10

CHAPTER

Maintenance
We have finnaly come to the final chapter of this module, that is maintenance. I hope you
had understood and gained better insights into those chapters that we had covered so far. In
this chapter we will focus on the concept and the importance of maintenance in operations
management. However after going through this chapter you will realize that maintenance is
more than just keeping the machine or equipment in operating condition.

The concept of maintenance is very broad in nature. At home for instance, your mother or
maid maintains the house by keeping the interior and the exterior of the house clean. She
dusts and sweep and mop the floor, do the laundry, to ensure that the entire house is clean
and tidy. The lawn and the garden are well kept and maintained as well. All these are part f
maintenance activities. Even you and I have to perform maintenance by taking care of our
personal hygiene, get enough sleep and eat proper food to ensure that the facilities and
equipment are in operating condition to avoid production interruption.

Chapter Overview

MAINTENANCE

Concept of Maintenance Importance of Maintenance

Type of Maintenance

Breakdown Maintenance
Preventive Maintenance

Managing Maintenance
Table of contents

MAINTENANCE 273

Chapter Overview 273

Learnig Objectives 274

10.1 Introduction 275

10.2 The Concept Of Maintenance 275

10.3 Importance Of Maintenance 276

10.4 Type Of Maintenance 277

Breakdown Maintenance or Repairs 278
Preventive Maintenance Program 278

10.5 Managing Maintenance 279

The Level Of Preventive Maintenance And Breakdown Maintenance. 279
In-house Maintenance and Contract Maintenance. 280
Spare Parts Inventory And Standby Machines. 280

Summary 284

Learnig Objectives
After study this chapter, you should be able to :

Define maintenance
Explain the concept of maintenance
Discuss the importance of maintenance
Describe the types of maintenance activities
Explain the objectives of breakdown maintenance
Explain the objectives of preventive maintenance
Explain the relationship between the breakdown maintenance and preventive
maintenance
Discuss the impact of machines malfunctions on production system
Discuss the costs associated with breakdown maintenance
10.1 Introduction
Maintenance promotes quality that would otherwise be affected if breakdown happen
frequently. In the long run maintenance provides competitive advantage to firms.
Firms that operate on JIT programs, reliability and equipment are essential, without
which the impact would be disastrous if the machine breaks down.

Althrough the subject of maintenance is wise, we will however restrict our discussion
on the maintenance of equipment or production facilitics in an organization. Do you
know what would be the impact on the firms’ competitive position if they do not have
proper maintenance program? What would be the impact on production cost,
capacity, customer satisfactor, employee and customer safety if a machine or
equipment malfunctions?

Given the above brief overview, I’m sure you can now define maintenance.
So what is maintenance ?

Definitions

Maintenance involves all effort of keeping production facilities and equipment in an

operating condition. It can also be defined as activities relating to keeping the entire
production/operations system facilities or specific equipment in the system in
operating condition.

Maintenance is concerned with avoiding or minimizing downtime or to avoid

undesirable result due to system failure.

10.2 The Concept Of Maintenance

Maintenance activities include repairing a specific machine or equipment within the

production system to performing housekeeping, janitorial, window washing, and
painting services. The maintenance activities includes interior facility such as the
restrooms and all the departments within the organization and exterior areas such as
the building, the surrounding areas such as the parking lot, garbage collecting and the
landscaping.

Most organizations have established their own maintenance department whose main
responsibilities may includes activities mentioned earlier. Nowadays it is common for
organizations to subcontract some of these maintenance activities to outside
specialist or service contractors. For example, Universiti Teknologi MARA for
instance, subcontracts the maintenance of its copy machines to companies that
supplies the machines. However, some maintenance activities are performed in
house such as air-conditioning system and overhead projectors used in the
classrooms.
 The most important function of maintenance is to provide system reliability that is to
ensure that a specific machine continues to function for a specified period of time with
minimum chances of breaking down and at minimum cost. This can be achieved
through

i. Increasing repair capabilities or speeding the repair activities to minimize interruption.

