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A Proposed Improved Replacement Policy for Army Vehicles
Abstract
The British Army currently uses a replacement policy for non-armoured vehicles which employs age-based repair limits derived by a sensible but rather arbitrary method. The paper describes how a proposed improved replacement policy was devised: one which uses extensive data to compute optimum age-based repair limits and allows these limits to be adjusted for vehicles having exceptionally high and low mileages. The feasibility of a resale type of policy for some vehicles is examined.
After a general introduction, the model is described in detail. There follows an account of how the assumptions of the model were tested. Then the results are presented and discussed, in particular the savings to be expected from implementing the improved policy. Finally, the proposals are described which have now been approved by Army staff and are to be submitted to the Treasury.
... Motivation: Developing optimal reliability systems is an important research and development activity particularly useful in future studies in as much as systems that are safe, economically constituted and operating failure free are ensured. Earlier works in this direction relate to development of optimal systems under varied conditions and assumptions (vide, for example, [1] - [10]). Among these systems, those undergoing technological change and therefore are new entrants into the market particularly attract current research interests. ...
The reliability characteristic such as probability of survival, mean time to failure, frequency of failures and mean down time depend on the design and topological layout of the system. This paper deals with a single unit system that is operating in an environment exposed to the hazards of common cases failures, under some general assumptions the optional replacement policies were developed with the help of proposed measure of cost differences for old and new system.
... A production line would be stopped for maintenance if the defective rate or a certain product's physical parameter exceeded some critical value. Hastings (1969), Gertsbakh (1972, Bailey and Mahon (1975), and Kordonsky and Gertsbakh (1995; present examples of the use of one-dimensional parameters as the basis for making maintenance decisions. ...
... This economic decision theory is limited because it cannot be applied until the mining machine breaks down, therefore it cannot be applied on relatively new mining machines. Mitchell (1998) also reported that economic decision theory was revisited by Mahon and Bailey (1975) but the basic methods used still remain unchanged. ...
In order to increase the durability, availability, reliability and maintainability of a reconfigurable vibrating screen, an effective method is required to functionally appraise and improve its working condition. Researched literature provided a combination of key performance indicator parameters formulae derived from Markov’s Model to functionally appraise vibrating screens. To verify and test this methodology, on-site surveys and analyses of existing vibrating screens were undertaken in companies A, B, C and D. A case study and analyses of vibrating screens used in company A was considered in order to obtain relevant data needed for the methodology testing and verification. The results of the vibrating screen reliability decline rate, steady state availability and remaining effective useful life of vibrating screen WVS3 obtained after the analyses are 12.67, 90% and 18 years, indicating that an ineffective maintenance management system was used in managing this machine. To optimise this maintenance management system, further analyses were carried out and results such as optimum repair time and optimised maintenance plan for vibrating screens was determined in order to reduce down time and maintenance costs on this machine to the barest minimum. The same results highlighted for vibrating screen WVS3 were also determined and presented in the Appendix for the remaining seven vibrating screens. The analysis done to appraise vibrating screen was seen not to be user friendly to the maintenance workers and maintenance manager because it is time consuming, energy sapping and highly monotonous. To solve this problem, a vibrating screen web assessor application, which is highly efficient and involves little time for data processing was developed and evaluated (test run) to functionally appraise vibrating screens used in Company A.
... Large enterprises have the capability to establish corporate guidelines to determine and follow engineered replacement policies, as suggested by several authors (Drinkwater & Hastings, 1967;Drake et al., 1988;Jardine, 1984;Hide et al., 1990;Simms et al., 1982;Mahon & Bailey, 1975;Dreyfus, 1960;Schaevitz, 1988). However, Canadian logging operations are mostly carried out by relatively small independent contractors (Mercure, 1996;Legendre, 2005). ...
