Joint Condition-based Maintenance and Condition-based Production Optimization

Developments in sensor equipment and the Internet of Things increasingly allow production facilities to be monitored and controlled remotely and in real-time. Organizations can exploit these opportunities to reduce costs by employing condition-based maintenance (CBM) policies. Another recently proposed option is to adopt condition-based production (CBP) policies that control the deterioration of equipment remotely and in real-time by dynamically adapting the production rate. This study compares their relative performance and introduces a fully dynamic condition-based maintenance and production (CBMP) policy that integrates both policies. Numerical results show that the cost-effectiveness of the policies strongly depends on system characteristics such as the planning time for maintenance, the cost of corrective maintenance, and the rate and volatility of the deterioration process. Integrating condition-based production decisions into a condition-based maintenance policy substantially reduces the failure risk, while fewer maintenance actions are performed. Interestingly, in some situations, the combination of condition-dependent production and maintenance even yields higher cost savings than the sum of their separate cost savings. Moreover, particularly condition-based production is able to cope with incorrect specifications of the deterioration process. Overall, there is much to be gained by making the production rate condition-dependent, also, and sometimes even more so, if maintenance is already condition-based. These insights provide managerial guidance in selecting CBM, CBP, or the fully flexible CBMP policy.