IDEAS home Printed from https://ideas.repec.org/a/eee/proeco/v119y2009i2p347-353.html
   My bibliography  Save this article

Option model for joint production and preventive maintenance system

Author

Listed:
  • Jin, Xiaoning
  • Li, Lin
  • Ni, Jun

Abstract

Traditionally, optimal preventive maintenance strategies are derived under deterministic and constant rate demand. Using "option", a powerful financial derivative tool to tackle optimization problem under uncertain environment, this paper presents an analytical, option-based cost model for scheduling joint production and preventive maintenance when demand is uncertain. The manufacturing enterprise can balance the tradeoff between reduced risk from uncertainty that options afford and the increased price premium paid to invest preventive maintenance resources. The optimal number of preventive maintenance work-orders is obtained and numerical examples are included to validate the importance and the effectiveness of the proposed methodology. The comparison with the conventional periodic preventive maintenance policy is also analytically performed. The proposed option-based model is found to add flexibility to the production system and thus reduce the risk of shortage or overage of demand when conventional assumption of constant rate demand is released to stochastic demand.

Suggested Citation

  • Jin, Xiaoning & Li, Lin & Ni, Jun, 2009. "Option model for joint production and preventive maintenance system," International Journal of Production Economics, Elsevier, vol. 119(2), pages 347-353, June.
    • Handle: RePEc:eee:proeco:v:119:y:2009:i:2:p:347-353
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0925-5273(09)00087-5
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Harry Groenevelt & Liliane Pintelon & Abraham Seidmann, 1992. "Production Lot Sizing with Machine Breakdowns," Management Science, INFORMS, vol. 38(1), pages 104-123, January.
    2. Castro, I.T., 2009. "A model of imperfect preventive maintenance with dependent failure modes," European Journal of Operational Research, Elsevier, vol. 196(1), pages 217-224, July.
    3. Meller, Russell D. & Kim, David S., 1996. "The impact of preventive maintenance on system cost and buffer size," European Journal of Operational Research, Elsevier, vol. 95(3), pages 577-591, December.
    4. Dohi, Tadashi & Okamura, Hiroyuki & Osaki, Shunji, 2001. "Optimal control of preventive maintenance schedule and safety stocks in an unreliable manufacturing environment," International Journal of Production Economics, Elsevier, vol. 74(1-3), pages 147-155, December.
    5. Hau L. Lee & Meir J. Rosenblatt, 1987. "Simultaneous Determination of Production Cycle and Inspection Schedules in a Production System," Management Science, INFORMS, vol. 33(9), pages 1125-1136, September.
    6. Myers, Stewart C., 1977. "Determinants of corporate borrowing," Journal of Financial Economics, Elsevier, vol. 5(2), pages 147-175, November.
    7. Bengtsson, Jens, 2001. "Manufacturing flexibility and real options: A review," International Journal of Production Economics, Elsevier, vol. 74(1-3), pages 213-224, December.
    8. Kenne, J.-P. & Gharbi, A. & Beit, M., 2007. "Age-dependent production planning and maintenance strategies in unreliable manufacturing systems with lost sale," European Journal of Operational Research, Elsevier, vol. 178(2), pages 408-420, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Houda Ghamlouch & Mitra Fouladirad & Antoine Grall, 2019. "The use of real option in condition-based maintenance scheduling for wind turbines with production and deterioration uncertainties," Post-Print hal-02365402, HAL.
    2. Xu, He, 2010. "Managing production and procurement through option contracts in supply chains with random yield," International Journal of Production Economics, Elsevier, vol. 126(2), pages 306-313, August.
