Optimum PM and Reliability Centred Spares

Reliability improvement through
Preventive Maintenance and Optimal

Spares Stocking Policies
Ali Zuashkiani, PhD

Director of Educational Programs
Certified RCM II Practitioner
Center for Maintenance Optimization and Reliability
Engineering
University of Toronto
© A.K.S. JARDINE
About the instructor
• Ali Zuashkiani, PhD, CRL, CMRP is CEO of PAMCo, a Canadian Consulting Company with
projects across the globe. Ali is a graduate of Harvard Kennedy School of Policy, Said
Business School of Oxford, and business executive programs of WITS Business School
(South Africa), and INCAE business school (Costa Rica) and holds a PhD from the
University of Toronto. He has been Director of Educational Programs at C-MORE for 13
years.
• Ali has more than 20 years of practical experience combined with scientific rigour in
optimizing asset management decisions in more than 200 plants in 30+ countries. His
consulting endeavours include numerous Life Cycle Costing management projects for
utility and gas distribution companies in North America, RCM implementation projects
in power plants, oil and gas companies, and the electricity distribution industry, and
assignments dealing with asset management practices in 85 plants in the Middle East
and South America.
• Ali is the author of Expert Knowledge Based Reliability Models and a frequent global
speaker on a range of topics in asset management. He has been Chair of the
International Physical Asset Management Conference for the last 14 years. Ali was
named by the Asia Society as one of the world’s most dynamic young leaders in 2008
and was recognized by the World Economic Forum as a Young Global Leader of 2013.
© A.K.S. JARDINE 2
Component Replacement
Decisions
© A.K.S. JARDINE
Maintenance Optimization
Optimizing Equipment Maintenance and Replacement Decisions
Component Inspection Capital Equipment Resource

Replacement Procedures Replacement Requirements
Maintenance Management System (CMMS/EAM/ERP)
© A.K.S. JARDINE 4
Making Systems more Reliable
through Component Replacement
© A.K.S. JARDINE
Class Example
Air filter change:

Cr = $20 Km / month driven = 2000 Gas cost = $0.75/litre
Assuming 15 km/liter when new, then month 1 cost =
$100.00. Operation costs for the months 1-4 are
summarized in below table. When is the best time to
replace the air filter?
t (month) c (t)
1 100
2 105
3 110
4 112
© A.K.S. JARDINE 6
Short–Term Deterministic Replacement
Cold air Hot flue gases
Air heater
Soot deposits
steam
Boiler
Hot air Fuel
© A.K.S. JARDINE 7
Short–Term Deterministic Replacement
$/lb 1.2
Steam
Generated 1
0.8
0.6
0.4
0.2
tr
0
time
Where on the increasing operating cost curve is it economically

justifiable to make a replacement (that is, clean the air heater) ?
© A.K.S. JARDINE 8
Optimization Problem
Cost / unit time

1.2
Total cost
1
0.8
0.6 Operating cost (flue)
0.4
0.2
Replacement cost
(cleaning cost)
0
tr
Optimal tr
tr – interval between replacement.
© A.K.S. JARDINE 9
Example
Air filter change:

Cr = $20 Km / month driven = 2000 Gas cost = $0.75/litre
Assuming 15 km/litre when new, then month 1 cost = $100.00
t(month) c(t) C(t)

1 100 120
2 105 (20+100+105)/2=112.5
3 110 (20+100+105+110)/3=111.7
4 112 111.75
© A.K.S. JARDINE 10
Example
Therefore replace at end of month three, since:
Cost ($)/month
120 111.75
112.5
111.67
0 1 2 3 4
t (month)
Class Example
GAS METER PROBLEM
A gas meter costs 120 USD to replace (a new gas meter costs $
50 and its installation costs $70). The company does the
replacement surveys every 5 years.
For the first 10 years the meter works fine and measures gas
consumption very accurately. On average, from year 10 to 15 it
underestimates gas consumption by $2 per year which would be
10 dollars over the 5 year period of 10-15.
Over the period of 15-20 years of age a gas meter underestimate

