Abstract for: The Role of Overhaul in Reducing Lifecycle Costs and Maximizing the Return on Investments to Improve Reliability

Maintaining military aircraft in a high state of readiness requires a non-stop flow of spare parts. These replacement parts can either be new parts from procurement or repaired parts coming from overhaul. The cost of these replacement parts is a major component of total lifecycle operating and sustainment costs. Improvements in reliability can potentially reduce removals and these on-going costs. The overall cost reduction depends upon the interaction over time of any increase in the cost of the new improved part, the increase in reliability, changing demand levels and the role of overhaul. Three overhaul scenarios are examined for cases of improved reliability: (i) old parts improved in overhaul; (ii) old parts not improved in overhaul; and (iii) no overhaul. A system dynamics supply chain model including financial performance metrics is developed to investigate these scenarios through simulation. It is shown that all three scenarios reduce total lifecycle costs and that these reductions can be very significant. The first overhaul scenario is shown to have the greatest returns but the third scenario is only slightly lower. All scenarios are shown to have diminishing investment returns and share a common level of investment that maximizes the percentage reduction in lifecycle costs.