When equipment breaks down, production is interrupted. The extent of the
interruption can range for a few hours to days or weeks. Each time when a
breakdown occurs, the main concern is to put back the machine in operating
condition as soon as possible. Therefore by having a capable maintenance personel
or repair facility, the machine or equipment can be resored immediately.

ii. Implementing or impoving preventive maintenance.

Preventive maintenance may reduce the frequency and the severity of machine
failure or malfunctions. Breakdowns could be minimized or a avoided if there is an
effective preventive maintenance program.

10.3 Importance Of Maintenance

Why is maintenance importance ?

Of course, you can think of several reasons. Every organization may it be service or
manufacturing emphasizes the importance of maintenance due to reasons such as :

1. Production/ operations efficiency and effectiveness rely on the proper functioning of

the entire system such as its machines, equipment used to manufacture the
company’s product or to deliver specific service. Maintenance can avoid work
stoppage and ensure that the loss of production time and cost are minimized.

2. Machines malfunction can be catastrophic for a product focused company that

operates on continuous basis. If one of the machines in particular workstations fail to
function, the entire production is interrupted. Unless the machine is restored
immediately, the production activities would be delayed and customers may not
receive their goods on time. Therefore maintenance is important to keep the entire
production system running smoothly with minimum interruption.

3. When a machine malfunctions, it will be left idle and thus cannot be used to produce
goods, as result production capacity is reduced. Thus production target will not be
met which will result in loss of output, subsequently causing difficulty to meet
customers’ demand. If this problem persist the company will eventually loss sales and
profits.

4. Maintenance help reduces production cost such as idle labor cost and overtime cost.
In the case where these is no proper maintenance program, idle labor cost increases
due to frequent breakdown inmachines. Workers may have to work after the regular
hour to catch up with the production schedules. As a result management incur
overtime cost that increase the production cost.
 5. Maintenance also ensures that the entire workplace is a safe place to work for its
employees. Thus accidents at the factory or office can be avoided. Faulty equipment
may start a fire or cause explosion that might endanger the emloyees. As for the
service organization where customer involvement forms part of the service product,
maintenance provides a clean and safe environment for its customers.

6. To establish a competitive edge and to enhance good customer service. Since

maintenance minimizes machines failure, production schedules or target is achieved.
As a result goods or service can be delivered on time. This will lead improved
customer satisfaction and avoid losing market share.

7. To ensure that the product meet the expected quality and specifications. As
discussed in the previous chapter (quality control). Product defects can be attributed
to poor maintenance of machines and production facilities.

8. To reduce the cost of breakdown and repairs. If companies keep equipment in proper
condition, the number of breakdown will occur less often. Thus the cost of repair is
minimized.

 ACTIVITY
Determine other reasons why maintenance is importance ?

 CHICKLIST
I am now able to :
 Difine maintenance
 Explain the concept of maintenance
 Discuss the importance of maintenance

10.4 Type Of Maintenance

There are two type of maintenance

o Breakeven maintenance
o Preventive maintenance

Do you know the difference between these two maintenance activities?

Why firms need to implement both breakdown and preventive maintenance
program? What are the objectives of these maintenance programs?

We are going to discuss each type of maintenance next.

Breakdown Maintenance or Repairs

Repairs or breakdown maintenance involves performing maintenance activities after a

machine breakdown or malfunction has occurred and then must be repaired on an
emergency or priority basis. The breakdown maintenance includes repairs, replacement of
part, or even overhaul to ensure the machines is put back in operating condition. When a
machine malfunction, the production process is usually interrupted that could also affect
product quality and production schedule. Management utmost concerned is to restore the
machine as soon as possible to minimize production interruption.

Preventive Maintenance Program

Preventive maintenance involves performing maintenance activities before the equipment

falls. The main objectives of preventive maintenance are to reduce the frequency and
severity of interruptions to production caused by machine malfunction. Other objectives are o
detect potential failures in the plant or equipment to avoid the associated costs and make
changes or repairs to prevent failure. The associated costs include loss of output, idle
workers, schedule disruptions injuries, damage to other equipment, products or facilities.
Other cost includes the cost of maintaining inventory of spare part, repair tools and
equipment and repair specialist.