gas consumption by $4 per year. In the period of 20-25 years of
age it underestimates gas consumption by $6 per year and after
age 25 till age 30 it underestimates gas consumptions by $8 per
year. What is the best time to replace a gas meter?
(Note that a gas meter replacement age can be a multiple of 5

years which means it can be replaced at ages: 5, 10, 15, 20, 25,
30 only) © A.K.S. JARDINE
For Preventive Replacement
Cost minimization
Check two conditions:
1. Total cost of a failure replacement is
greater than total cost of a preventive
replacement
2. Wear-out effect occurring
For Preventive Replacement
Availability maximization/downtime
minimization
Check two conditions:
1. Total outage (downtime) of a failure
replacement is greater than total
outage (downtime) of a preventive
replacement
2. Wear-out effect occurring
RCM Methodology Logic
What is Age?
Time-Based Discard
• Operating hours
• Calendar time
• Cycles
– Operating
– Launch
Reliability Centered Maintenance View
Items are replaced at specified frequencies regardless of their
condition at the time
Replace at fixed interval regardless of condition
Scheduled Discard Tasks
These tasks resolve age related failures

© A.K.S. JARDINE
Adopted from RCM II book by John Moubray
Preventive Maintenance
If a group of similar components is subjected
Initial State to similar stresses over a period of time,
they can be expected to reach a
failed state at about the same age
Number of failures
Asset condition
Age End State

© A.K.S. JARDINE
Preventive Maintenance
If we know the minimum age at which any one
Initial State of a group of items is likely to reach a failed
state we can prevent most of the failures by
restoring or discarding the items before they
reach this age (Usually called life or useful
life)
Number of failures
Asset condition
Age End State

© A.K.S. JARDINE
Number of
Conditional Probability of Failure
A failure frequency curve that looks like

failures
this
Age
Probability of Failure
corresponds to a conditional
Conditional
probability of
failure curve that looks like this
Age
© A.K.S. JARDINE
A scheduled discard task is technically feasible

if there is an age at which there is a rapid
increase in the conditional probability of failure
Most items will survive to this point

Conditional
Age
© A.K.S. JARDINE
A scheduled discard task is technically feasible if there is an age at
which there is a rapid increase in the conditional probability of
failure
▪ If most of the items survive to this age
(unless the failure has safety or environmental consequences,
in which case all* the items must survive to this age)
* By all we mean that the

conditional probability of
Conditional
failure must be below the

maximum tolerable level.
Age
© A.K.S. JARDINE
Factors that Influence Tolerance
Regarding Safety
In any one year, what probability do you tolerate of being killed by
any event in each situation?
?
I have no control and no
choice about exposure (off-site
exposure to industrial accident)
?
I believe I have no control but
I have some choice about
exposure (in a passenger plane)
?
I believe I have some control
and have some choice about
exposure (at work)
?
I believe I am in control
and I have complete choice
(in my car or home workshop) 10-8 10-7 10-6 10-5 10-4 10-3
Factors that Influence Tolerance
Regarding Safety
In any one year, what probability do you tolerate of being killed by
any event in each situation?
?
I have no control and no
choice about exposure (off-site
exposure to industrial accident)
?
I believe I have no control but
I have some choice about Intolerable
exposure (in a passenger plane)
?
I believe I have some control
and have some choice about
exposure (at work)
Tolerable
?
I believe I am in control
and I have complete choice
(in my car or home workshop)
10-8 10-7 10-6 10-5 10-4 10-3
Frequency: Scheduled Discard Tasks
The frequency of scheduled restoration and scheduled discard
tasks is governed by the "life" of the item (in other words, the age
at which there is a rapid increase in the conditional probability of
failure)...
Conditional
Age
© A.K.S. JARDINE
Probability of Dying at Work During One Year
• North Sea Fishermen: 1/1000
• Steel Industry: 1/10,000
• Light Industry: 1/100,000
• Office Workers: 1/1,000,000
Conditional Probability of Failure:
Reality
Preventive Replacement Cost Conflicts
Optimal Replacement Time

