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Optimization of component reliability in the design phase of capital goods

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  • Öner, K.B.
  • Kiesmüller, G.P.
  • van Houtum, G.J.

Abstract

We introduce a quantitative model to support the decision on the reliability level of a critical component during its design. We consider an OEM who is responsible for the availability of its systems in the field through service contracts. Upon a failure of a critical part in a system during the exploitation phase, the failed part is replaced by a ready-for-use part from a spare parts inventory. In an out-of-stock situation, a costly emergency procedure is applied. The reliability levels and spare parts inventory levels of the critical components are the two main factors that determine the downtime and corresponding costs of the systems. These two levels are decision variables in our model. We formulate the portions of Life Cycle Costs (LCC) which are affected by a component's reliability and its spare parts inventory level. These costs consist of design costs, production costs, and maintenance and downtime costs in the exploitation phase. We conduct exact analysis and provide an efficient optimization algorithm. We provide managerial insights through a numerical experiment which is based on real-life data.

Suggested Citation

  • Öner, K.B. & Kiesmüller, G.P. & van Houtum, G.J., 2010. "Optimization of component reliability in the design phase of capital goods," European Journal of Operational Research, Elsevier, vol. 205(3), pages 615-624, September.
    • Handle: RePEc:eee:ejores:v:205:y:2010:i:3:p:615-624
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    Cited by:

    1. Jin, Tongdan & Tian, Zhigang & Xie, Min, 2015. "A game-theoretical approach for optimizing maintenance, spares and service capacity in performance contracting," International Journal of Production Economics, Elsevier, vol. 161(C), pages 31-43.
    2. Xie, Wei & Liao, Haitao & Jin, Tongdan, 2014. "Maximizing system availability through joint decision on component redundancy and spares inventory," European Journal of Operational Research, Elsevier, vol. 237(1), pages 164-176.
    3. Patra, Pradipta & Kumar, U. Dinesh & Nowicki, David R. & Randall, Wesley S., 2019. "Effective management of performance-based contracts for sustainment dominant systems," International Journal of Production Economics, Elsevier, vol. 208(C), pages 369-382.
    4. Hu, Qiwei & Boylan, John E. & Chen, Huijing & Labib, Ashraf, 2018. "OR in spare parts management: A review," European Journal of Operational Research, Elsevier, vol. 266(2), pages 395-414.
    5. Shuai Zhang & Kai Huang & Yufei Yuan, 2021. "Spare Parts Inventory Management: A Literature Review," Sustainability, MDPI, vol. 13(5), pages 1-23, February.
    6. Qianru Ge & Willem van Jaarsveld & Zümbül Atan, 2020. "Optimal redesign decisions through failure rate estimates," Naval Research Logistics (NRL), John Wiley & Sons, vol. 67(4), pages 254-271, June.
    7. Mirzahosseinian, H. & Piplani, R., 2011. "A study of repairable parts inventory system operating under performance-based contract," European Journal of Operational Research, Elsevier, vol. 214(2), pages 256-261, October.
    8. Ge, Qianru & Peng, Hao & van Houtum, Geert-Jan & Adan, Ivo, 2018. "Reliability optimization for series systems under uncertain component failure rates in the design phase," International Journal of Production Economics, Elsevier, vol. 196(C), pages 163-175.
    9. Kurtuluş Barış Öner & Alan Scheller-Wolf & Geert-Jan van Houtum, 2013. "Redundancy Optimization for Critical Components in High-Availability Technical Systems," Operations Research, INFORMS, vol. 61(1), pages 244-264, February.
    10. Qin, Xuwei & Shao, Lusheng & Jiang, Zhong-Zhong, 2020. "Contract design for equipment after-sales service with business interruption insurance," European Journal of Operational Research, Elsevier, vol. 284(1), pages 176-187.
    11. N. Knofius & M. C. Heijden & A. Sleptchenko & W. H. M. Zijm, 2021. "Improving effectiveness of spare parts supply by additive manufacturing as dual sourcing option," OR Spectrum: Quantitative Approaches in Management, Springer;Gesellschaft für Operations Research e.V., vol. 43(1), pages 189-221, March.
    12. Xian Zhao & Jing Zhang & Xiaoyue Wang, 2019. "Joint optimization of components redundancy, spares inventory and repairmen allocation for a standby series system," Journal of Risk and Reliability, , vol. 233(4), pages 623-638, August.
    13. Rezapour, Shabnam & Allen, Janet K. & Mistree, Farrokh, 2016. "Reliable flow in forward and after-sales supply chains considering propagated uncertainty," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 93(C), pages 409-436.
    14. Christian-Albrechts-Universität zu Kiel, Institut für Betriebswirtschaftslehre (Ed.), 2011. "Jahresbericht 2010," Manuskripte aus den Instituten für Betriebswirtschaftslehre der Universität Kiel 654, Christian-Albrechts-Universität zu Kiel, Institut für Betriebswirtschaftslehre.
    15. Rezapour, Shabnam & Allen, Janet K. & Mistree, Farrokh, 2016. "Reliable product-service supply chains for repairable products," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 95(C), pages 299-321.
    16. Westerweel, Bram & Basten, Rob J.I. & van Houtum, Geert-Jan, 2018. "Traditional or Additive Manufacturing? Assessing Component Design Options through Lifecycle Cost Analysis," European Journal of Operational Research, Elsevier, vol. 270(2), pages 570-585.
    17. van der Heijden, M.C. & Alvarez, E.M. & Schutten, J.M.J., 2013. "Inventory reduction in spare part networks by selective throughput time reduction," International Journal of Production Economics, Elsevier, vol. 143(2), pages 509-517.
    18. Jin, Tongdan & Tian, Yu, 2012. "Optimizing reliability and service parts logistics for a time-varying installed base," European Journal of Operational Research, Elsevier, vol. 218(1), pages 152-162.
    19. Qin, Xuwei & Jiang, Zhong-Zhong & Sun, Minghe & Tang, Liang & Liu, Xiaoran, 2021. "Repairable spare parts provisioning for multiregional expanding fleets of equipment under performance-based contracting," Omega, Elsevier, vol. 102(C).
    20. Öner, K.B. & Kiesmüller, G.P. & van Houtum, G.J., 2015. "On the upgrading policy after the redesign of a component for reliability improvement," European Journal of Operational Research, Elsevier, vol. 244(3), pages 867-880.

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