    3. Díaz Cazañas Ronald & De La Paz Martínez Estrella María & Delgado Sobrino Daynier Rolando & Košťál Peter & Mudriková Andrea, 2018. "Integrating Production and Maintenance Planning as an Element of Success at the Tactical Level: A Fuzzy Control Theory Approach," Research Papers Faculty of Materials Science and Technology Slovak University of Technology, Sciendo, vol. 26(42), pages 109-117, June.
    4. P Viveros & E Zio & F Kristjanpoller & A Arata, 2012. "Integrated system reliability and productive capacity analysis of a production line. A case study for a Chilean mining process," Journal of Risk and Reliability, , vol. 226(3), pages 305-317, June.
    5. Fitouhi, Mohamed-Chahir & Nourelfath, Mustapha, 2014. "Integrating noncyclical preventive maintenance scheduling and production planning for multi-state systems," Reliability Engineering and System Safety, Elsevier, vol. 121(C), pages 175-186.
    6. Wu, Jun & Xie, Min & Adam Ng, Tsan Sheng, 2011. "On a general periodic preventive maintenance policy incorporating warranty contracts and system ageing losses," International Journal of Production Economics, Elsevier, vol. 129(1), pages 102-110, January.
    7. Xia, Tangbin & Xi, Lifeng & Zhou, Xiaojun & Lee, Jay, 2012. "Dynamic maintenance decision-making for series–parallel manufacturing system based on MAM–MTW methodology," European Journal of Operational Research, Elsevier, vol. 221(1), pages 231-240.
    8. Kort, Peter & Lavrutich, Maria & Nunes, Cláudia & Oliveira, Carlos, 2023. "Preventive investment, malfunctions and liability," International Journal of Production Economics, Elsevier, vol. 263(C).
    9. Ko, Chuan-Chuan & Lin, Tyrone T. & Yang, Chyan, 2011. "The venture capital entry model on game options with jump-diffusion process," International Journal of Production Economics, Elsevier, vol. 134(1), pages 87-94, November.
    10. Fitouhi, Mohamed-Chahir & Nourelfath, Mustapha, 2012. "Integrating noncyclical preventive maintenance scheduling and production planning for a single machine," International Journal of Production Economics, Elsevier, vol. 136(2), pages 344-351.
    11. Ram Niwas & M. S. Kadyan & Jitender Kumar, 2016. "MTSF (mean time to system failure) and profit analysis of a single-unit system with inspection for feasibility of repair beyond warranty," International Journal of System Assurance Engineering and Management, Springer;The Society for Reliability, Engineering Quality and Operations Management (SREQOM),India, and Division of Operation and Maintenance, Lulea University of Technology, Sweden, vol. 7(1), pages 198-204, December.
    12. Pinciroli, Luca & Baraldi, Piero & Zio, Enrico, 2023. "Maintenance optimization in industry 4.0," Reliability Engineering and System Safety, Elsevier, vol. 234(C).
    13. Hu, Fei & Lim, Cheng-Chew & Lu, Zudi, 2014. "Optimal production and procurement decisions in a supply chain with an option contract and partial backordering under uncertainties," Applied Mathematics and Computation, Elsevier, vol. 232(C), pages 1225-1234.
    14. Ghamlouch, Houda & Fouladirad, Mitra & Grall, Antoine, 2019. "The use of real option in condition-based maintenance scheduling for wind turbines with production and deterioration uncertainties," Reliability Engineering and System Safety, Elsevier, vol. 188(C), pages 614-623.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Dhouib, K. & Gharbi, A. & Ben Aziza, M.N., 2012. "Joint optimal production control/preventive maintenance policy for imperfect process manufacturing cell," International Journal of Production Economics, Elsevier, vol. 137(1), pages 126-136.
    2. Chakraborty, Tulika & Giri, B.C. & Chaudhuri, K.S., 2008. "Production lot sizing with process deterioration and machine breakdown," European Journal of Operational Research, Elsevier, vol. 185(2), pages 606-618, March.
    3. Om Prakash & A.R. Roy & A. Goswami, 2014. "Stochastic manufacturing system with process deterioration and machine breakdown," International Journal of Systems Science, Taylor & Francis Journals, vol. 45(12), pages 2539-2551, December.