Preventive maintenance activities include inpection that can be done on regular basis,
machine adjustments, lubrication, cleaning, and parts replacement. Record keeping on
machine maintenance is important so that preventive maintenance is performed according to
schedule.
Who should do maintenance? What to do? and how often?
Preventive maintenance can be scheduleed according to the availability of maintenance
personnel and during lunch break or non-operating hours to avoid interference with operating
schedules. By performing preventive maintenance the firm can preserve the machine and
extend the life of the machine.

There are two types of preventive maintenance.

Routine maintenance

Routine maintenance can be done on a daily basis. Production operators who work
directly with the machine could perform the routine maintenance instead of repair
specialist. Routine maintenance includes activities such as oiling and cleaning scrap,
which can be done by workers without the background of technical knowledge or
expertise. Thus production workers can perform the simple procedures mentioned
above.

Routine maintenance can be done before the material is fed into the machine or at
the end of the day’s work. By involving workers in the maintenance activities, they will
become more sensitive to potential failure and they develop a sense of ownership
and responsibility towards the machines they operate.
 Inspection
Inspection involves periodic checking of equipment to detect the need for repairs or
replacement of parts before the machine breaks down. Inspection can be done on a
monthly basis or every fortnightly depending on the types or machines requirement.
Sending your car for regular servicing after every .5000-KM of mileage or every three
months which ever occur first is an example of preventive maintenance. These
maintenance activities can either be done by in-house Maintenance or outsite service
contractor.

10.5 Managing Maintenance

How much preventive maintenance and breakdown maintenance to be performed?
What are the amount and the type of equipment to be maintained?
Use in-house maintenance or to establish contract maintenance?

These are some of the issues that the firms need to decide.

The Level Of Preventive Maintenance And Breakdown Maintenance

The operations manager normally faces the challenge of determining the right
amountof maintenance activities to be performed on specific equipment as well as the
entire production facilities. The operations manger must try to strike a balance
between preventive maintenance and breakdown maintenance. The objective is to
achieve the most optimal total maintenance cost. (See figure 10.1 – The relationship
between preventive maintenance and breakdown maintenance)

Figure 10.1 – Relationship between preventive maintenance cost and breakdown maintenance cost.
If these is too much of preventive maintenance, the preventive maintenance cost will
increase. The number of breakdown, however will reduce, this will lead to reduced
breakdown cost. However at a certain point, an increase in preventive maintenance activities
will not reduce the total maintenance cost. In other words, the rate of reduction in total
breakeven cost is less than the increase in the total preventive maintenance cost. As a result
the overall total maintenance cost will start to rise.

On the other hand, if the firm spends too tittle on preventive maintenance program, the
number of breakdown will occur more often which would lead to increase in the total
breakeven cost. Thus the operations manager must try to balance the two types of
maintenance activities activities as shown in the diagram.

No matter how much the preventive maintenance activities performed on the machines or
equipment, the breakdown cost can never reach zero because the equipment will eventually
breakdown due to old age. At this stage it is better for the firm to replace the old machine
with a new one rather than spending money to repair it. This is because it is uneconomical
for the firm to expend maintenance effort that will only result in increased total maitenance
cost.

In-house Maintenance and Contract Maintenance

Use in-house or contract maintenance?

Is it worthwhile to establish in-house maintenance department?

Firm may have to decide what are the maintenance activities that should be done in-house or
contract maintenance. If there were many equipment to maintain, is would be wise for the
firm to set up its own maintenance department. But then they will have to dicide the number
of crew size or technicians to hire. The frequencies of scheduled repairs and the number of
equipment would be determinant factors for the size of repair crew. The firm decide on hiring
an outside maintenance specialist, it may incur extra charges which they have to pay
irrespective of whether there is breakdown or not. The reliability of the specialist and its
reputation is important. This is to encure they can get the repair done immediately with
minimum cost Most large companies utilize both in house well as contract maintenance.

Spare Parts Inventory And Standby Machines.

What is the level of spare parts inventory?

Standby Equipment, is it necessary?

