Available online at www.sciencedirect.

com

European Journal of Operational Research 192 (2009) 479–486

www.elsevier.com/locate/ejor

Stochastics and Statistics

A facility location and installation of resources model

for level of repair analysis
Eduardo Siqueira Brick *, Eduardo Uchoa
Departamento de Engenharia de Produção, Universidade Federal Fluminense, Rua Passo da Pátria 156, sala 306,
Bloco D, Niterói, RJ 24210-240, Brazil

Received 25 October 2006; accepted 30 August 2007

Available online 1 October 2007

Abstract

The Level of Repair Analysis – LORA – is an analytic methodology aimed at determining: (i) the optimal location of facilities that
compose a maintenance structure; (ii) the quantity of required resources in each facility; and (iii) the best repair policies, i.e., rules that
determine if a given component should be discarded or repaired, and where those actions should take place. This work presents a mixed-
integer programming model for LORA that is more comprehensive than others in the literature, being suitable to many practical situ-
ations. The model was applied to 15 substantial real world problems, and considering distinct maintenance policies to some of them,
resulted in 22 different solutions, all of which could be achieved by a commercial Mixed-Integer Programming (MIP) solver in reasonable
times.
 2007 Elsevier B.V. All rights reserved.

Keywords: Maintenance; Level of Repair Analysis; Capacitated Location Problem; Integer Programming

1. Introduction A technical system is composed by a large number of

Level of Repair Analysis (LORA) is an analysis method-
ology used to determine the optimal location of facilities
and equipments for the maintenance of technical systems
components and the more appropriated repair policies.
Such systems may be used to provide services, to extract
raw materials, or to manufacture products. LORA is fre-
quently applied to systems deployed in different locations,
spread over large geographic regions, possibly covering
more than one continent. Examples of such systems include
a surveillance system composed of radars extended along a
border, a communications system composed by a set of
switching equipments located in different cities, or a
defense system that relies on aircrafts distributed among
various airbases.
* tem. It represents an aircraft, illustrating the fact that these
Corresponding author.
E-mail addresses: brick@producao.uff.br (E.S. Brick), uchoa@produ-
cao.uff.br (E. Uchoa).
components that can be modeled by tree structures,
according to various criteria. These structures may encom-
pass many levels, known as indentation levels. For the sake
of LORA, the suitable criterion to place a component in a
particular structure indentation level is the relation con-
tain–contained (father–son), associated with the possibility
that it can be removed from its father and substituted by a
spare. Depending on the maintenance resources available
at the places where the systems are deployed, only a subset
of the components can be removed and substituted at these
locations. These are called Line Replaceable Units (LRU).
The components that can be removed and replaced only at
places where special facilities exist are called Shop Replace-
able Units (SRU). We assume that a SRU may contain
other SRU, but not a LRU.
Fig. 1 depicts part of the tree structure of a complex sys-
components may be located at any indentation level in the
structure.

