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Designing Logistics Support Systems. Level of Repair Analysis and Spare Designing logistics support systems Level of repair analysis and spare parts inventories Rob Basten Dissertation committee Chairman / Secretary Prof. dr. P.J.J.M. van Loon Promotor Prof. dr. W.H.M. Zijm Assistant Promotors Dr. M.C. van der Heijden Dr. ir. J.M.J. Schutten Members Prof. dr. J.L. Hurink Prof. dr. R.J. Boucherie Prof. dr. E. Kutanoglu Prof. dr. ir. G.J.J.A.N. van Houtum Prof. dr. ir. R. Dekker This thesis is number D128 of the thesis series of the Beta Research School for Operations Management and Logistics. The Beta Research School is a joint effort of the departments of Technology Management, and Mathematics and Computing Science at the Technische Universiteit Eindhoven and the Centre for Telematics and Information Technology at the University of Twente. Beta is the largest research centre in the Netherlands in the field of operations management in technology-intensive environments. The mission of Beta is to carry out fundamental and applied research on the analysis, design, and control of operational processes. This research has been funded by the Innovation-Oriented Research Pro- gramme ‘Integrated Product Creation and Realization (iop ipcr)’ of the Nether- lands Ministry of Economic Affairs. Ph.D. thesis, University of Twente, Enschede, the Netherlands Printed by Wöhrmann Print Service The image on the front cover is based on a photo by Shonna Cunningham of the U.S. Navy. It shows the Hr. Ms. De Zeven Provinciën, a frigate of the Royal Netherlands Navy. Its equipment includes an apar and smart-l by Thales Nederland. © R.J.I. Basten, Enschede, 2009 All rights reserved. No part of this publication may be reproduced without the prior written permission of the author. isbn 978-90-365-2967-9 DESIGNINGLOGISTICSSUPPORTSYSTEMS LEVEL OF REPAIR ANALYSIS AND SPARE PARTS INVENTORIES PROEFSCHRIFT ter verkrijging van de graad van doctor aan de Universiteit Twente, op gezag van de rector magnificus, prof. dr. H. Brinksma, volgens besluit van het College voor Promoties in het openbaar te verdedigen op vrijdag 8 januari 2010 om 15:00 uur door Robertus Johannes Ida Basten geboren op 16 november 1981 te Boxmeer Dit proefschrift is goedgekeurd door de promotor: prof. dr. W.H.M. Zijm en de assistent-promotoren: dr. M.C. van der Heijden dr. ir. J.M.J. Schutten Acknowledgements Writing a PhD thesis has not only required a huge effort from me, but also from people around me. Therefore, I would like to thank the following people. First, I thank my supervisors. My department, ompl, has had four chairmen in the last four years, but Matthieu van der Heijden and Marco Schutten provided steady supervision. They complement each other, having a different focus and different skills, and when I needed help, Marco and particularly Matthieu freed enormous amounts of time. In the last year, Henk Zijm became the chairman of ompl and my promotor. He made a significant contribution by giving extensive feedback on draft versions of the various chapters in this thesis. Second, I am grateful to those who facilitated my research. Erhan Kutanoglu provided me with the opportunity to work in Austin, Texas, which I really enjoyed. The logistic engineers at Thales Nederland provided a lot of informa- tion and were always there to answer questions. In particular, I thank Cees Doets and Jürgen Donders. Next, I am grateful to the students who made a contribution, most importantly Martijn Smit. He did a lot of work at Thales Nederland and without him, Chapter 6 might not have been there. Lastly in this group, I gratefully acknowledge the support of the Innovation-Oriented Research Programme ‘Integrated Product Creation and Realization’ (iop ipcr) of the Netherlands Ministry of Economic Affairs, and I thank the people who attended the meetings of the user committee of the iop ipcr project. They kept me focused on doing practically relevant research. Third, my thanks go out to the colleagues at ompl. In particular, I thank my roommate Leendert, both for his help on (mainly mathematical) problems that I faced and for the pleasant working atmosphere. I also greatly appreciated the coffee breaks with the other PhD candidates and some faculty members. Finally, I thank my parents, brothers, my girlfriend Miriam, and my friends. I appreciate that they allowed me to talk about my thesis and that they gave me the possibility to take my mind off of it. Furthermore, I am grateful for Berteun’s unrivaled LaTeX skills. Rob Basten Enschede, December 2009 v Contents 1 Introduction 1 1.1 Motivation . 2 1.2 Level of repair analysis and spare parts stocking . 5 1.3 Example . 8 1.4 Literature . 9 1.5 Contribution . 10 1.6 Outline of the thesis . 13 2 Literature and research challenges 15 2.1 Requirements in practice . 