Canadian logging contractors use their harvesting equipment seasonally, intensively, in extreme weather conditions, and in remote geographical locations. These factors lead to rapid machinery deterioration. Machine reliability is vital and harvesting contractors must replace production equipment regularly to assure operational continuity. Fixed-asset management choices involve significant amounts of money and can jeopardize the financial situation of a company. This is a major concern since harvesting contractors' machine replacement strategies are mostly informal and based on personal intuition. Managerial decision based on comprehensive analysis should determine the appropriate time for machine replacement, taking into account after-tax cash flows and proper maintenance strategies. Adopting an economic replacement model could guide decision making and improve harvesting contractor's overall performance. This paper presents an ongoing review of equipment replacement models and proposes characteristics of an effective machine replacement model meeting the needs of forest harvesting contractors in Eastern Canada.
... Large enterprises have the capability to establish corporate guidelines to determine and follow engineered replacement policies, as suggested by several authors (Drinkwater & Hastings, 1967;Drake et al., 1988;Jardine, 1984;Hide et al., 1990;Simms et al., 1982;Mahon & Bailey, 1975;Dreyfus, 1960;Schaevitz, 1988). However, Canadian logging operations are mostly carried out by relatively small independent contractors (Mercure, 1996;Legendre, 2005). ...
Canadian logging contractors use their harvesting equipment seasonally, intensively, in extreme weather conditions, and in remote geographical locations. These factors lead to rapid machinery deterioration. Machine reliability is vital and harvesting contractors must replace production equipment regularly to assure operational continuity. Fixed-asset management choices involve significant amounts of money and can jeopardize the financial situation of a company. This is a major concern since harvesting contractors' machine replacement strategies are mostly informal and based on personal intuition. Managerial decision based on comprehensive analysis should determine the appropriate time for machine replacement, taking into account after-tax cash flows and proper maintenance strategies. Adopting an economic replacement model could guide decision making and improve harvesting contractor's overall performance. This paper presents an ongoing review of equipment replacement models and proposes characteristics of an effective machine replacement model meeting the needs of forest harvesting contractors in Eastern Canada.
... Assuming that costs are time-invariant, Derman [33] proves the optimality of a stationary control limit rule, stating that an asset is replaced if and only if it is in a state above a calculated threshold. Repair limit replacement rules, stating that a vehicle is replaced whenever its estimated repair costs exceed a threshold value, are developed in Drinkwater and Hastings [36], Hastings [63] and Mahon and Bailey [91]. ...
... In addittion, our model assumes that the repair times are exponentially distributed. Mahon & Bailey [15] suggest that distributions with decreasing repair rate are more appropriate for modelling repair times. This approach results interesting specially when a short-run horizon is analyzed. ...
Nowadays, we observe a dramatic increase of maintenance outsourcing. This is specially true for heavy industries such as mining in which focus in core busi-ness, increasing technological complexity and scale economies appear as some of the main reasons to outsource maintenance. In this work, the authors propose an analysis for the optimal negotiation of maintenance service contracts in which the parties in-volved (service provider and equipment owner) have shared long-run goals in order to maximize their own profits. In these models we study how different type of planned maintenance actions affect aspects of the reliability of equipments having an increasing failure rate. The results show a maximum reduction of about 95% in the surplus gener-ated by the parties, when the aging of the equipment is taken into account. It has been predicted the optimal period between equipment replacements and preventive over-hauls, showing the relevant influence of the type of planned actions over the decisions making associated to the settling of the terms and conditions of the maintenance ser-vice contract. The model improves previous works by reporting some misconceptions related to the evaluation of the expected number of failure times occurring during a contract horizon. The results show a loss of about 10% in the surplus generated by the parties, due to mistaken decisions arising from such misconceptions. The models are validated by simulations over a test case carried out in a commercial software.
... In general, the cost to repair a failed item is a random variable which can be characterised by a distribution function HðzÞ: Analogous to the notion of a failure rate, one can define a repair cost rate given by fhðzÞ=½1 À HðzÞg; where hðzÞ is the derivative of HðzÞ: Depending on the form of HðzÞ; the repair cost rate can increase, decrease or remain constant with z: A decreasing repair cost rate is usually an appropriate characterisation for the repair cost distribution Mahon and Bailey [142]. Optimal repair limit strategy is discussed in Blischke and Murthy (WCA, Chapter 9), Chung [143], Murthy (PWH, Chapter 24) and Zuo et al. [144]. ...
