Integrating maintenance and production decisions in a hierarchical production planning environment

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This article presents a three-part model to evaluate an organization’s maintenance policy. In stage one, an aggregate production plan is generated using a linear programming formulation suggested by Chung and Krajewski (Operations Management 1984;4:389–406). In stage two, a master production schedule is developed to minimize the weighted deviations from the goals specified by the aggregate production plan. In stage three, work center loading requirements, determined through rough cut capacity planning using resource profiles, are used to simulate equipment failures during the aggregate production planning horizon. Several experiments are used to test the significance of various factors for maintenance policy selection. These factors include the category of maintenance activity, maintenance activity frequency, failure significance, maintenance activity cost, and aggregate production policy. Scope and purpose In order to resolve often conflicting objectives of system reliability and profit maximization, an organization should establish appropriate maintenance guidelines that take into consideration (1) costs associated with performing production activities, (2) costs associated with performing maintenance activities, and (3) the various costs associated with equipment failure and the resulting interruptions to the production plan. In currently prevailing practices, maintenance policy often is determined at the operational level in a political test between production and maintenance management. The resulting policy often is not optimal for the organization’s overall objectives.