Skip to main content

A Framework for the Simulation-Based Estimation of Downtime Costs

  • Conference paper
  • First Online:
Exploring Service Science (IESS 2018)

Part of the book series: Lecture Notes in Business Information Processing ((LNBIP,volume 331))

Included in the following conference series:

Abstract

Currently, industrial maintenance experiences a shift from traditional on-call business towards long-term maintenance contracts, as, for example, availability-based maintenance contracts. Recently, researchers presented Service Level Engineering (SLE) as an approach for customers to determine their cost-optimal long-term availability levels for their production equipment within one production system. However—in order to apply SLE—customers must know their costs of downtime, i.e. costs associated to the unavailability of production assets.

This work presents a generic approach for customers to determine their costs of downtime function, a function reflecting the costs arising for a manufacturer due to unavailable production equipment. The approach uses simulation studies to incorporate different downtime patterns that result in the same overall availability. Consequently, this work contributes to the successful application of availability-based maintenance contract in practice. In detail, this work addresses the question of determining the industrial costs of downtime, a necessary prerequisite for the successful application of SLE in industrial maintenance.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 39.99
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD 54.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

References

  1. Baines, T., Lightfoot, H., Benedettini, O., Kay, J.: The servitization of manufacturing. J. Manuf. Technol. Manag. 20(5), 547–567 (2009)

    Article  Google Scholar 

  2. Datta, P.P., Roy, R.: Cost modelling techniques for availability type service support contracts: a literature review and empirical study. CIRP J. Manuf. Sci. Technol. 3(2), 142–157 (2010)

    Article  Google Scholar 

  3. Ebeling, C.E.: An Introduction to Reliability and Maintainability Engineering. Waveland Press, Inc., Long Grove (2010)

    Google Scholar 

  4. Edwards, D.J., Holt, G.D., Harris, F.C.: Predicting downtime costs of tracked hydraulic excavators operating in the UK opencast mining industry. Constr. Manag. Econ. 20(7), 581–591 (2002)

    Article  Google Scholar 

  5. Erkoyuncu, J.A., Roy, R., Shehab, E., Kutsch, E.: An innovative uncertainty management framework to support contracting for product-service availability. J. Serv. Manag. 25(5), 603–638 (2014)

    Article  Google Scholar 

  6. Fox, J.P., Brammall, J.R., Yarlagadda, P.K.: Determination of the financial impact of machine downtime on the Australia post large letters sorting process. In: 9th Global Congress on Manufacturing and Management (GCMM), pp. 732–738 (2008)

    Google Scholar 

  7. Gregor, S., Hevner, A.R.: Positioning and presenting design science research for maximum impact. MIS Q. 37(2), 337–355 (2013)

    Article  Google Scholar 

  8. Huber, S., Spinler, S.: Pricing of full-service repair contracts. Eur. J. Oper. Res. 222(1), 113–121 (2012)

    Article  MathSciNet  Google Scholar 

  9. Huber, S., Spinler, S.: Pricing of full-service repair contracts with learning, optimized maintenance, and information asymmetry: pricing of full-service repair contracts. Decis. Sci. 45(4), 791–815 (2014)

    Article  Google Scholar 

  10. Hypko, P., Tilebein, M., Gleich, R.: Clarifying the concept of performance-based contracting in manufacturing industries. J. Serv. Manag. 21(5), 625–655 (2010)

    Article  Google Scholar 

  11. Kieninger, A., Westernhagen, J., Satzger, G.: The economics of service level engineering. In: Proceedings of the 2011 44th Hawaii International Conference on System Sciences, pp. 1–10 (2011)

    Google Scholar 

  12. Kuechler, B., Vaishnavi, V.: On theory development in design science research: anatomy of a research project. Eur. J. Inf. Syst. 17(5), 489–504 (2008)

    Article  Google Scholar 

  13. Law, A.M.: Simulation Modeling and Analysis, 5 edn. McGraw-Hill Education, New York (2015)

    Google Scholar 

  14. Li, L., Chang, Q., Ni, J.: Data driven bottleneck detection of manufacturing systems. Int. J. Prod. Res. 47(18), 5019–5036 (2009)

    Article  Google Scholar 

  15. Liu, J., Chang, Q., Xiao, G., Biller, S.: The costs of downtime incidents in serial multistage manufacturing systems. J. Manuf. Sci. Eng. 134(2), 021016 (2012)