Warranty is an important element of marketing new products as better warranty signals higher product quality and provides greater assurance to customers. Servicing warranty involves additional costs to the manufacturer and this cost depends on product reliability and warranty terms. Product reliability is influenced by the decisions made during the design and manufacturing of the product. As such warranty is very important in the context of new products. Product warranty has received the attention of researchers from many different disciplines and the literature on warranties is vast. This paper carries out a review of the literature that has appeared in the last ten years. It highlights issues of interest to manufacturers in the context of managing new products from an overall business perspective.
... When the fleet comprises a single plant, or the replacement of the entire fleet is considered, models such as that described in Christer and Scarf (1994) may be used. When plant are to be replaced singly, then, given individual operating cost history, repair limit replacement policies (Hastings, 1969;Mahon and Bailey, 1975;Jardine et al., 1976) may be considered. Of course, the replacement of plant singly may be impractical in certain cases. ...
This paper may be seen as an appeal to maintenance modellers to work with maintenance engineers and managers on real problems. Such collaboration is essential if maintenance modelling is to be accepted within the engineering community. It is also particularly important in the design and building of maintenance management information systems if such systems are to be used to manage and operate maintenance policy in the new millennium. In this context, developing areas of maintenance modelling are discussed, namely: inspection maintenance; condition based maintenance; maintenance for multi-component systems; and maintenance management information systems. Some new models relating to capital replacement are also considered. Thus, we are concerned with the mathematical modelling of maintenance rather than with management processes relating to maintenance. Discussion of maintenance management information systems is included because of their importance in providing data for mathematical modelling and in implementing model-based maintenance policy.
... 4. The model assumes that the repair times are exponentially distributed. Mahon and Bailey [18] suggest that distributions with decreasing repair rate are more appropriate for modelling repair times. 5. ...
In recent years, there has been a growing trend to out-source service operations in which the equipment maintenance is carried out by an external agent rather than in-house. Often, the agent (service provider) offers more than one option and the owners of equipment (customers) are faced to the problem of selecting the optimal option, under the terms of a contract. In the current work, we develop a model and report results to determine the agent's optimal strategy for a given type of contract. The model derives in a non-cooperative game formulation in which the decisions are taken by maximizing expected profits. This work extends previous models by considering the realistic case of equipments having an increasing failure intensity due to imperfect maintenance, instead of the standard assumption that considers failure times are exponentially distributed (constant failure intensity). We develop a model using a linear function of time to characterize the failure intensity. The main goal, for the agent, is to determine the pricing structure in the contract and the number of customers to service. On the other hand, for the clients, the main goal is to define the period between planned actions for preventive maintenance and the time to replace equipments. In order to give a complete characterization of the results, we also carry out a sensitivity analysis over some of the factors that would influence over the failure intensity.
Maintenance actions can be grouped into preventive maintenance (PM) and corrective maintenance (CM). This chapter discusses the impact of PM actions on first failure and the effect of CM actions after the first failure. It focuses on the characterization of these impacts as well as the cost implications of maintenance actions. The chapter starts with maintenance for products and plants. It discusses the modeling of CM actions, which is followed by the modeling of PM actions. Next, the chapter deals with repair and downtime. Downtime is characterized by two events: failure of the item, and the item being put back into operation after repair/replacement. The chapter discusses modeling the cost of each action (PM and CM) separately by a parameter or by a distribution function. It looks at the modeling of repair versus replace decisions. Finally, the chapter discusses the modeling of fleet and infrastructure maintenance.
Models play an important role in solving decision problems. They are used to (i) analyse the effect of changes to decision variables on system performance (for example, the effect of different PM actions on system failures) and (ii) decide on the optimal values of decision variables to achieve some specified objectives (for example, optimum PM to minimise total maintenance costs).