Total Cost Per Week, C (tp)
$/Week
Failure Replacement
Cost/Week
Preventive Replacement
Cost/Week
tp
Optimal Value of tp
Constant Interval Replacement Policy
Cf Cf
New
Item Cp Cp Cp Cp
tp tp tp tp t
Construction of Model
Cp: total cost of a preventive replacement

[labour, parts, outage cost, etc.]
Cf: total cost of a failure replacement.
f(t): p.d.f. of failure times.
C(tp): total cost per unit time for preventive

replacement at intervals of length tp, plus
failure replacements as required.
Failure causes downtime -
But what is downtime?
T1 T2 T3 T4 T5 T6 T7 T8 T9
Production rate
12
10
0
1
6
11
16
21
26
31
36
41
46
51
56
61
66
71
76
81
86
91
96
Get parts,
start repair Full production rate
Diagnose
Complete test,
Equipment available handover to production
Maintenance arrives
Complete repair, start test
Call to Maintenance
First sign of performance degradation
What is downtime? Who’s asking???
T1 T2 T3 T4 T5 T6 T7 T8 T9
Production rate
12
10 Executive
8
6
Production
4
2
Maintenance
0
1
6
11
16
21
26
31
36
41
46
51
56
61
66
71
76
81
86
91
96
Get parts,
start repair Full production rate
Diagnose
Complete test,
Equipment available handover to production
Maintenance arrives
Complete repair, start test
Call to Maintenance
First sign of performance degradation
We have:
Cf Cf Cp
tp
One cycle
Expected cost / cycle Cp + H(tp)Cf

C(tp) = =
Cycle length tp
Where H(tp) = expected number of renewals in interval (0,tp)
Age Age-based Replacement Policy
Cf Cf
New
Item Cp Cp Cp
tp tp tp t
Optimal Preventive Replacement Age
of Equipment Subject to Breakdown
Failure Failure
replacement replacement
Preventive Preventive
replacement replacement
tp tp
0 Time
Determination of Optimal Preventive
Replacement Age
Construction of model:
Cp, Cf & f(t) as before.

There are two possible cycles:
Cp Cf
0 tp 0 M(tp)
GOOD FAILED
CYCLE CYCLE
Determination of Optimal Preventive
Replacement Age
Construction of model:
C(tp) = total cost / unit time
when preventive replacement occur at
age tp.
Expected cost / cycle

C(tp) =
Expected cycle length
Cp * R(tp) + Cf * [ 1 – R(tp) ]
C(tp) =
tp * R(tp) + M(tp) * [1 – R(tp)]
A Primer on Statistics
© A.K.S. JARDINE
Weibull Distribution

 -1  t 
  t  - 
è 
 : shape parameter
f (t ) =   
 è  
e : characteristic life
f(t) 60
=1/2 (Hyperexponential)
50
=1 (Exponential)
40
=2 (Rayleigh)
30
=3.5 (Normal)
20
10
0
© A.K.S. JARDINE
t 39
Hazard Rate [h(t)]
For Weibull distribution:
h(t)
β>1
β =1
β <1
time
Summary
f(t) 1
0.9
0.8 f(t)
0.7
0.6
0.5
0.4
F(t)
0.3 R(t)
0.2
0.1
0
time
t
F(t) + R(t) = 1.0
Hazard rate [h(t)]
This is a conditional probability, with h(t)δt being the

probability that an item fails during the interval δt,
given that it has survived to time t.
f(t)
h(t) =
1 – F(t)
h(t) = f(t) / R(t)
System Hazard Function
Equipment Life Periods
Infant
Mortality Useful Life Wearout
Hazard
function
Overall Life
Characteristic Curve
Stress Related
Failures
Quality Wearout
Failures Failures
Time
Note:
Age-based policy is cheaper than the interval