0377-2217/$ - see front matter  2007 Elsevier B.V. All rights reserved.
doi:10.1016/j.ejor.2007.08.043
480 E.S. Brick, E. Uchoa / European Journal of Operational Research 192 (2009) 479–486
NAVIGATION MOTOR
SUBSYSTEM SUBSYSTEM
COMPRESSOR TURBINE
LRU 3 LRU 4
SRU 31 LRU 31
SRU 311
SRU 3111
Fig. 1. Example of a system tree structure.
Nodes that do not represent physical components
replaceable at the operation sites are not considered in
LORA. In the above example, LRU 2 and 4 could be
linked directly to the system AIRCRAFT A1. This means
that the LORA model discussed in this paper deals only
with the maintenance of components that can be removed
from the system. When an organization owns various sim-
ilar systems, it is frequent to find common components
among them. Thus, a particular LRU or SRU may be part
of the structure of more than one system.
It is assumed that it is possible to associate the failure of
a system with a specific LRU. When this occurs, that LRU
is replaced by a spare. The defective LRU, removed from
the system, generates a demand for maintenance actions
by the support system. This demand originates at the places
were the technical systems are deployed. There are many
ways in which a LRU may fail. These are called failure
modes. The first decision in LORA is between LRU repair
and disposal, depending on the failure mode. In case of
repair, LORA also prescribes to which maintenance facility
this LRU should be sent for service, also depending on the
failure mode. If the failure mode occurs in a SRU con-
tained in the LRU, the repair means the substitution of
the defective SRU. The faulty SRU may be repaired or dis-
carded. Many types of resources are required to perform
each of the possible maintenance actions, namely: test
instruments, tools, spares, technical documentation, sup-
port software, special facilities, consumables and special-
ized human resources. Some repairs may be performed
on premises belonging to third parties, in which case it is
not necessary to install resources, but the unit cost of repair
is usually higher.
The American Department of Defense, where the
LORA was initially formulated (MIL-STD-1390 D), deals
AIRCRAFT A1
LRU 1 COMMUNICATION
SUBSYSTEM
LRU 2 SRU 11 SRU 12
LRU 5 SRU 111 SRU 112
LRU 311
SRU 3112
with an extreme situation with respect to geographical dis-
tribution of the assets. It recommends a maintenance struc-
ture in three echelons: Operational (in the same locations
where the systems are deployed); Intermediate (geographi-
cally close to places where the technical systems operate)
and Depot (specialized and centralized maintenance, per-
haps thousands of miles away from the operation sites).
Usually the first two echelons are organic, whereas third
parties typically operate the Depot maintenance level.
Ideally, a LORA model should be integrated with the
overall problem of selecting the ‘‘best’’ support system
for the technical systems owned by an organization, con-
sidering adequate effectiveness and efficiency measures
and a set of possible support system alternatives. This
should be the main objective of product support logistics,
as defined by Barros et al. (2001). Usually, system availabil-
ity is the effectiveness measure and life cycle cost (or total
ownership cost) is the efficiency measure. The solution of
this broader problem — maximize availability subject to
cost constraints or minimize costs subject to availability
constraints — would also include non-LORA issues like
the determination of the spare inventory levels at each sup-
port and operational sites and could be further complicated
by considering the stochastic nature of some inputs, like
failure and maintenance times. Alfredsson (1997) has pro-
posed a model to address this overall problem, using mar-
ginal analysis, but acknowledged that he had to make
many simplifying assumptions in order to circumvent con-
vexity problems. He has also assumed that the maintenance
structure is taken as pre-defined and must consist of two
echelons; one central site, supporting various regional lev-
els which, in turn, support a number of operational sites.
Sleptchenko et al. (2003) have addressed the same problem.
They have used a modification of the VARI-METRIC
 E.S. Brick, E. Uchoa / European Journal of Operational Research 192 (2009) 479–486
procedure (Sherbrooke, 1992), which also relies on mar-
ginal analysis, to obtain near-optimal solutions and had
to make several approximations to avoid problems with
non-convex constraints in the model.
Barros and Riley (2001) have proposed an integer pro-
gramming model for LORA, as well as branch and bound
algorithms to find exact solutions. Nevertheless, Barros &
Riley have assumed a number of simplifying hypotheses,
resulting in a formulation that does not fit very well in real
situations. For instance, the issues of the geographical dis-
tribution of the operation sites or the capacity of the main-
tenance facilities are not considered. In addition, it is
assumed that, if a facility is capable of performing the
repair of a component belonging to a certain indentation
level, then it will be capable to repair all other components
belonging to that same level. Gutin et al. (2005) proved