This paper considers two replacement policies for systems which, during their useful life, are subject to deterioration. Strategy 1: after a failure, the repair cost is estimated. If the repair cost exceeds a given limit, the system is not repaired, but replaced with a new one. So far, this policy has been analysed only for constant repair cost limits. This paper investigates the effect of applying time-dependent repair cost limits on the long-run maintenance cost rate. Examples show that, compared to the application of constant repair cost limits, a reduction of the maintenance cost rate between 5% and 10% can be expected. Strategy 2: the system is replaced as soon as the total repair costs arising during its running time exceed a given limit. Compared to the economic lifetime method, which is based on the average repair cost development and that requires the same data input, maintenance cost savings up to 20% could be achieved.
Two types of economic replacement policies for a fleet of vehicles are investigated. One is a simple group replacement policy in which vehicles are replaced at a pre-set age or milage. In the second, a repair limit is set that varies with the condition of the vehicle. A vehicle is replaced whenever it requires a repair expected to cost more than this allowable repair limit. The structure of the repair limit problem is shown to be a Markov decision process, and steady-state repair limits can be determined by R. A. Howard's policy improvement routine. Because for each state the repair limit is a continuous decision variable, however, Howard's routine is modified to allow a search procedure to determine the optimal limits. Using data for Postal Canada vehicles, these two types of policies are compared and the results indicate the superiority of repair limit policies over simple group replacement.
When it is not economical to carry out maintenance in-house, out-sourcing to an external agent is an alternate viable option. In this paper, we study a simple maintenance service contract involving a single agent (providing the maintenance service) and a single customer (owner of the equipment and recipient of the maintenance service). We develop a simple model to obtain the optimal strategies for both the customer and the agent. We give a complete characterization of the strategies along with some sensitivity analysis and discuss some extensions.
Repair limit analysis was originally proposed as a methodology for determining whether to repair or to replace an operating unit. The approach structures the problem as a Markov or semi-Markov decision process in which state-dependent repair limits trigger the replacement decision. Such a basic framework can easily be applied to more general equipment repair/overhaul environments in which typical maintenance condition monitoring information can serve as the overhaul trigger. One unnecessary limitation of repair limit analysis found in the literature is the use of a constant force of mortality within each state of the model. The purpose of this paper is to extend the repair limit analysis by incorporating a changing force of mortality as the unit ages. In this way, the analysis is more flexible in the parameter estimation phase and it is argued here more appealing since a changing (and usually increasing) force of mortality is utilized in equipment maintenance environments.
This thesis purposes a framework by which optimal system renewal decisions may be made in a consistent and timely manner within the military, under realistic conditions of changing environments. A unique network representation of the system renewal process was used to develop a prototype version of the analytical core model. Its plausibility and usefulness was demonstrated by a series of case studies. The case studies also show how pertinent staff forecasts can be organized and integrated to provide decision makers with a broad, consistent, long-term perspective of the issues relevant to system renewal planning. They are presented with a graphic picture of the entire solution space as structured by the scenarios considered. Various solutions are suggested for each scenario and their robustness may be tested by thoroughly exercising the model for a wide range of scenarios. Prediction of what and when renewals are likely to be and estimation of the associated cost and effectiveness allow anticipatory long-term plans to be formulated. The thesis also suggests how bulk versus phased procurement decisions and force level and mix issues could be analysed using the model. Keywords: Dynamic programming; Lagrangian relaxation; Prototype design; Computer program listings.
Improved management of public works, mobile construction equipment, and other publicly and privately owned fleets can yield significant cost savings through reduced operating expenses, smaller fleet size, and increased availability of these resources. To gain these benefits, the Army has funded research into combining the data contained in modem equipment maintenance management systems with optimization techniques, expert systems, and managerial judgment. This study outlines the underlying concepts and specifications for a model that will consider downtime and its effects, enable equipment trade-off analyses, and suggest fleet sizes and replacement policies, based on consideration of operating environment, demand patterns, and expected maintenance costs. equipment and supplies, maintenance and repair.
