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Optimal selection of obsolescence mitigation strategies using a restless bandit model

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  • Dinesh Kumar, U.
  • Saranga, Haritha

Abstract

Obsolescence of embedded parts is a serious concern for managers of complex systems where the design life of the system typically exceeds 20Â years. Capital asset management teams have been exploring several strategies to mitigate risks associated with Diminishing Manufacturing Sources (DMS) and repeated life extensions of complex systems. Asset management cost and the performance of a system depend heavily on the obsolescence mitigation strategy chosen by the decision maker. We have developed mathematical models that can be used to calculate the impact of various obsolescence mitigation strategies on the Total Cost of Ownership (TCO) of a system. We have used classical multi-arm bandit (MAB) and restless bandit models to identify the best strategy for managing obsolescence in such instances wherein organizations have to deal with continuous technological evolution under uncertainty. The results of dynamic programming and greedy heuristic are compared with Gittins index solution.

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  • Dinesh Kumar, U. & Saranga, Haritha, 2010. "Optimal selection of obsolescence mitigation strategies using a restless bandit model," European Journal of Operational Research, Elsevier, vol. 200(1), pages 170-180, January.
    • Handle: RePEc:eee:ejores:v:200:y:2010:i:1:p:170-180
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    3. Shi, Zhenyang & Liu, Shaoxuan, 2020. "Optimal inventory control and design refresh selection in managing part obsolescence," European Journal of Operational Research, Elsevier, vol. 287(1), pages 133-144.
    4. Andrea Bacchetti & Stefano Bonetti & Marco Perona & Nicola Saccani, 2018. "Investment and Management Decisions in Aluminium Melting: A Total Cost of Ownership Model and Practical Applications," Sustainability, MDPI, vol. 10(9), pages 1-36, September.
    5. José Niño-Mora, 2022. "Multi-Gear Bandits, Partial Conservation Laws, and Indexability," Mathematics, MDPI, vol. 10(14), pages 1-31, July.
    6. Urtzi Ayesta & M Erausquin & E Ferreira & P Jacko, 2016. "Optimal Dynamic Resource Allocation to Prevent Defaults," Post-Print hal-01300681, HAL.
    7. Xu, Jianyu & Chen, Lujie & Tang, Ou, 2021. "An online algorithm for the risk-aware restless bandit," European Journal of Operational Research, Elsevier, vol. 290(2), pages 622-639.
    8. Imen Zaabar & Raul Arango-Miranda & Yvan Beauregard & Marc Paquet, 2021. "A Sustainable Multicriteria Decision Framework for Obsolescence Resolution Strategy Selection," Sustainability, MDPI, vol. 13(15), pages 1-16, August.

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