Master IEOR

UE6 – PERFORMANCE EVALUATION

January 2019
Part 1 - 1h30

All supporting documents and calculator allowed

Penalty applied to students with identical arguments and identical mistakes

Problem 1: Preventive maintenance and discrete time Markov chains.

Consider a failure-prone machine. At the beginning of each time period t, the machine is of age n which is
equal to the number of consecutive periods without failure. The machine can fail and the failure rate depends
on the age. The failure of the machine during a period t induces a repair cost Cr = 2000€ and the machine is
of age 0 at the beginning of the next period t+1. If the machine is of age n at beginning of period t and it does
not fail, then it is of age n+1 at the beginning of period t+1. The failure rate (i.e. probability of failure) of the
machine is as follows:

age 0 1 2 3 4
failure rate 0 0 0.25 0.80 1

Your tasks:
a) (15%) Propose a Markov chain model of the age of the machine by explaining the meaning of states and
transition;
b) (20%) Determine the steady state distribution with justifications of its existence, the balance equations
and details of different steps of your computation;
c) (15%) Determine the failure frequency of the machine and its maintenance cost per period.

(50%) In view of the above results, the company considers the introduction of preventive maintenance
(PM). At the beginning of each period t, it is possible to perform a PM of cost Cp = 300€ which brings
immediately the machine to a new state, i.e. of age 0 at the beginning of period t but after the PM.

You are asked to repeat steps a)-b) and determine total corrective and preventive maintenance cost of the four
policies: P4 - preventive maintenance at age 4, P3 – preventive maintenance at age 3, P2- preventive
maintenance at age 2, P1- preventive maintenance at age 1. Repeat a)-c) in order to determine the total
maintenance cost (PM and CM) per period. What conclusion do you draw?
(Suggestion: for policy P4, is age 4 a state of the Markov chain?)

Problem 2: Performance evaluation of an echelon base-stock policy with lost demand

demand
M

production
stock

Consider a system of one machine, the processing time is on average 10 minutes. A finished part is
immediately put in a stock. Customer demand arrives randomly at rate 5.5 parts/hour. A demand is satisfied
immediately if the stock is not empty. Otherwise, it is lost.

The so-called echelon base-stock policy is used to control the production. It is based on the so-called
Inventory Position (IP) which is equal to the sum of the stock level X(t) plus the number n(t) of parts being
produced by the machine, i.e. IP(t) = X(t) + n(t).

After the occurrence of an event (arrival of a demand or end of production of the machine), idle machine
start production as long as the IP does not exceed the echelon base-stock level S.

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S = 3 for questions a) – f)

a) (15%) i) Show that any state (X(t), n(t)) such that IP(t) < S and n(t) < 1 is an intangible state, i.e. with zero
duration. ii) show that for any tangible state (a state with positive duration) with stock level X(t), n(t) and
IP(t) are uniquely determined by X(t), iii) give the set of tangible states.
b) (10%) Show that X(t) is a CTMC (Continuous Time Markov Chains) of 4 states under conditions that you
will explain. (ii) Give the graphic representation of the CTMC by giving the meaning of states and
transitions and the exact value of transition rates.
c) (10%) Explain how the following information are taken into account in your Markov chain model: (i)
demand lost when the stock is empty, (ii) base stock S = 3, (iii) one machine, (iv) processing time of 0
minutes per part and demand of 5.5 parts per hour.
d) (5%) Verify the conditions of the existence of steady state probabilities;
e) (20%) Determine the steady state probabilities πn by giving the balance equations and their solution;
f) (10%) Determine the mean inventory level and the service ratio which is defined as the percentage of
customer demands satisfied;
g) (25%) Consider a new base stock S = 5, give the new Markov chain model, determine its steady state
probabilities and its mean inventory level and service ratio;
h) (5%) How the mean inventory level and the service ratio change when S increases? Illustrate this relation
by an inventory-level vs service-ratio curve? How can one use this relation to correctly set base stock level?

Problem 3 Failure-prone production lines.

Consider a production line composed of 3 machines M1, M2 et M3 separated by 2 buffers B1 and B2. The
processing times are on average 15 minutes on M1, 10 minutes on M2 and 15 minutes on M3. Machines are
subject to failures and the reliability model ODF (Operation-Dependent Failure) is used. The mean time
between failures is 6 days for M1, 4 days for M2 and 6 days for M3. The repair time is the same for the four
machines and is on average 1 day. All the times are assumed exponentially distributed and the production
line operates 8h per day.

M1 B1 M2 B2 M3

a) (10%) Explain the meaning of ODF failures.

b) (15%) Give the defining parameters of each machine (maximal rate, failure rate, repair rate). Determine
the individual throughput rate of each machine, i.e. the productivity if it is never starved nor blocked.
c) (20%) Determine the throughput rate if the line was without buffers. In this case, which machine to
improve first in order to improve the performance of the line? Why?
d) (15%) Determine the throughput rate of the line if B1 and B2 are unlimited buffers. Would be the
buffers limited? Why? In this case, which machine to improve first in order to improve the performance
of the line? Why?
e) (40%) Assume that we are allowed to locate a single buffer B of capacity h = 5 in the line. Consider two
configurations: I-insert B between M1 and M2 or II-insert B between M2 and M3.
(i) Simplify the three-machine line into two-machine lines. What do you observe?
(ii) What is the best location of the buffer B in order to maximize the throughput? Why?
(iii) Use continuous flow model to determine the productivity, blocking and starvation probabilities for
the best location of buffer B.
(iv) What is the capacity of the buffer B needed to increase the productivity by 5%? Why

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 Master IEOR
UE6 – DESIGN OF PRODUCTION SYSTEMS
January 2019
Part 2 - 1h30

All supporting documents and calculator allowed

Penalty applied to students with identical arguments and identical mistakes

You are in charge of the design of a production line. The goal of this line will be to
produce one type of product. The production process is composed of 13 operations to
perform. Processing times are indicated in Table 1 and precedence constraints are given in
Figure 1. The customer demand is assumed to be 2,500 parts per month.

3 7 11

4 6 8

2 5 9 12

10 13

Figure 1 : Precedence graph

Operation 1 2 3 4 5 6 7 8 9 10 11 12 13
Time (min) 4 5 7 2 3 5 2 6 5 1 2 5 6
Table 1 : Processing times

1. Your company works 20 days per month in 3 shifts of 8 hours including a break of 30
minutes. Considering a projected overall line availability of 90%, calculate a lower
bound on the number of workstations.
2. You are seeking for a line design with the lowest possible number of workstations,
what is the name of the corresponding optimization problem?
3. You decide to use a heuristic for this problem. Explain which heuristic you will choose
and apply it to this problem. Analyze the performance of the solution obtained.
4. Your company has found out that customer demand has been underestimated and they
ask you to adapt the production system for a 50% increase of production rate. You
choose to keep the balancing obtained on question 3 and to increase the number of
workers assigned to workstation (using the assumption that the workload of a
workstation can be up to the takt time multiplied by the number of workers assigned to
this workstation). Indicate the solution obtained with this method.
5. Finally, you think you could limit the number of additional workers with a different
balancing of operations. Propose a new heuristic to deal with this combined problem
(i.e., balancing problem with workforce assignment) and indicate the solution
obtained.