    Article  Google Scholar 

  16. Negahban, A., Smith, J.S.: Simulation for manufacturing system design and operation: literature review and analysis. J. Manuf. Syst. 33(2), 241–261 (2014)

    Article  Google Scholar 

  17. Ng, I., Maull, R., Yip, N.: Outcome-based contracts as a driver for systems thinking and service-dominant logic in service science: evidence from the defence industry. Eur. Manag. J. 27(6), 377–387 (2009)

    Article  Google Scholar 

  18. Ng, I., Yip, N.: Identifying risk and its impact on contracting through a benefit based-model framework in business to business contracting: case of the defence industry. In: Proceedings of the 1st CIRP Industrial Product-Service Systems (IPS2) Conference, pp. 207–215 (2009)

    Google Scholar 

  19. Patti, A.L., Watson, K.J.: Downtime variability: the impact of durationfrequency on the performance of serial production systems. Int. J. Prod. Res. 48(19), 5831–5841 (2010)

    Article  Google Scholar 

  20. Peffers, K., Rothenberger, M., Tuunanen, T., Vaezi, R.: Design science research evaluation. In: Peffers, K., Rothenberger, M., Kuechler, B. (eds.) DESRIST 2012. LNCS, vol. 7286, pp. 398–410. Springer, Heidelberg (2012). https://doi.org/10.1007/978-3-642-29863-9_29

    Chapter  Google Scholar 

  21. Peffers, K., Tuunanen, T., Rothenberger, M.A., Chatterjee, S.: A design science research methodology for information systems research. J. Manag. Inf. Syst. 24(3), 45–77 (2007)

    Article  Google Scholar 

  22. Roser, C., Nakano, M., Tanaka, M.: Productivity improvement: shifting bottleneck detection. In: Proceedings of the 34th Winter Simulation Conference (WSC), San Diego, California, pp. 1079–1086 (2002)

    Google Scholar 

  23. Salonen, A., Tabikh, M.: Downtime costing—attitudes in Swedish manufacturing industry. In: Proceedings of the 10th World Congress on Engineering Asset Management (WCEAM 2015), Tampere, pp. 539–544 (2016)

    Google Scholar 

  24. Schmitz, B., Duffort, F., Satzger, G.: Managing uncertainty in industrial full service contracts: digital support for design and delivery. In: Proceedings of the 2016 IEEE 18th Conference on Business Informatics (CBI), pp. 123–132 (2016)

    Google Scholar 

  25. Stremersch, S., Wuyts, S., Frambach, R.T.: The purchasing of full-service contracts: an exploratory study within the industrial maintenance market. Indus. Market. Manag. 30(1), 1–12 (2001)

    Article  Google Scholar 

  26. Vandermerwe, S., Rada, J.: Servitization of business: adding value by adding services. Eur. Manag. J. 6(4), 314–324 (1988)

    Article  Google Scholar 

  27. Wolff, C., Schmitz, B.: Determining cost-optimal availability for production equipment using service level engineering. In: Proceedings of the 2017 IEEE 19th Conference on Business Informatics (CBI), pp. 176–185 (2017)

    Google Scholar 

  28. Wolff, C., Vssing, M., Schmitz, B., Fromm, H.: Towards a technician marketplace using capacity-based pricing. In: Proceedings of the 51st Hawaii International Conference on System Sciences, pp. 1553–1562 (2018)

    Google Scholar 

Download references

Author information

Authors and Affiliations

Authors

Corresponding author

Correspondence to Clemens Wolff .

Editor information

Editors and Affiliations

Rights and permissions

Reprints and permissions

Copyright information

© 2018 Springer Nature Switzerland AG

About this paper

Check for updates. Verify currency and authenticity via CrossMark

Cite this paper

Wolff, C., Voessing, M. (2018). A Framework for the Simulation-Based Estimation of Downtime Costs. In: Satzger, G., Patrício, L., Zaki, M., Kühl, N., Hottum, P. (eds) Exploring Service Science. IESS 2018. Lecture Notes in Business Information Processing, vol 331. Springer, Cham. https://doi.org/10.1007/978-3-030-00713-3_19

Download citation

  • DOI: https://doi.org/10.1007/978-3-030-00713-3_19

  • Published:

  • Publisher Name: Springer, Cham

  • Print ISBN: 978-3-030-00712-6

  • Online ISBN: 978-3-030-00713-3

  • eBook Packages: Computer ScienceComputer Science (R0)

Publish with us

Policies and ethics