COMPUTATIONAL STUDY (II)

• Immediate collection, availability based capacity

Periodic collection, availability based capacity

• Immediate collection, availability based capacity

Periodic collection, usage based capacity

% Cost savings: (TRC*

i – TRC*p)/TRC*

i

• February 2012

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RESULTS (I)

February 2012

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RESULTS (II)

February 2012

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CONCLUSIONS (I)

• Transportation point of view: periodic collection always leads to benefits; benefits increase with increasing λ

• Also customer related aspects included: positive effects are canceled out by extra rental

• Also MPS aspects included: • Availability policy: decrease positive effects due to

bursty arrival pattern (unless a high λ)

• Usage policy: benefits can be obtained for smaller values of λ (λ = 1: up to 38% cost reduction)

some cost parameter instances: loss in savings (up to 126%)February

2012

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CONCLUSIONS (II)

• Usgae based policy often outperformed by the availability based policy

• % savings increase with increase in α• The higher Δ the lower the % savings• The higher hτ the lower the % savings

• In most cases the system chooses the shortest possible period length indicates importance of fast response to the system state

February 2012