recently that this model may be solved in polynomial time,
using an algorithm for network flow over a bipartite graph.
This is an indication of the limitations of the Barros &
Riley model, because it shows that even one of the most
basic facility location problems, namely the Simple Plant
Location Problem, which is NP-hard, cannot be repre-
sented in that model. Another integer programming model
for LORA, also less general than the one proposed in this
paper, has been presented by Bousseta (1995).
There are commercial software packages available for
LORA. Examples in North America and Europe are,
respectively, Opus 10 (Systecon AB, 2007) and EDCAS
(Tools for Decision Group, 2007). It is not possible to
determine exactly what models and resolution techniques
are implemented. Probably, the combinatorial part of the
problem, concerning the location of maintenance facilities
and resources, is treated by heuristics.
2. A generic location problem model
This section presents an integer programming formula-
tion for the discrete location of facilities and installation
of resources with limited capacities problem, broader than
the ones already published in the literature, according to
the recent surveys of ReVelle and Eiselt (2005), Klose
and Drexl (2005), ReVelle et al. (2008) and works of Ghi-
ani et al. (2002) and Wu et al. (2006). The next section
describes the LORA problem and show how it can be
reduced to this more general problem.
Define K as the set of demand generating sites and T as a
set of tasks, or specific demand types. The data dtk is the
number of tasks t 2 T, demanded at site k 2 K. Define J
as a set of sites potentially capable to accomplish tasks.
A task may be accomplished by the execution of one of
the possible service actions defined in set A. The data ctkaj
is the cost to accomplish task t, generated at site k, per-
forming the service action a 2 A, in the site j 2 J. The exe-
cution of a service action requires resources belonging to a
set R. The data urta is the capacity of the resource r 2 R,
used to accomplish task t, by the execution of the service
action a. The installation of one unit of resource r in site
481
j costs frj and each installed unit provides the capacity
Crj. The maximum number of units of the resource r that
can be installed in the site j is Mrj.
Define xtkaj as a continuous variable that indicates the
percentage of the demand t, generated in k, that should
be attended by means of the execution of the service action
a in site j. Define yrj as a integer variable representing the
number of units of the resource r to be installed in site j.
The model is presented below.
XXXX XX
Min d tk ctkaj xtkaj þ frj y rj ð1Þ
t2T j2J r2R j2J
k2K a2A
XX
s:t: xtkaj ¼ 1 8t 2 T ; 8k 2 K; ð2Þ
a2A j2J
xtkaj 6 y rj 8t 2 T ; 8k 2 K; 8a 2 A; 8j 2 J ;
8r 2 Rjurta > 0; ð3Þ
XXX
d kt urta xtkaj 6 C rj y rj 8r 2 R; 8j 2 J ; ð4Þ
t2T k2K a2A
0 6 xtkaj 6 1 8t 2 T ; 8k 2 K; 8a 2 A; 8j 2 J ;
ð5Þ
0 6 y rj 6 M rj ; y rj 2 Z 8r 2 R; 8j 2 J : ð6Þ
The objective function is given by the sum of the costs to
execute the service actions, which are proportional to the
demand, and are called variable costs, and the costs to
install the resources at the service sites, which are called
fixed costs (although they may also depend on the demand
in the capacitated problem). Restrictions (2) guarantee that
all generated demand is met by service actions. Restrictions
(3) condition the execution of each possible service action,
in each site, to the installation of at least one unit of the
required resources. Restrictions (4) control the resources
capacities consumption. The following should be noted
regarding the above formulation:
• The case where there is only one kind of resource, one
kind of service action and all Mrj = 1, is the traditional
formulation for the Capacitated Facility Location.
• The case where there is only one type of resource and
one kind of service action, but there are sites with
Mrj > 1, is the problem treated by Ghiani et al. (2002).
• Restrictions (3) already follow logically from the others,
but are known to be very useful to improve the formu-
lation linear relaxation.
• The model supports situations where some resources
may be considered with unlimited capacity, by just
choosing Crj sufficiently high.
• Depending on the situation, it may be desirable to force
the x variables to be binary too. This variant will be
called Uniform Service Action per Origin and per Task
Policy (USAOTP). This policy requires that all demand
of the kind t, originated at site k, be always serviced at
the same site j, with the same kind of service action a.
• Depending on the situation it may be desirable to
choose a unique service action for each t 2 T. This does
not imply that demand generated at different sites k
482 E.S. Brick, E. Uchoa / European Journal of Operational Research 192 (2009) 479–486
must be attended at the same site j. This variant will be
called Uniform Service Action per Task Policy
(USATP) and requires the addition of new variables
xta, t 2 T, a 2 A, and of the following restrictions:
X ertheless, we assume that there are no technical conditions
xta ¼ 18t 2 T ð7Þ
a2A
X sites.
xtkaj 6 xta 8t 2 T ; 8a 2 A; 8k 2 K;
j2J
0 6 xta 6 1; xta 2 Z 8t 2 T ; 8a 2 A:
