Joint Decisions of Components Replacement and Spare Parts Ordering Considering Different Supplied Product Quality

In addition to equipment maintenance decisions, spare parts ordering decisions from different suppliers play a key role in reducing related costs (e.g., maintenance, inventory and ordering costs). Since suppliers may use different production technologies and materials, spare parts (or products) from different suppliers can be different in quality. Nevertheless, in recent studies, the quality of spare parts is rarely considered to incorporate both equipment maintenance and spare parts ordering. In this paper, we investigate the joint optimization of condition-based maintenance and spare parts provisioning policy under two suppliers with different product quality. We formulate a sequential-decision problem with a Markov decision process and consequently obtain an optimal maintenance and ordering policy by an exact value iteration algorithm. To improve computation efficiency, based on the principle of sequential optimization, we develop heuristic methods. Extensive numerical experiments are conducted to assess the overall performance of the developed heuristic methods. Compared to the optimal method, results showed that the average cost gap is about 2% and computation time is reduced by 94% on average under the proposed heuristic method. Note to Practitioners—This paper is motivated by the observation that automobile industries tried to integrate emergency suppliers from which spare parts have different quality into maintenance schedules to avoid stockout and reduce equipment failure during the Covid-19 pandemic. Specifically, the article focuses on balancing the trade-offs between condition-based maintenance and inventory management from two suppliers with different lead times and spare parts quality for multi-unit systems. On the one hand, effective maintenance scheduling relies on spare parts for replacement to ensure the stability of production. On the other hand, inventory management needs to select the supplier with appropriate lead time and product quality to reduce the ordering cost and avoid stockout based on the degradation states of equipment. The joint optimization of these two aspects serves to reduce the total maintenance and ordering cost. Nevertheless, most existing research aims to optimize them separately. In this paper, we formulate the joint decision problem considering the two aspects based on a Markov decision process. We obtain an optimal maintenance and ordering policy by an exact value iteration algorithm and present heuristics to improve the computation efficiency when the system contains multiple machines. Practitioners can implement the proposed methodology to make condition-based maintenance and inventory management when spare parts with different qualities are ordered from two suppliers. To balance cost and computational efficiency, it is suggested to implement the optimal policy by an exact value iteration algorithm when the number of machines is small in the system and use the heuristic methods when the number of machines is large (i.e., usually larger than 3).