In this paper we study a policy involving repair cost limit as a decision variable for minimizing the cost of servicing items sold under warranty.
This paper studies 4x4 vehicle replacement within the International Committee of the Red Cross (ICRC), one of the largest humanitarian organizations. ICRCpolicy sets the replacement of vehicles at 5 years or 150,000 Km, whichever comes first. Using field data collected at the ICRC headquarters and national level we study the ICRC policy. Our results suggest that the organization can make considerable savings by adjusting its replacement policy. This study contributes to the area of logistics and transportation research in humanitarian operations.
Hastings [1] introduced the concept of repair limits for replacement problems, the basic idea being that if, at a given time, the repair of a vehicle, for example, is sufficiently expensive, then it will be economical to replace the vehicle with a new one. Numerical results also demonstrated that repair limits decreased with age. In addition, it was assumed that, at a certain age, vehicles should be replaced whatever the repair cost. This paper addresses theoretical issues surrounding these questions.Hastings [1] benutzt Reparaturgrenzen fr Ersetzungsprobleme: wenn zu einem Zeitpunkt die Reparatur eines Fahrzeugs (z. B.) hinreichend teuer ist, dann ist es konomisch sinnvoll, das Fahrzeug durch ein neues zu ersetzen. Numerische Resultate zeigten, da diese Reparaturgrenzen monoton fallend sind mit zunehmendem Alter. Auerdem wurde angenommen, da die Fahrzeuge in einem gewissen Alter unabhngig von den Raparaturkosten ersetzt werden. Die vorliegende Arbeit befat sich mit der theoretischen Untersuchung dieser beiden Fragen.
When a manufacturer offers a warranty, all legitimate claims under warranty must be serviced. The number of claims that might
be expected depends on the reliability of the product. Servicing of the claims results in additional costs to the manufacturer.
There are several notions of warranty costs, each of which leads to a distinct cost model. In this chapter we focus on models
for prediction of warranty costs as a function of product reliability for various one-dimensional warranties. These models
play a critical role in warranty management.
A variety of mathematical models have been developed to study different aspects of warranty. In this paper we carry out a comprehensive review of these models by classifying them into three categories based on consumer, manufacturer and public policy decision maker perspectives.
Warranty is an important element of marketing new products. The servicing of warranty results in additional costs to the manufacturer. Warranty logistics deals with various issues relating to the servicing of warranty. Proper management of warranty logistics is needed not only to reduce the warranty servicing cost but also to ensure customer satisfaction as customer dissatisfaction has a negative impact on sales and revenue. Unfortunately, warranty logistics has received very little attention. The paper links the literature on warranty and on logistics and then discusses the different issues in warranty logistics. It highlights the challenges and identifies some research topics of potential interest to operational researchers.
Research in the field of urban police patrol-car analysis has tended to concentrate in the areas of vehicle deployment, fleetsize and location, etc., with very little emphasis in the area of vehicle maintenance and replacement policy. As such, the purpose of this paper is to develop and demonstrate a simulation model for patrol-vehicle replacement and maintenance analysis. The simulation model will encompass a Markov-type framework of state movements where the states represent the various stages of a patrol vehicle's life from new to inoperable. The model will be developed in the form of a Q-Gert network, and, demonstrated via a case example of an urban patrol fleet of 100 vehicles.
In this paper we give an overview of applications of maintenance optimization models published so far. We analyze the role of these models in maintenance and discuss the factors which may have hampered applications. Finally, we discuss future prospects.
One particular methodology for machine replacement and repair analysis encompasses a Markov or semi-Markov model consisting of states reflecting various stages of machine deterioration. In this paper the “bathtub curve” of replacement analysis is used as the basis for modeling the time in each state of a state-dependent, control-limit replacement policy. A repair queue is also embedded in the model. Specifically, a Q-GERT network simulation is developed and demonstrated via a case example of the weaving operation of a textile company. Output statistics related to the state movement of machines, new machines acquired, and machine repair are presented and discussed.