policy but disadvantage is:
- age-based policy is more “difficult”

to implement.
- need to keep a record of component age.
- need to reschedule.
Sugar Refinery Centrifuge Case
Wet Sugar
Sugar Refinery
Centrifuge
Dry Sugar
36 Problems Top
6 Analyzed 5
Months Data
Failure frequency: cloth interval
CLASS CUMULATIVE CLASS CUMULATIVE
INTERVAL FREQUENCY RELATIVE INTERVAL FREQUENCY RELATIVE
(weeks) FREQUENCY (%) (weeks) FREQUENCY (%)
0 < 2 24 10.5 26 < 28 4 86.9
2 < 4 36 26.2 28 < 30 1 87.3
4 < 6 27 38.0 30 < 32 4 89.1
6 < 8 23 48.0 32 < 34 4 90.8
8 < 10 15 54.6 34 < 36 5 93.1
10 < 12 9 58.5 36 < 38 2 93.9
12 < 14 12 63.8 38 < 40 2 94.8
14 < 16 11 68.6 40 < 42 2 95.6
16 < 18 13 74.2 42 < 44 2 96.5
18 < 20 4 76.0 44 < 46 2 97.4
20 < 22 12 81.2 50 < 52 4 99.1
22 < 24 5 83.4 56 < 58 1 99.6
24 < 26 4 85.2 76 < 78 1 100.0
TOTAL: 229
Weibull Analysis
© A.K.S. JARDINE
2-Cycle Weibull Paper
Estimation of 2.4
Parameters 720 830
0
Minimum Life, 
Shape Factor, 
Characteristic Life, 
Mean Life, 
Median Life
Bq Life
Characteristic Life
f(t)
 = 2.4
63.2%
 = 830 time
Mean Life
f(t)
 = 2.4
52.7%
 = 720 time
Median Life
f(t)
 = 2.4
50%
time
B50 life = 700
Maintenance Management
Parameter Estimation for Cloth Replacement
Estimation point Cloth Replacement 229

1
13 13
0
β =1
η estimator
Perpendicular
μ=η=13
η=13
13
Bearing Replacement
Historical Data
12 25 9 13 19
Shortest Time : 9 weeks

Longest time: 25 weeks To-day
Then: Establish risk of bearing failing as it ages
Failure Distribution
Bearing Failure Distribution
0.06
f(t) 0.05
0.04
0.03
0.02
0.01
0
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35
Time
The Best Time
• Risk curve
• Economics
(Cf & Cp)
• Blend to
establish the
optimal tp
PUMP FAILURE DATA
RUNNING SUSPENSION
TIME TO OR
FAILURE CENSORED
(MONTHS) TIME
3
6 6
9
 MEAN LIFE = ? MONTHS

PUMP FAILURE DATA
1 FAILURE
2
3
10
Testing Time (10 weeks)
4 F + 6 Suspensions
Source: AHC Tsang
PUMP FAILURE DATA
NEW
P.R P.R. P.R. F.R. F.R. P.R. P.R. F.R. P.R.
s S S F F S S F S
        