The firm must maintain a certain level of spare part inventory to ensure that the repairs can
be done immediately. The cost of maintaining these stock of spare part is the same as the
cost of inventory discussed in Chapter 7. Some companies invest in standby equipment to
minimize production interruptions. How is this possible? When equipment break down, the
standby equipment will be used, while the malfunctioned machine undergoes repairs. The
main disadvantage of standby equipment is that the machine will be left idle during other
time. In short, the standby equipment will be under utilized.
What would be other maintenance issues beside those that have already been discrussed?

Investigate the maintenance activities performed in a service or manufacturing organization.

Find out whether the organization, which you had selected, perform the preventive
maintenance and breakdown maintenance? How often PM is done who perform the
maintenance activities?

Now lets consider the following example.

Example 10.1
Machine ‘XXX’ breakdown frequently causing interruptions in manufacturing activities.
Each breakdown cost RM120. With each breakdown a component ‘ZEE’ will have to
be replaced in order to restore the machine. The maintenance department has decide
to perform inspection on this machine to reduce breakdowns. Each inspection cost
RM60. Following this an experiment has been caried out and relevent information has
been gathererd. Component ‘ZEE’ costs RM30 each.

Number of Number of Number of

inspections per component ‘ZEE’ breakdowns per
month replaced after month
inspection
1 0 0 20
2 1 2 11
3 2 4 9
4 3 7 5
5 6 9 4
6 9 12 2

Determine the most cost effective inspection schedule that would be followed by the
maintenance department

Solution

Step.1

First you have to determine the cost of component ZEE replaced for each inspection
option. For example the cost of component for alternative 1 is zero because there
was no component replaced. (0 x RM30) = 0
Step.2

Find the cost of breakdown for each inspection option 1.there is no inspection,thus
the inspection cost is zero(0).(0xRM60)=0

Step.3

Find the cost of breakdown for each inspection option.for example the cost of
breakdown for option 1 is (20 x RM120) = RM2,400

Step.4
find the total maintenance cost for each inspection option

Total maintenance cost = cost of replaced component + cost

of inspection + cost of breakdown

For example,total maintenance cost for alternative 1 =RM2400 (RM0 + RM0 +

RM2400)

(1) (2) (3) (4)

Option No. of inspection Cost of inspection No. of component
per month (RM) ZEE replaced
1 0 0 x 60 = 0 0
2 1 1 x 60 = 60 2
3 3 3 x 60 = 180 4
4 5 5 x 60 =300 7
5 7 7 x 60 = 420 9
6 10 10 x 60 = 600 13

(5) (6) (7) (8)

Cost of component No. of break down Cost of inspection Total cost of
replaced (RM) per month (RM) Maintenance (RM)
0 x 30 =0 20 20 x 120 = 2,400 2,400
2 x 30 = 60 11 11 x 120 = 1,320 1,440
4 x 30 = 120 9 9 x 120 = 1,080 1,380
7 x 30 = 210 5 5 x 120 = 600 1,110
9 x 30 = 270 4 4 x 120 = 480 1,170
13 x 30 = 390 2 2 x 120 = 240 1,230

The most economical inspection option is option 4 that is 5 inspections per month
because total maintenance cost is minimum at RM1,110.

Notice that the total maintenance cost will start to increase when the inspection
increases to 9 times and above. (See Figure 10.1 to understand the cost behavior)
Now, let’s consider another example.

Example 10.2
Sportmart Inc. has kept records of breakdowns on its carding machines for a 300
days working day per years as shown :

Number of breakdowns Frequency (days)

0 40
1 150
3 70
4 30
5 10

The firm estimates that each breakdown costs RM65 and it is considering adopting a
preventive maintenance program that would cost RM20 per day and limit the number
of breakdowns to an average of one (1) per day. What is the expected annual saving
from the preventive maintenance program, if any?

Solution

Step.1

Convert the frequency into probability to determine the expected number of

breakdown occur per day as shown below.