• Another possibility is to choose a unique service site for
each t 2 T. This variant will be called Uniform Service
Site per Task Policy (USSTP) and requires the addition
of new variables xtj, t 2 T, j 2 J, and of the following
restrictions:
X that t 2 T(q), or such that t 2 T(q2) and q2 2 L(q). The next
xtj ¼ 1 8t 2 T ; ð10Þ
j2J
X are facilities and resources required to perform the neces-
xtkaj 6 xtj 8t 2 T ; 8j 2 J ; 8k 2 K;
a2A
0 6 xtj 6 1; xtj 2 Z 8t 2 T ; 8j 2 J :
In the following section it will be shown that the LORA
problem, considering its variants, may be formulated using
the above model. To represent the situation where some
decisions are not valid, such as where it is not possible to
execute a certain service action a in a specific site j, it
will be necessary to force some variable groups xtkaj to be
zero or to be excluded from the formulation. Similarly,
some restrictions (3) and (4) may be removed to represent
the fact that some service sites j already have unlimited
resources.
3. The LORA model
Let S be the set of all systems to be supported by the
maintenance structure object of the analysis. Let Q(s) be
the set of all repairable components belonging to s 2 S.
The unit cost of component q 2 Q(s) is c(q). These compo-
nents are organized according to a tree structure, using the
criteria contain–contained. Let Q1(s)  Q(s) be the set of
all LRU belonging to s 2 S and Q2(s)  Q(s) be the set of
all SRU belonging to s 2 S. The quantity of LRU q 2 Q1(s)
in the system s 2 S is n(q, s). Q, Q1 and Q2 are, respectively,
the sets of all repairable items, LRU and SRU existing in
the set S.
It is assumed that in a system structure a LRU may con-
tain other LRU and SRU, while a SRU may contain only
other SRU. Given LRU q 2 Q1, let L(q)  Q2 be the set of
all SRU contained in q, and not contained in another LRU
also belonging to q. The quantity of the SRU q2 2 L(q)
contained in LRU q is equal to n(q2, q).
When the system fails, this failure will be due to a LRU
q. This failure may have occurred in SRU q2 2 L(q),
belonging to LRU q, or in one part of this LRU that does
not belong to any SRU. It is assumed that in the sites
where the systems are deployed, there are conditions (such
as human, material and information resources) that make
it possible to identify the LRU with the lowest indentation
level where the failure has occurred and to remove it. Nev-
to repair LRU or to substitute and repair SRU in these
ð8Þ Let T be the set of all failure modes in S. There is a univ-
ocal relation between T and Q so that each failure mode t is
ð9Þ associated with only one q 2 Q. Let T(q)  T be the set of
failure modes t, associated with the component (LRU or
SRU) q 2 Q. Let kt be the failure rate for the failure mode t.
Each occurrence of failure mode t requires an answer
from the support system. The immediate answer is the sub-
stitution of the LRU with the lowest indentation level, in
which the failure has occurred. That is, the LRU q such
step is to dispatch the defective LRU to a site where there
ð11Þ sary maintenance. It is assumed that failure modes do
not occur simultaneously. There are four possible mainte-
ð12Þ nance actions to be considered:
• aD = discard the LRU q;
• aC = repair the LRU q if the failure mode t has occurred
in the LRU q and not in one of its SRU;
• ad = repair the LRU q by substituting the defective SRU
q2, followed by the disposal of SRU q2;
• ac = repair the LRU q by substituting the defective SRU
q2, followed by the repair of SRU q2.
These maintenance actions require the use of different
kinds of resources belonging to the set R (set of required
resources). Each maintenance action a 2 A, in response to
failure mode t 2 T, uses the quantity urta of the resource
r 2 R. Naturally, when a given action for a failure mode
does not need a specific resource, the correspondent quan-
tity will be zero.
The broad productive system, including both technical
and support systems, may be distributed along various geo-
graphical places g 2 G (set of geographical places covered
by the productive process). These places may receive facil-
ities where the technical systems will be installed and oper-
ated or its components may be repaired or discarded, upon
failure. The facilities for repair or disposal may be organic
or owned by third parties.
The subset K of G represents the places where technical
system instances will be installed and operated. The other
sites belonging to G will be able to host facilities for repair
and disposal. They are represented by the set J. In order to
represent the situation where a facility for repair and dis-
posal is located in the same place of an operation facility,
sites belonging to subsets K and J may have the same geo-
graphical coordinates.
Subset J comprehends sites where organic or third par-
ties maintenance facilities may be located. Organic mainte-
nance facilities may be located on sites subset JO  J and
 E.S. Brick, E. Uchoa / European Journal of Operational Research 192 (2009) 479–486
will require the availability of resources to perform the
repair and disposal maintenance actions. Outsourced third
party maintenance facilities may be located on sites subset
JT  J. By hypotheses, these sites already have all the nec-