3F + 6S
Failure Suspension (or
censored
observation)
Life-time distribution of water pumps
MEAN TIME
TO FAILURE
MILES x 103
0 50 100 150 200 250
MEAN = 85,000 MILES
T-33 Silver Star Aircraft
T-33 Silver Star Aircraft
The T33 aircraft engine is supplied with fuel provided by two fuel pumps (upper and lower).
The fuel system design is such that either pump can provide the necessary fuel pressure and
quantity to operate the engine satisfactorily. That is, the system is redundant and the failure of
a pump is not a catastrophic event.
The decision to be arrived at is: Should the pump be removed after “x” hours and overhauled
and relifed, or should we repair/overhaul it after failure only?
Failure Data
Collected over a 2-year period. Censored items represent a “snapshot” of all pumps still
operating successfully on one specific day.
Interval Failures Censored Items
(Hours) Upper Lower Upper Lower
0 – 200 1 2 7 5
200 – 400 5 1 6 5
400 – 600 10 1 5 1
600 – 800 4 1 4 10
800 – 1000 1 1 6 3
1000 – 1200 6 1 9 3
1200 – 1400 2 1 10 6
1400 – 1600 2 1 0 4
1600 – 1800 4 2 0 4
Fuel Pump Failures
Estimation point
82
Endpoints of Intervals 2.25
1170 1320
̭
0
β =2.25
Perpendicular
η estimator
̭
η=1320 hours
13
CATERPILLAR D10N Track-Type Tractor
Steering Clutch, L.H.
(from a group of 6 CAT D10 Dozers)
MG707 Failure Replacement
7979 h 2027 h 9671 h
New Today
Failure intervals (F) 7979 h, 2027 h

Suspension interval (S) 9671 h
Assume Clutch re-built to “as new” condition
(assumption can be checked)
Similar data obtained for 5 other

dozers F=7, S=6, Sample Size = 13
Statistical Analysis of Failure Data

From Weibull analysis: MTTF = 6500 h  = 1.79
Cost Data
CP = $5640 Labour: 16 * $40/h = $ 640
Parts 2600
Vehicle off the road (VOR)
(8 h * $300/h) = 2400
$ 5640
Cf = $7160 Labour: 24 * $40/h = $ 960

Parts 2600
VOR (12 h * $300/h) = 3600
$ 7160
Cheapest Policy: Replace only on Failure (R-o-o-F) @ $1.10/hr
Remarks: L.H. Steering Clutch
A run-to-failure policy was a surprising

conclusion since the clutch was exhibiting
wearout characteristics. However, the
economic considerations did not justify
preventive replacement according to a fixed-
time maintenance policy.
CP Rail
A SUCCESS STORY IN THE ANALYSIS OF
FAILURE DATA: CP RAIL
COMPONENT POWER TRACTION TURBO-

ASSEMBLY MOTOR CHARGER
ALTERNATIVES • REPLACE
WITH NEW MAJOR SEND TO GM
• WASH & OVERHAUL FOR REBUILD
WEAR
• OVERHAUL
FORMER WASH & WEAR OVERHAUL REBUILD

POLICY AT 5 YRS AT 5 YRS AT 2 YRS
NEW OVERHAUL RUN TO RUN TO

POLICY AT 4 YRS FAILURE FAILURE
SAVING $ 410,000/YR
$$>>4000,000/YR
400,000/YR $$ >>5000,000/YR
500,000/YR
GRAND BENEFIT: > $ 1,310,000/YR

Optimum Preventive Replacement of Cat
3524B Engines
ABC currently operates a fleet of 13 CAT
797A Haul Trucks at their Oil Sands facility
at Ft McMurray in Alberta. All of these
machines are powered by CAT 3524 Diesel
Engines, which have been experienced
failures on different systems. Current Part
Contract expects 18000 GOH for Engine
Change-Out. The propose of this analysis is
to assess the optimal engine replacement
time based on ages and costs by using
available data
Optimum Policy
Optimum policy is to
replace the engines
every 7000 hours.
Expected savings for
the whole fleet of 13
trucks compared to the
OEM recommended
replacement time of
18000 hours:
$40,000,000 per
year
Spare Parts Provisioning: Slow-
moving Spares
72
Repairable Spares
System
Stock
OUT OF STOCK
Repair Shop
73
73
Criteria for Decision
Making
1.Instant reliability (service level)

