Application of Prospect Theory in the Context of Predictive Maintenance Optimization Based on Risk Assessment

Abstract

The optimization of predictive maintenance relies mainly on the reduction of costs and risks, which can be of various types. The evaluation of risks cannot be realized independently of the psychology state and cognitive knowledge of the decision maker. In this article, we demonstrate this through the proposal of a methodology that tackles both optimization of maintenance and estimation of failure risks at the same time. The methodology takes as input the remaining useful life of the system at instant t and determines the optimal inspection step and the threshold of remaining useful life for predictive maintenance. The originality of the methodology consists of using a theory inspired by behavioral economics called prospect theory. Prospect theory allows modeling the outcome of a decision making by considering several aspects related to the decision maker, mainly loss aversion and a tendency to overestimate events with low probability of occurrence but with high economic losses. A case study was then developed where both cases were considered: with prospect theory and without prospect theory. A sensitivity analysis of the results under variation of some input parameters was carried out in a final step to confirm the consistency of the results and show the interest of prospect theory.

Maintenance decision-making and its relevance in engineering asset management

“…Cost optimisation is a widely used approach in planning maintenance activities. Louhichi, et al [55] derived a cost model based on risk assessment for predictive maintenance, where different overheads of maintenance costs are derived along with its optimisation. The model is based on an objective function, which is the sum of all overheads of maintenance costs.…”

A Methodology Proposal for Estimating the Costs Associated with Failure Effects of Subsea Equipment

“…With regard to the opportunity cost, this can include costs related to operational losses ( ), which are the costs incurred when a failure mode inhibits the main function of the system and prevents the creation of value (Rhee & Spencer, 2009). The opportunity costs also consider costs due to indirect losses, such as environmental costs ( ) caused by the degradation of the environment due to the emission of pollutants, human costs ( ) caused by human loss (injury, illness or death) and financial costs ( ) caused by a decrease in orders from clients, depending on the type of failure mode (Louhichi et al, 2019).…”

“…The environmental costs ( ) associated with a failure scenario i, can be evaluated by using Eq. ( 9): (9) According to Louhichi et al (2019), a failure scenario can cause damage to the environment by emitting harmful pollutants. For a failure scenario i, consider: x =( , : the probability of emitting pollutants, so is the probability of emitting chemical j during failure scenario i. x =( , ,…, ): the emission volume of pollutants, so that is the emission volume of chemical j during failure scenario i. x = ( , ,…, ): density vector of the chemicals, so that ,is the density value of the chemical j emitted during the failure scenario i. x =( , ,…, ): cost of damage per ton of emission of pollutants, so that is the cost of damage per ton of emission of chemical j during failure scenario i.…”

“…According to Louhichi et al (2019), assessing risks outside the financial domain can be challenging, as it is difficult to put a monetary value on something like a human life. To deal with this issue, economists have introduced the concept of Value of Statistical Life (VSL), which reflects the worker's willingness to pay for accepting a certain level of risk and pay for more safety.…”

Detection, Prognosis and Decision Support Tool for Offshore Wind Turbine Structures

“…Most of the maintenance optimization algorithms in the literature start from the assumption that a component can be replaced or restored to an initial fault free condition (e.g., [25][26][27][28][29][30]). This is not the case for corrosion of the tower.…”