essary resources to perform the maintenance actions they
are requested. The subset JD  JO comprehends all sites
where only organic maintenance facilities capable of exe-
cuting exclusively LRU disposal maintenance actions can
be located.
The quantity of units of the technical system s 2 S
installed in site k 2 K is represented by n(k, s). These sys-
tems will operate according to different regimes, such as
continuous operation (24 h/7 d), 8 h per business day,
1000 h per annum, etc. Thus, each operation regime defines
an annual quantity of operation hours h(s, k). The demand
for maintenance actions of type t, to be performed in LRU
q of system s, generated at site k, will be a function of the
parameters n(k, s), h(k, s), n(q, s) and kt associated with
components q 2 Q1(s) and of the parameter n(q, q2) associ-
ated with components q2 2 Q2(s)jq2 2 L(q). The annual
average demand for maintenance actions generated at site
k for the failure mode t, in LRU q, such that t 2 T(q2)
and q2 2 L(q), or such that t 2 T(q), are given, respectively,
by (13) e (14):
X
d tk ¼ nðs; kÞ:hðs; kÞ:nðq; sÞ:nðq2 ; qÞ:kt
8s2S
8k 2 K; 8tjt 2 T ðq2 Þ and q2 2 LðqÞ; ð13Þ
X the total demand requires the use of 8000 h of this resource,
d tk ¼ nðs; kÞ:hðs; kÞ:nðq; sÞ:kt
8s2S
8k 2 K; 8tjt 2 T ðqÞ: ð14Þ
Supposing that adequate resources to perform mainte-
nance actions in a certain place exist, meeting the demand
in this location will imply a variable cost proportional to
the size of this demand. This cost will be composed of
two parts: one is the cost to transport the failed LRU
between the operation and maintenance sites and the other,
the direct costs to perform the maintenance actions (LRU
disposal, LRU repair, or LRU repair with SRU disposal or
repair).
The transportation cost, in general, depends on the loca-
tion of the two sites involved, the transportation modal and
on some characteristics of the LRU to be transported
(among which weight, volume, value and dangerousness
are the most important). The cost of the two-way transpor-
tation of LRU q between k and j sites is ctqkj.
The unit cost of a repair action on LRU q, such that
t 2 T(q), is a function of the failure mode t and of the site
j where the maintenance will be executed. This cost is rep-
resented by crtj. The unit cost to substitute the SRU q2 such
that t 2 T(q2) and q2 2 L(q) is cstj. Finally, the unit cost to
dispose of a LRU or a SRU is equal to the unit cost of the
discarded component c(q).
All unit costs considered are at present value, using an
annual discount rate d, for n years of system operation.
The discount factor F(n, d) is given by:
483
X
n
i1
F ðn; dÞ ¼ 1=ð1 þ dÞ : ð15Þ
i¼1
Therefore, the average unit cost of the maintenance
action a, related to failure mode t, in LRU q, such that
t 2 T(q) or t 2 T(q2) and q2 2 L(q), generated at site k
and executed in site j, for a period of n years, discounted
at an annual rate of d, is shown in Table 1.
Meeting the demands at the possible maintenance sites
imply the existence of resources in these places. The costs
of these resources are not directly proportional to the
demand therein serviced.
Some of these are fixed costs, which do not depend at all
(within reasonable limits) on the demand size, such as civil
construction cost of facilities and fixed maintenance costs.
Since these costs depend on site j, these resources r have
been modeled with fixed cost Frj, unlimited capacity Crj,
and maximum quantity per site Mrj = 1. When these
resources are required by some maintenance action, the
parameter urta is arbitrarily set to 1.
Another type of cost, also proportional to the demand
size, but in a different way (because it depends only on
lumped amounts of the demand), corresponds to resources
with limited capacity, which must be installed in discrete
quantities. As an example, suppose that a circuit-board test-
ing equipment may be used in a certain place (due to avail-
ability or man-power limitations) for 3000 h per annum. If
it will be necessary to buy 3 units. In these cases, these
resources may be modeled with unit cost Frj, a limited
capacity Crj, and maximum quantity per site Mrj P 1. The
capacity of resource r, used to perform maintenance action
a, in response to failure mode t, is given by urta.
The installation of resources will be considered only in
sites j 2 JO (those able to receive organic facilities capable
of performing maintenance actions). By hypothesis, sites
j 2 JT, where there are third parties able to execute mainte-
nance actions have all the required resources. It is usual
that unit costs to perform maintenance actions by third
parties are higher.The generic LORA model may be formu-
lated as: Minimize (1), Subject to (2)–(6), where dtk is given
by (13) and (14), ctkaj is given by (16)-(19) and Frj, Crj, Mrj,
Table 1
Maintenance actions costs
Action Description Average discounted unit cost
(ctkaj)
ac LRU repair, with SRU F ðn; dÞ:ðctqkj þ cstj þ crtj Þ ð16Þ
substitution and repair
ad LRU repair, with SRU F ðn; dÞ:ðctqkj þ cstj þ cðq2 ÞÞ ð17Þ
substitution and disposal
aC LRU repair F ðn; dÞ:ðctqkj þ crtj Þ ð18Þ
aD LRU disposal F ðn; dÞ:ððctqkj =2Þ þ cðqÞÞ ð19Þ
484 E.S. Brick, E. Uchoa / European Journal of Operational Research 192 (2009) 479–486