2.Interval reliability
3.Cost minimization
4.(Process) Availability
74
74
Conveyor Systems: Electric Motors (Table 2.12, Page 80)
Number of motors 62
Scenario
Planning Horizon 1825 Days (5 years)
Reliability and MTBRemovals 3000 Days (8 years)
Maintainability MTTRepair 80 Days
Cost of spare motor $15,000
Value of unused spare $10,000
Cost Cost of emergency spare $75,000
Downtime cost $1000/day
Holding cost $4.11/day
QUESTION: HOW MANY SPARE PARTS TO STOCK?
75
75
Results: Repairable Motors
• Instant reliability: 95% reliability requires 4 spares

• Interval reliability: 95% reliability requires 7 spares
• Cost minimization: requires 6 spares.
• Availability of 99%: requires 2 spares.
76
76
Optimum Number of Capital
Spares-TFT Pumps
Number of Pumps 6
3 Barges on Sand Dump 8
MTBremovals (days) 456.25
MTTRepair (days) 14
Cost of Spare Pump $110,000.00
Down time cost ($/day) $125,000.00
Holding Cost ($/day) $33.15
77
Optimum Number of Capital
Spares-TFT Pumps
Total Annual Costs

$800,000
No. of Spares Annual Cost Reliability
$700,000
$600,000
0 $ 8,154,100 97.02% Most economical
$500,000 no. of spare pumps
1 $ 724,525 99.74% $400,000

$300,000
2 $ 66,832 99.98% $200,000
$100,000
3 $ 38,216 100.00% $-
1 2 3 4 5 6
No. of spare pumps
4 $ 48,399 100.00%
5 $ 60,517 100.00%
78
Thank You
Email me at:
ali.zuashkiani@utoronto.ca

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Reliability improvement through

Preventive Maintenance and Optimal

Ali Zuashkiani, PhD

Optimizing Equipment Maintenance and Replacement Decisions

Component Inspection Capital Equipment Resource

Maintenance Management System (CMMS/EAM/ERP)

Air filter change:

Cold air Hot flue gases

Hot air Fuel

Where on the increasing operating cost curve is it economically

Cost / unit time

0.6 Operating cost (flue)

Air filter change:

t(month) c(t) C(t)

Therefore replace at end of month three, since:

Over the period of 15-20 years of age a gas meter underestimate

(Note that a gas meter replacement age can be a multiple of 5

Replace at fixed interval regardless of condition

Scheduled Discard Tasks

These tasks resolve age related failures

Age End State

Age End State

A failure frequency curve that looks like

A scheduled discard task is technically feasible

Most items will survive to this point

* By all we mean that the

failure must be below the

• North Sea Fishermen: 1/1000

• Steel Industry: 1/10,000

• Light Industry: 1/100,000

• Office Workers: 1/1,000,000

Optimal Replacement Time

Cp: total cost of a preventive replacement

Cf: total cost of a failure replacement.

f(t): p.d.f. of failure times.

C(tp): total cost per unit time for preventive

Expected cost / cycle Cp + H(tp)Cf

Where H(tp) = expected number of renewals in interval (0,tp)

Cp, Cf & f(t) as before.

Expected cost / cycle

For Weibull distribution:

This is a conditional probability, with h(t)δt being the

h(t) = f(t) / R(t)

Age-based policy is cheaper than the interval

- age-based policy is more “difficult”

- need to keep a record of component age.

Estimation point Cloth Replacement 229

Shortest Time : 9 weeks

Then: Establish risk of bearing failing as it ages

Bearing Failure Distribution

 MEAN LIFE = ? MONTHS

MG707 Failure Replacement

7979 h 2027 h 9671 h

Failure intervals (F) 7979 h, 2027 h

Similar data obtained for 5 other

Statistical Analysis of Failure Data

Cf = $7160 Labour: 24 * $40/h = $ 960

A run-to-failure policy was a surprising

COMPONENT POWER TRACTION TURBO-

FORMER WASH & WEAR OVERHAUL REBUILD

NEW OVERHAUL RUN TO RUN TO

GRAND BENEFIT: > $ 1,310,000/YR

1.Instant reliability (service level)

QUESTION: HOW MANY SPARE PARTS TO STOCK?