15 2.2 Level of repair analysis . 18 2.3 Spare parts stocking . 20 2.4 Joint problem of lora and spare parts stocking . 22 2.5 Conclusions . 25 3 Basic lora model 27 3.1 Model . 28 3.2 Improved model . 33 3.3 Computational experiments . 40 3.4 Conclusions . 45 4 Flow model for the lora problem 47 4.1 Model assumptions and input data . 48 4.2 Minimum cost flow model . 49 4.3 Computational experiments . 54 4.4 Conclusions . 61 5 Extensions to the lora flow model 63 5.1 Motivation of model extensions . 63 5.2 Model formulation of extensions . 67 5.3 Computational experiments . 73 5.4 Conclusions . 81 vii viii 6 Iterative method for the joint problem of lora and spare parts stock- ing 83 6.1 Model . 84 6.2 General approach . 91 6.3 Algorithm . 93 6.4 Computational experiments . 101 6.5 Case study at Thales Nederland . 110 6.6 Extension to non-symmetrical lora decisions . 114 6.7 Conclusions . 115 7 Integrated method for the joint problem of lora and spare parts stocking 117 7.1 vari-metric: the marginal approach . 118 7.2 Algorithm . 122 7.3 Test results . 128 7.4 Conclusions . 134 8 Conclusions and further research 137 8.1 Conclusions . 137 8.2 Usage in practice . 142 8.3 Further research . 143 A Notation 151 B Proof that the lora problem is NP-hard 153 C Experimental design for the basic lora model 155 D Experimental design for the lora flow model 157 E Experimental design for the joint model 159 Bibliography 167 Samenvatting 169 About the author 173 Chapter 1 Introduction Manufactured products and installations are often prone to failure. Inexpen- sive products, such as many consumer goods, will be discarded upon failure. Capital goods, which are more expensive products and installations, will be repaired. Capital goods are physical systems that are used to produce products or services. The focus in this thesis is on the logistics support system that is required to maximize the operational availability during the lifetime of capi- tal goods. We concentrate on capital goods that are expensive and have high downtime costs. Examples are manufacturing systems, power plants, defence systems, medical devices, and airplanes. In many cases, safety regulations require regular inspections, during which (upcoming) failures are detected; in other cases, the capital good simply stops functioning due to a failure. High downtime costs result in these cases from lost production, missions that need to be aborted, patients that cannot be treated, and flights that are delayed or cancelled. Typical characteristics of capital goods that are relevant in the context of this thesis are, besides their high price and high downtime costs, their technical complexity, low failure rate, geographically dispersed installed base, and long life cycle. The focus is on corrective maintenance rather than preventive maintenance, since the negative consequences of system downtime arise from unexpected failures, whereas preventive maintenance is usually scheduled. Quick recovery of the system is of utmost importance, which means that capital goods are typically restored by repair by replacement of a component. An identical spare part is put in the system, so that it functions again. Since those components can be expensive as well, up to more than several hundreds of thousands of euros, these are repaired by replacement (of a subcomponent) too. In all cases, the question is whether a component (or subcomponent) should be repaired or discarded upon failure, if repair is technically feasible. This economic trade-off is complex, due to the complex product structure, the geographically dispersed installed base, the spare parts that are required, and the various resources (e.g., 1 2 Chapter 1 test and repair equipment) that are required to perform repairs. In this thesis, we will develop mathematical models to support the economic trade-off. The remainder of this chapter is structured as follows. In Section 1.1, we further motivate this research, and in Section 1.2, we define in detail the problem that we focus on in this thesis. An example in Section 1.3 serves to illustrate the problem. We dicuss the relevant literature in Section 1.4, and our contribution to the literature in Section 1.5. This section includes the research objective and research questions. Finally, in Section 1.6, we give the outline of this thesis. 1.1 Motivation The research in this thesis is part of the iop-ipcr1 project life-cycle oriented design of capital goods. The goal of the project is to develop a set of quantitative techniques that can be used for an integrated balancing of system availability and life cycle costs (lcc). These techniques are to be used in the development process of capital goods, to gain insights into the impact of design decisions on the lcc and the availability of the product.
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