Practical extensions to a minimum cost flow model for level of repair analysis

The level of repair analysis (LORA) gives answers to three questions that are posed when deciding on how to maintain capital goods: (1) which components to repair upon failure and which to discard, (2) at which locations in the repair network to perform each type of repairs, and (3) at which locations in the network to deploy resources, such as test equipment. The goal is to achieve the lowest possible life cycle costs. Various models exist for the LORA problem. However, they tend to be restrictive in that specific business situations cannot be incorporated, such as having repair equipment with finite capacity or the occurrence of unsuccessful repairs or no‐fault‐founds. We discuss and model such practically relevant extensions to an existing minimum cost flow formulation for the LORA problem. In an extensive numerical experiment, we show that incorporating the model refinements leads to a substantial change in the costs in general. The repair strategy changes substantially only when incorporating finite resource capacities or a probability of unsuccessful repair that is decreasing with an increasing echelon level.