Effect of preventive maintenance on supply chains with one producer and multiple newsvendors

It is well-known that the production decisions are influenced by the state of the production process. Therefore, the process must be maintained in top operating conditions through adequate maintenance programmes. A supply chain with one producer and multiple newsvendors is considered in this article. The production process in this supply chain is assumed to be imperfect in a sense that it may fail at any point in time during the production run. In the supply chain under consideration, if the production process fails, failure maintenance (FM) is conducted which brings the process to as-bad-as-old conditions. Regardless of the number of failures that have already occurred and after a fixed interval of time, the process undergoes preventive maintenance (PM) which brings the process to as-good-as-new conditions. The objective of the model is to determine the optimal production and maintenance schedules that maximise expected total profit of the supply chain. The proposed model is general in a sense that it is not specific to certain sector or supply chain. A closed form solution is obtained and numerical analysis is conducted on key parameters of the model. Moreover, the model is solved using diverse input data; the results show similar trends in all cases.