urta are defined hereinabove. In addition, the variables yrj Table 2

and the restrictions (3) and (4) corresponding to places in Problem sizes
JT, are omitted. Since ac, ad and aC type actions cannot Problem jSj jKj jJOj jJTj jQ1j jQ2j jTj jRj
be executed in sites j 2 JD, the corresponding xtkaj variables 1 1 15 4 2 10 14 36 9
must be eliminated. Restrictions (4), corresponding to 2 1 15 8 2 10 14 36 9
resources r with unlimited capacity Crj, must also be 3 2 16 8 2 16 32 74 9
4 3 16 8 2 26 45 113 9
eliminated. 5 4 16 10 3 32 55 126 9
For the Uniform Service Action per Task Policy 6 5 20 15 3 53 100 206 9
(USATP) option, variables and restrictions (7)–(9) must 7 1 23 12 3 53 100 206 9
be added; for the Uniform Service Site per Task Policy 8 6 23 15 3 56 106 215 14
(USSTP) option, variables and restrictions (10)–(12) must 9 6 23 12 3 56 106 215 14
10 7 23 6 1 59 116 256 14
be added; and for the Uniform Service Action per Origin 11 8 23 10 1 66 132 296 14
and per Task Policy (USAOTP), the restriction that all 12 8 23 12 3 66 132 296 20
variables xtkaj must be binary must be added. 13 9 23 12 3 70 140 310 20
14 9 23 3 3 70 140 310 20
4. Computational experiments 15 2 23 20 6 14 22 58 20

The proposed models were tested on 15 problems gener-

ated to be statistically similar to those found in certain Bra-
zilian military and civilian groups of systems sharing the
same maintenance structure. Location decisions are essen-
tial when performing LORA for these systems, since they
are spread over a large continental area, including remote
operation sites in the Amazon jungle. There is always the
question of whether is it better to minimize transportation
costs by opening maintenance facilities closer to the opera-
tion sites or to minimize repair costs by opening only a few
facilities, typically close to industrial centers. There is also
the need of considering possible savings by outsourcing
part of the maintenance, in which case potential outsour-
ced maintenance sites may be located in North America,
Europe or Asia. The sizes of the test problems are shown
in Table 2.
For each such problem we selected a combination of
maintenance policies (USATP, USSTP, USAOTP, or free
policy) and generated the corresponding LORA MIP mod-
els. The lifecycle and the annual discount rate used were,
respectively, 15 years and 6%. The resulting 22 integer pro-
gramming instances were run in a machine with Pentium
IV 3.2 GHz processor and 1 GB of RAM, using CPLEX
9.1 as the mixed-integer programming solver. The results
obtained are shown in Table 3.
Columns CONs, VARs, and NON ZEROS indicate the
number of constraints, variables and non-zero coefficients
in each MIP instance after CPLEX preprocessing. Column
ROOT TIME is the total time spent in root node, before
starting the tree enumeration. This time includes the solu-
tion of the linear relaxation of the model, the addition of

