Bayesian decision making in determining optimal leased term and preventive maintenance scheme for leased facilities

Abstract

Under a business competitive environment, quite a few enterprises choose capital leasing to reduce tax payment and investment risk instead of buying facilities. Since the durability and service life of leased facilities will be longer, the breakdowns and deterioration of leased facilities are inevitable during lease period. Accordingly, in order to reduce the related costs and keep the facility's health during lease period, preventive maintenances are required to perform to reduce the cost of free-repair warranty and maintain customers' satisfaction. However, performing preventive maintenance is not easy to scheme due to the scarcity of historical failure data. Accordingly, the study integrates lease and maintenance decisions into a synthetic strategy, and it can be applied under the situation of only expert's evaluation and/or scare historical failure data by employing Bayesian analyses. In this study, the mathematical models and corresponding algorithms are developed to determine the best preventive maintenance scheme and the optimal term of contract for leased facilities to maximize the expected profit. Moreover, the computerized architecture is also proposed, and it can help the lessor to solve the issue in practice. Finally, numerical examples and the sensitive analyses are provided to illustrate the managerial strategies under different leased period and the preventive maintenance policies.

Condition‐based preventive maintenance with a yield rate threshold for deteriorating repairable systems

“…The deterioration of a system can be described using stochastic models. Many studies chose an NHPP with a Weibull power law intensity function because of its flexibility in terms of describing all of the reliability patterns in the system life phase 14,15 . Along with deterioration of the system, the system can experience failure at any time and will begin to produce defective products at a certain level.…”

“…Many studies chose an NHPP with a Weibull power law intensity function because of its flexibility in terms of describing all of the reliability patterns in the system life phase. 14,15 Along with deterioration of the system, the system can experience failure at any time and will begin to produce defective products at a certain level. In other words, the quality of the product (yield rate) is related to the deterioration of the system.…”