No. of breakdown Frequency (days) Probability Expected number

of breakdown per
day
40 40/300 = 0.13 0 x 0.13 = 0
3 150 150/300 = 0.50 1 x 0.50 = 0.50
4 70 70/300 = 0.23 3 x 0.23 = 0.69
5 30 30/300 = 0.10 4 x 0.10 = 0.40
10 10/300 = 0.13 5 x 0.03 = 0.15
Total : 300 days Total : 1.74 times

Step.2
Determine the cost of breakdown per

= Number of breakdown occuring per day x cost of per each breakdown

= 1.74 x RM65
= RM113.10

Therefore breakdown cost per year = RM113.10 x 300 days = RM33,930

 Step.3
Determine the cost of preventive maintenace (RM)

= Cost of preventive maintenance program + cost of breakdown

= Cost of PM/day + cost of breakdown / day = RM20 / 1 x RM65
= RM85 per day

Therefore cost of preventive maintenance program per year

= RM85 x 300 days
= RM25,500

Therefore Sportmart Inc. should adopt the preventive maintenance program

beccause it is less expensive. The annual cost saving per year is RM8,430
(RM33,930 – RM25,500)

Therefore cost of preventive maintenance program per year

= RM85 x 300 days
= RM25,500

Therefore Sportmart Icn. Should adopt the preventive maintenance program because
it is less expensive. The annual cost saving per year is RM8,430 (RM33,930 –
RM25,500)

Summary
 Maintenance relates to the activities of keeping the production facilities and
equipment in operating condition.
 There are two types of maintenance activities. They are preventive maintenance and
repair or breakdown maintenance.
 Preventive maintenance involves the activities of lubricating, adjustment and
replacement of parts before breakdown occurs.
 Breakdown maintenance refers to maintenance refers to maintenance activities such
as repairs, carried out only after before breakdown occurs.
 Maintenance activities are essential due to several reasons. Some of which are to
establish competitive advantage, promote quality of goods, enhance customer
satisfaction , worker and emloyee satety, minimize production interference as well as
to minimize the cost of breakdown and other costs associated with breakdown.
 The challenge faces the operations manager is to balance the preventive
maintenance cost and breakdown cost so that the most optimum maintenance cost is
achieve.
 CHECKLIST
I am now able to :
 Describe the types of maintenance activities

 Expain the objectives of breakdown maintenence

 Explain the objectives of preventive maintenance

 Explain the relationship between the breakdown maintenance and preventive

maintenance

 Discuss the impact of machines malfunctions on production system

 Discuss the costs associated with breakdownmaintenance

Self Test

1. In order to reduce the cost of maintenance, GX Corp. Is examining its inspection

schedules performed on its equipment. The result of a few inspection alternatives are
as follows :

Number of inspection per Number of breakdowns Number of parts replaced

month after inspection
0 15 0
2 8 4
4 6 9
6 1 14

Various component parts that are replaced costs on the average of RM30 per unit,
while breakdown costs about RM200. The cost of inspection is RM80.
Determine the most economical alternative.
STUDY QUESTIONS

1. Discuss the relationship between the two types of maintenance activities with the aid
of a grap.

2. a. What is maintenance?
b. State at least three reasons why maintenance is important in production.

3. Discuss the types of costs associated with breakdown maintenance.

4. Briefly explain the two types of maintenance.

5. Discuss the three objectives of maintenance.

6. Explain the cost involved in maintenance activities.

7. Differentiate between breakdown maintenance from preventive maintenance.

8. Sometime performing preventive maintenance is an expensive undertaking. Explain

why

9. a. Why is maintenance required in a production sysytem?

b. Describe the types of maintenance available.

10. Production facilities must be maintained to the highest reliability possible. Facilities
breakdown creates many problems. Explain four.

11. Jaya Tuition Centre has experienced the following number of air conditioning system
breakdowns per month for the past three years.

Number of breakdowns per Number of months the

month breakdowns occured
0 3
1 7
2 12
3 9
4 5

The average cost of each breakdown is RM300. A service contractor has offered to
perform preventive maintenance for the tuition centre at a cost of RM500 per month.
No contractor guarantees to limit the breakdown to an average of one breakdown per
month. No charge will be made for any breakdowns exceeding this limit. Determine
whether the preventive maintenance contract or the current breakdown policy is more
favorable based on cost effectiveness.