    4. Zequeira, Romulo I. & Valdes, Jose E. & Berenguer, Christophe, 2008. "Optimal buffer inventory and opportunistic preventive maintenance under random production capacity availability," International Journal of Production Economics, Elsevier, vol. 111(2), pages 686-696, February.
    5. Chelbi, Anis & Ait-Kadi, Daoud, 2004. "Analysis of a production/inventory system with randomly failing production unit submitted to regular preventive maintenance," European Journal of Operational Research, Elsevier, vol. 156(3), pages 712-718, August.
    6. Thomas Sloan, 2008. "Simultaneous determination of production and maintenance schedules using in‐line equipment condition and yield information," Naval Research Logistics (NRL), John Wiley & Sons, vol. 55(2), pages 116-129, March.
    7. El-Ferik, Sami, 2008. "Economic production lot-sizing for an unreliable machine under imperfect age-based maintenance policy," European Journal of Operational Research, Elsevier, vol. 186(1), pages 150-163, April.
    8. Chiu, Singa Wang & Wang, Shan-Ling & Chiu, Yuan-Shyi Peter, 2007. "Determining the optimal run time for EPQ model with scrap, rework, and stochastic breakdowns," European Journal of Operational Research, Elsevier, vol. 180(2), pages 664-676, July.
    9. B C Giri & T Dohi, 2005. "Exact formulation of stochastic EMQ model for an unreliable production system," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 56(5), pages 563-575, May.
    10. Kazaz, Burak & Sloan, Thomas W., 2013. "The impact of process deterioration on production and maintenance policies," European Journal of Operational Research, Elsevier, vol. 227(1), pages 88-100.
    11. Harun Öztürk, 2019. "Modeling an inventory problem with random supply, inspection and machine breakdown," OPSEARCH, Springer;Operational Research Society of India, vol. 56(2), pages 497-527, June.
    12. Bertazzi, Luca, 2011. "Determining the optimal dimension of a work-in-process storage area," International Journal of Production Economics, Elsevier, vol. 131(2), pages 483-489, June.
    13. Peymankar, Mahboobe & Dehghanian, Farzad & Ghiami, Yousef & Abolbashari, Mohammad Hassan, 2018. "The effects of contractual agreements on the economic production quantity model with machine breakdown," International Journal of Production Economics, Elsevier, vol. 201(C), pages 203-215.
    14. Bouslah, Bassem & Gharbi, Ali & Pellerin, Robert, 2013. "Joint optimal lot sizing and production control policy in an unreliable and imperfect manufacturing system," International Journal of Production Economics, Elsevier, vol. 144(1), pages 143-156.
    15. Peng, Hao & van Houtum, Geert-Jan, 2016. "Joint optimization of condition-based maintenance and production lot-sizing," European Journal of Operational Research, Elsevier, vol. 253(1), pages 94-107.
    16. Giri, B. C. & Yun, W. Y. & Dohi, T., 2005. "Optimal design of unreliable production-inventory systems with variable production rate," European Journal of Operational Research, Elsevier, vol. 162(2), pages 372-386, April.
    17. Kim, Chang Hyun & Hong, Yushin, 1997. "An extended EMQ model for a failure prone machine with general lifetime distribution," International Journal of Production Economics, Elsevier, vol. 49(3), pages 215-223, May.
    18. Cuervo, Felipe Isaza & Botero, Sergio Botero, 2016. "Wind power reliability valuation in a Hydro-Dominated power market: The Colombian case," Renewable and Sustainable Energy Reviews, Elsevier, vol. 57(C), pages 1359-1372.
    19. Meller, Russell D. & Kim, David S., 1996. "The impact of preventive maintenance on system cost and buffer size," European Journal of Operational Research, Elsevier, vol. 95(3), pages 577-591, December.
    20. Harun Öztürk, 2021. "Optimal production run time for an imperfect production inventory system with rework, random breakdowns and inspection costs," Operational Research, Springer, vol. 21(1), pages 167-204, March.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:proeco:v:119:y:2009:i:2:p:347-353. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ijpe .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.