Table 3
Test results
Problem Policy CONs VARs NON ROOT TIME ROOT B&C TOTAL TIMES FINAL
ZEROS (second) GAP (%) NODES (seconds) GAP (%)
1 FREE 18861 2869 57724 5 0.03 107 8 0
2 USAOTP 43748 8468 147728 10 0.04 804 105 0
3 USATP 31740 4851 97359 12 0.05 171 29 0
4 USSTP 101613 17930 316066 109 0.01 3 118 0
5 USATP + USSTP 157084 28081 492512 456 0.02 306 4286 0
6 USATP + USAOTP + USSTP 824998 154180 2814300 3476 0.00 1 3476 0
6 FREE 384582 52189 1193194 1243 0.04 321 2428 0
7 USATP 215712 36229 674990 907 0.01 3 959 0
7 USAOTP 764385 141280 2583225 678 0.05 1088 10000 0.02
8 USAOTP 800316 150079 2717221 1190 0.03 2109 10000 0.02
9 USAOTP 434996 84952 1512508 382 0.03 10550 10000 0.01
10 USAOTP 69553 358164 1205880 415 0.02 2000 3602 0
11 USAOTP 605136 118388 2038324 890 0.02 2400 6934 0
12 USAOTP 644382 128775 2191754 1685 0.03 2000 9585 0
13 USAOTP 817717 163948 2787644 1270 0.04 1748 10000 0.02
14 USAOTP 210612 47109 732018 180 0.00 1 180 0
14 USAOTP + USSTP 210658 47133 732271 112 0.00 1 112 0
14 USAOTP + USATP 242610 59475 833697 514 0.00 1 514 0
14 USATP + USSTP 277207 59545 868708 652 0.00 1 652 0
14 USAOPT + USATP + USSTP 242656 59545 834157 614 0.00 1 614 0
14 FREE 62979 11602 189599 12 0.00 1 12 0
15 USAOPT 202399 46683 711627 556 0.04 9500 8102 0
 E.S. Brick, E. Uchoa / European Journal of Operational Research 192 (2009) 479–486
cuts to strengthen this relaxation and the application of pri-
mal heuristics to find good solutions. Column ROOT GAP
gives the percentage difference between the best solution
found while still at the root and the lower bound given
by the strengthened linear relaxation. Column B&C
NODES is the size of the enumeration tree used by CPLEX
to achieve optimality. Finally, TOTAL TIME is the total
time spent. We set a time limit of 10,000 seconds for each
run. If a proven optimal could not be found within that
time, column FINAL GAP contains the percentage differ-
ence between the best solution ever found and the current
lower bound. When the instance can be solved to optimal-
ity within the time limit the final gap is zero.
We remark that, although solving those instances to
proven optimality may require hours to explore several
hundreds of nodes in the branch-and-cut tree, the CPLEX
solver always found solutions guaranteed to be very close
to the optimal in a few minutes, right after solving the first
linear relaxation. In all cases those solutions had a gap of
less than 0.10%, good enough for most practical purposes.
5. Conclusions
This paper proposed a MIP model for the discrete loca-
tion of facilities and installation of capacitated resources
and showed its applicability to LORA problems. Compu-
tational experiments have shown that quite large problems
can be solved in reasonable times, attesting that the overall
approach is practical. We believe that the proposed model
is more general and realistic than others published previ-
ously. Its use to solve LORA problems presents the follow-
ing desirable characteristics:
1. The input data can be obtained with the use of well
known and widely used logistic support analysis meth-
ods, such as Maintenance Task Analysis (MTA) and
Failure Mode, Effect and Criticality Analysis (FMECA).
2. The input data is very detailed, thus adaptable to many
real situations. For instance: (i) transportation costs
may be defined for each component and for each route,
(ii) variable maintenance costs may be dependent on
each failure mode, maintenance action and maintenance
site, (iii) the costs for the installation of resources in dif-
ferent sites may be different.
3. There is no limitation on the quantity of resources types.
4. It is a true capacitated model. Resources capacities can
be set for each maintenance site. This feature is very use-
ful, for instance, to model situations where different sup-
port sites may work different amounts of hours per day.
5. There are several maintenance service policies to choose
from.
6. For historical or practical reasons many support systems
have been organized in multi-echelon structures. This
kind of structure is arbitrary and constitutes, in fact, a
simplification. When a multi-echelon structure is used,
an ‘‘a priori’’ choice is made about the arrangement of
the support sites, whereas in the proposed model any
485
maintenance site is potentially able to service any failure
mode, using any maintenance action. Consequently, the
number of possible alternatives is larger and this will
lead naturally to cheaper solutions.
7. It can be adapted to handle situations where failure rates
vary with time. For systems with mechanical compo-
nents, operating for long periods of time, the aging effect
may increase the failure rate, with the result that the
demand will also increase with time. Therefore, it may
be desirable to delay the installation of a portion of
the resources, according to the demand growth. It is
possible to adapt the model to this situation, at the cost
of an increase in the number of variables and con-
straints. The solution would be to divide the life cycle
time in P periods, each one with its failure rates. The
