Subcontracting as a capacity management tool in multi-project repair shops Citation for published version (APA): Keizers, J. M. (2000). Subcontracting as a capacity management tool in multi-project repair shops. Technische Universiteit Eindhoven. https://doi.org/10.6100/IR537276 DOI: 10.6100/IR537276 Document status and date: Published: 01/01/2000 Document Version: Publisher’s PDF, also known as Version of Record (includes final page, issue and volume numbers) Please check the document version of this publication: • A submitted manuscript is the version of the article upon submission and before peer-review. There can be important differences between the submitted version and the official published version of record. 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ISBN 90-386-0743-1 NUGI 684 Keywords: Subcontracting; Production control; Maintenance management Druk: PlantijnCasparie Heerhugowaard bv Subcontracting as a Capacity Management Tool in Multi-Project Repair Shops PROEFSCHRIFT ter verkrijging van de graad van doctor aan de Technische Universiteit Eindhoven, op gezag van de Rector Magnificus, prof.dr. M. Rem, voor een commissie aangewezen door het College voor Promoties in het openbaar te verdedigen op dinsdag 3 oktober 2000 om 16.00 uur door Joris Maria Keizers geboren te Nijmegen Dit proefschrift is goedgekeurd door de promotoren: prof.dr.ir. J.W.M. Bertrand en prof.dr. J. Wessels Acknowledgements This thesis is the result of the research that I conducted between May 1996 and July 2000 at the Technische Universiteit Eindhoven. Of course, this research could not have been completed without the support of others. First of all, I would like to thank my supervisors. The interesting and fruitful discussions with Will Bertrand have been a great inspiration to me. Jaap Wessels joint the team almost two years ago and played an important role in the validation phase of this research. Henk Zijm and Aart van Harten are acknowledged for their useful comments on the draft version of this thesis. Furthermore, I would also like to extend my gratitude to Ivo Adan and Jan van der Wal, who were of great importance for realizing Chapter 5. I am indebted to the Royal Netherlands Navy. They have not only been the financier of this research, but, more importantly, they provided me with the access to all kinds of processes and information in their maintenance organization. There are many people who where willing to answer my many questions and critically comment on ideas. In particular, I would like to thank Peter Calbo, who has been of great help. My colleagues at the university made my stay there a very pleasant one. Especially Kim van Oorschot (keep going during your last months!), Ebbe Negenman (didn't we have a great course on negotiating?), Willem de Paepe (one day I'll beat you!), Wenny Raaymakers (I had a great time in Budapest) and Jan-Peter Vos (no more 'trainpooling') are acknowledged. I express my gratitude to my friends and family, for their interest and the necessary distraction from work. In particular, I would like to thank my parents for their support and confidence in me throughout the years. And finally Nienke, you are the living proof that my stay in Eindhoven has resulted in much more than just this thesis! Den Haag, July 2000 Joris Keizers Contents 1 Introduction 1 1.1 Maintenance 1 1.2 Production control in multi-project repair shops 3 1.3 Problem formulation 6 1.4 Literature review 10 1.5 Research methodology 12 2 The Royal Netherlands Navy Case I - Introduction 17 2.1 Motivation 17 2.2 The Royal Netherlands Navy 18 2.3 The maintenance organization 19 2.4 Planning and control: the current situation 28 2.5 Local versus process inherent problems 37 3 The Royal Netherlands Navy Case II - Diagnosing Project Planning Performance 41 3.1 Introduction 41 3.2 Literature review 44 3.3 Order planning at SEWACO 46 3.4 Selection of case relevant characteristics 49 3.5 Diagnosing the causes of poor performance 53 3.6 Conclusions 60 4 Hierarchical Framework for Control 63 4.1 Introduction 63 4.2 Literature on hierarchical planning and control 64 4.3 Objective 67 4.4 Capacity and repairables determination 69 4.5 Subcontracting 70 4.6 Pulling repairables 73 4.7 Job - operator allocation 74 4.8 Summary 75 5 A simplified Model for Integrating Subcontracting and Internal Capacity Planning 77 5.1 Introduction 77 5.2 Problem formulation 78 5.3 The distribution of the makespan 80 5.4 Discussion of the approximation 85 5.5 Subcontracting policy 87 5.6 Extension 88 5.7 Conclusion 93 6 Design of Subcontracting and Pulling Decision rules 95 6.1 Introduction 95 6.2 Control and control theory 97 6.3 Performance indicators 103 6.4 Control decisions 110 6.5 Summary 115 7 The Royal Netherlands Navy Case III - Making the Control Structure Applicable 117 7.1 Introduction 117 7.2 A framework for testing 118 7.3 Assumptions and choices 121 7.4 Subcontracting decisions 126 7.5 Summary 128 8 The Royal Netherlands Navy Case IV - Validation and Evaluation of the Control Structure 129 8.1 Introduction 129 8.2 Selection of repair shops and output measures 131 8.3 Review period and planning horizon 132 8.4 Validation of the control mechanism 136 8.5 Validation of the analytical queuing model 142 8.6 Evaluation of the control mechanism 148 8.7 Side effects of control mechanism 154 8.8 Summary 160 9 Behavior of the Control Structure under Relaxed Assumptions Regarding Demand and Resource Structure 163 9.1 Introduction 163 9.2 Dominant demand classes 164 9.3 Demand classification 168 9.4 Subcontracting characteristics 174 9.5 Summary 179 10 Conclusions and Further Research 181 10.1 Introduction 181 10.2 Crucial workload characteristics 182 10.3 Framework for control 182 10.4 Knowledge transfer from theoretical models to real-life 184 10.5 Further research 185 References 187 Appendix A: Capacity Requirements and Availabilities at SEWACO 193 Appendix B: Actual Delivery Performance of the SEWACO Repair Shops 195 Appendix C: Algorithm for the Makespan Moments 197 Appendix D: Fitting a Mixture of Two Erlang Distributions 198 Summary 199 Samenvatting 203 Curriculum Vitae 207 1 Introduction 1.1 Maintenance Maintenance has existed since time immemorial. It is not unlikely that the first cavemen were faced with the problem of keeping their spearheads sharp enough for the hunt. In later ages, the coaches had to be kept operational for transport and travelling. It is not surprising then, that most maintenance activities were only carried out on a trial-and-error base, resulting in corrective maintenance. It is not until the second part of the 20th century that maintenance received more attention, which is a consequence of World War II and the aerospace developments (Corder 1992). Ever since, industrial companies have become more and more aware that maintenance could reduce a part of the uncertainty of the production processes. Therefore, their belief that “maintenance only costs” has turned into the belief that “maintenance also pays”. Furthermore, in everyday life people are faced - whether aware or not - with maintenance: we give preventive maintenance to our cars and corrective maintenance to a flat tyre. Companies like Bic and Gillette make fortunes due to the fact that people apply repair-by-replacement activities for pencils and razor blades (Patton 1980). 1 For scientific researchers, maintenance is an area of growing interest, demonstrated by the increasing number of scientific publications about maintenance and maintenance management. Several reasons can be attributed for this phenomenon. Firstly, organizations realize that maintenance may contribute to the long-term objective of producing a high quantity of their products whilst maintaining a high quality. Secondly, the widespread mechanization and automation has increased the capital tied up in production equipment which makes the output of the organizations increasingly dependent on the reliability of the technical systems. Thirdly, the increasing complexity of the technical systems has resulted in a need for more sophisticated maintenance models and control policies. Another reason is that managers have become aware that the productivity may be increased by maintenance control (Paz & Leigh 1993, Dekker 1996 and Cho & Parlar 1991).