The management of heavy construction equipment is a difficult task. Equipment managers are often called upon to make complex economic decisions involving the machines in their charge. These decisions include those concerning acquisitions, maintenance, repairs, rebuilds, replacements, and retirements. The equipment manager must also be able to forecast internal rental rates for their machinery. Repair and maintenance expenditures can have significant impacts on these economic decisions and forecasts. The purpose of this research was to identify a regression model that can adequately represent repair costs in terms of machine age in cumulative hours of use. The study was conducted using field data on 270 heavy construction machines from four different companies. Nineteen different linear and transformed non-linear models were evaluated. A second-order polynomial expression was selected as the best. It was demonstrated how this expression could be incorporated in the Cumulative Cost Model developed by Vorster where it can be used to identify optimum economic decisions. It was also demonstrated how equipment managers could form their own regression equations using standard spreadsheet and database software. Thesis (Doctoral).
This thesis investigates a coordination mechanism for a supply chain with one manufacturer and one retailer in a single period, single product newsvendor model. It looks beyond the conventional supply chain coordination problem by incorporating a specific form of warranties. The manufacturer provides a free replacement warranty in case of product failure within a specified after-sale interval. We assume that the expected value of stochastic market demand is an increasing function of this warranty period length. The supply chain is coordinated if its optimal actions (production quantity and warranty length) are realized while each party maximizes its own respective profit. Any deviation by either party from the terms of a coordinated contract cannot improve its performance. We consider different types of contracts between the two parties: a wholesale price only or a revenue sharing contract with shared warranty costs or such costs borne by the manufacturer alone. The manufacturer decides the warranty period, K, and other contract parameters, such as the wholesale price, shares of revenue, and warranty cost sharing arrangements. The retailer accepts the contract and determines the order amount, as long as it is able to make positive profit. The manufacturer then produces and delivers the order quantity for the selling season. Each party makes its decisions to maximize its own profit, hence the realized decisions may differ from the supply chain’s optimal solutions, if the contract is not coordinated. Thus, we examine whether the supply chain can be coordinated under each type of contract outlined above. For coordinated contracts we focus on the issue of profit allocation. If a contract type is non-coordinating, we attempt to highlight the factors that affect its efficiency, where the efficiency of a non-coordinating contract is defined as the ratio of realized supply chain profit over its optimal profit. The results obtained from this research leads to some interesting managerial insights. Under the wholesale price only contract types, we find that even if the retailer is willing to share the warranty fulfillment costs with the manufacturer, the resulting supply chain profit is less than the optimal value, leading to suboptimal performance. Under a revenue sharing contract, however, the production/ order quantity and the warranty length are coordinated, if the warranty costs are shared by the two parties in the same proportion as the profits. The profit allocation of each party under coordination is flexible from 0 to 100% of chain profit. This concept is illustrated by a numerical example of additive demand case followed by an extensive sensitivity analysis, which leads to some important insight. The major contribution of this thesis is its novel aspect of considering warranty period optimization towards supply chain coordination. We provide the guidelines for designing a contract between a manufacturer and a retailer so that the supply chain’s performance is optimized in terms of the production/ order quantity and the warranty period, while each party in the chain achieves its maximal profit. Without the presence of a third party, the contract coordinates the supply chain with less cost. A non-coordinating contract may still be desirable if it entails relatively low administrative cost while achieving a high degree of efficiency, as defined before. The concepts developed here are easy to implement in real world supply chain, and can provide valuable insights into more complex types of supply chain contracts.
The usual approach to finding optimal repair limits on failure of a component is to use a finite state approximation Markov Decision Process (MDP). In this paper an alternative approach is introduced. Assuming a stochastically increasing repair cost, the optimum solution is shown to satisfy a certain two-point boundary condition, first order differential equation. An asymptotic formula for the optimal repair limit function is derived. Numerical solutions are obtained for some Weibull and Special Erlang distributed time to failure distributions. The structural form of the repair limit function results in a solution procedure which is several orders of magnitude faster than is achievable using previous methods.
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