decision variables x and y would have a new index
p 2 P. Resources quantities may then vary with the time
periods, depending on the demand generated during
each one.
Nevertheless, the proposed model still has some limita-
tions that may be considered in future works:
• It does not take explicitly into consideration that mainte-
nance decisions affect spares stock levels required to guar-
antee the desired system availability. For instance, it is
possible that the repair of a LRU by its third part man-
ufacturer may take several months, while the same
repair by an organic installation would take only a few
days. In this case, the decision to repair at the manufac-
turer premises will imply in the increase of the number
of spare items to be stocked, in order to keep the same
system availability level. This additional cost is not con-
sidered explicitly in the proposed model. One possibility
would be to estimate those costs using an auxiliary
model to capture the effect of the repair time of each ser-
vice site in the spare stock levels. This solution has been
used by Blanchard and Fabrycky (1998). It implies that
repair times must be defined in advance, before running
the LORA model. However, this does not take into
account the fact that repair times may depend signifi-
cantly on decisions made by the LORA model. For
example, if the total site demand is close to its capacity,
there will be a queue of components waiting for repair,
leading to a repair time larger than assumed.
• It does not consider the stochastic aspects of LORA. The
model relies on average failure rates and does not con-
sider how failures are actually randomly distributed on
time. Similar considerations may be done with respect
to estimating costs by averages. If those (and many
other possible) stochastic aspects are considered to be
critical in a certain application, one would like to have
a model leading to a robust solution over a large set
of scenarios.
Finally, as mentioned in Section 1, it is desirable to
integrate a LORA model within the overall problem of
486 E.S. Brick, E. Uchoa / European Journal of Operational Research 192 (2009) 479–486
selecting the ‘‘best’’ support system for the technical
systems owned by an organization, considering availabil-
ity as the effectiveness measure and life cycle cost as the
efficiency measure. This is a very complex and difficult
problem indeed, as can be attested by the difficulties
pointed out by Alfredsson (1997) and Sleptchenko
et al. (2003). The development of models to solve the full
problem of life cycle cost minimization, subject to
availability restrictions, and over a large set of forecasted
scenarios, may be considered one of the greatest chal-
lenges for researchers of the field in the forthcoming
years.
References
Alfredsson, P., 1997. Optimization of multi-echelon repairable item
inventory systems with simultaneous location of repair facilities.
European Journal of Operational Research 99, 584–595.
Barros, L., Riley, M., 2001. A combinatorial approach to level of
repair analysis. European Journal of Operational Research 129,
242–251.
Barros, L., Riley, M., Brown, D., 2001. Special millennium issue of EJOR:
A global view of industrial logistics. European Journal of Operational
Research 129, 231–234.
Blanchard, B., Fabrycky, W., 1998. Systems Engineering and Analysis.
Prentice-Hall, Upper Saddle River, NJ.
Bousseta, A., 1995. Mathematical tools in cost effectiveness optimization
process. In: Proceedings of the International Conference on Industrial
Logistics (ICIL-95), Ouro Preto (Brazil).
Gutin, G., Rafiey, A., Yeo, A., Tso, M., 2005. Level of repair analysis and
minimum cost homomorphisms of graphs. Lecture Notes in Computer
Science 3521, 427–439.
Ghiani, G., Guerriero, F., Musmanno, R., 2002. The capacitated plant
location problem with multiple facilities in the same site. Computers
and Operations Research 29, 1903–1912.
Klose, A., Drexl, A., 2005. Facility location models for distribution system
design. European Journal of Operational Research 162, 4–29.
MIL-STD-1390 D. Military Standard: Level of Repair Analysis, US Navy.
ReVelle, C.S., Eiselt, H.A., 2005. Location analysis: A synthesis and
survey. European Journal of Operational Research 165, 1–19.
ReVelle, C.S., Eiselt, H.A., Daskin, M.S., 2008. A bibliography for some
fundamental problem categories in discrete location science. European
Journal of Operational Research 184, 817–848.
Sherbrooke, C.C., 1992. Optimal Inventory Modeling of Systems: Multi-
Echelon Techniques. John Wiley& Sons, New York.
Sleptchenko, A., van der Heijden, M.C., van Harten, A., 2003. Trade-off
between inventory and repair capacity in spare part networks. Journal
of the Operations Research Society 54, 263–272.
Systecon AB. Introducing OPUS 10. Stockolm, <http://www.systecon.se/
documents/Introducing_OPUS10.pdf> (accessed in May, 2007).
Tools for Decision Group, 2001. EDCAS.<http://www.tfdg.com/Prod-
ucts/EDCAS/> (accessed in May, 2007).
Wu, L.Y., Zhang, X.S., Zhang, J.L., 2006. Capacitated facility location
problem with general setup cost. Computers and Operations Research
33, 1226–1241.