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A model for considering the impact of rescheduling

planned maintenance activities in a maintenance
service contract
a a a
Marco Tantardini , Alberto Portioli-Staudacher & Marco Macchi
a
Department of Management, Economics and Industrial Engineering, Politecnico di Milano,
Piazza Leonardo Da Vinci 32, 20133, Milano, Italy.
Published online: 28 Feb 2012.

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To cite this article: Marco Tantardini, Alberto Portioli-Staudacher & Marco Macchi (2014) A model for considering the impact
of rescheduling planned maintenance activities in a maintenance service contract, Production Planning & Control: The
Management of Operations, 25:3, 241-259, DOI: 10.1080/09537287.2012.665094

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 Production Planning & Control, 2014
Vol. 25, No. 3, 241259, http://dx.doi.org/10.1080/09537287.2012.665094

A model for considering the impact of rescheduling planned maintenance activities

in a maintenance service contract
Marco Tantardini*, Alberto Portioli Staudacher and Marco Macchi
Department of Management, Economics and Industrial Engineering, Politecnico di Milano,
Piazza Leonardo Da Vinci 32, 20133, Milano, Italy
(Received 2 May 2011; final version received 4 February 2012)

Maintenance services are becoming increasingly relevant and both service providers and users are paying more
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attention to cost and service level. Nonetheless, until now very little attention has been devoted for understanding
and evaluating rescheduling costs which can be quite relevant, particularly if maintenance is outsourced to
external providers. This article proposes a model to measure the costs for rescheduling maintenance
interventions, thus allowing to take them into consideration both when defining a service contract and when
running it. The model has been developed after a wide empirical analysis deployed in two phases: a first
exploratory phase aimed at identifying the variables of the rescheduling problem by interviewing the main
maintenance service providers in Italy; the second, a confirmatory phase has been developed validating the model
using data from real industrial setting and analysing the results with the managers who supplied the data.
Keywords: outsourcing; maintenance service contracts; rescheduling; cost model

1. Introduction goods is available to serve the market, production may

The relationship between production and maintenance
is conflicting in nature (Rishel and Christy 1996,
Weinstein and Chung 1999). Production aims at
manufacturing high numbers of goods at low cost; to
this end, it requires the maximum availability of
production systems. Maintenance asks for a time to
step-in to restore the production equipment from
degradation; this causes a reduction of available time
(Budai et al. 2006) if the intervention is performed
during the production shift, but enables to avoid the
occurrence of costly failures in the near future
(Tam et al. 2006). Due to different objectives, a
conflict arises between continuing and stopping the
production.
Indeed, even if production and maintenance
achieve a joint decision for their respective schedules,
there is still a hidden conflict which may arise with
rescheduling in the case of unexpected events.
Production may require a change in the maintenance
schedule if the demand grows in the short term, in
order to limit the risk of stock outs. In this case, time
available for making maintenance activities is usually
constrained and, often, maintenance is asked to move
to a later period featuring a low demand. Another
example situation is just the opposite case. When the
demand is temporarily low and a high stock of finished
be interested in an anticipation of the maintenance
schedule in order to exploit the idle time determined by
the reduced workloads. A third and last example is
related to the case when maintenance personnel is used
to assist the production in technical activities such as
set-ups due to product change over: unscheduled
set-ups may be required by production to meet a
demand mix different than expected. This creates a
conflict related to the use of the maintenance personnel
for unscheduled activities of production assistance
instead of scheduled maintenance.
In all the cases, production assumes unconstrained
availability of the maintenance personnel and fixed
costs regardless of when and how the maintenance is
carried out, which is not true in the case of scarcity of
resources: indeed, with rescheduling there is a potential
for an inefficient use of maintenance resources (oper-
ator, material, planner, etc.) because of the changes to
previously committed programs and activities.
But how has scientific literature analysed the
problem? Recent literature has paid attention to
coordinated decisions between production and main-
tenance (see, e.g. Cassandry and Kutanoglu 2005,
Ji et al. 2007, Oyarbide-Zubillaga et al. 2008), by
proposing models to develop joint plans and schedules.
Three principal issues have been presented: (i) planning

*Corresponding author. Email: marco.tantardini@polimi.it

2012 Taylor & Francis

 2
242 M. Tantardini et al.
models, used to solve an optimisation problem con-
sidering the degradation of production equipment and
simultaneously minimising the costs incurred in the
production and maintenance domain, such as produc-
tion, setup, inventory, labour, maintenance and quality
costs (see, e.g. Weinstein and Chung 1999, Pistikopolos
et al. 2001, Aghezzaf et al. 2007, Aghezzaf and Najid
2008); (ii) planning models, where the stocking of
production material is included as a buffer to absorb
the demand variation and the changes in the produc-
tion rates subsequent to the stoppages of equipment
for maintenance activities (see, e.g. Chelbi and
Ait-Kadi 2004, Chelbi and Rezg 2006, Chelbi et al.
2008, Regz et al. 2008, Radhoui et al. 2009); (iii) sched-
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uling models, aimed at optimising typical operational
performances, like the flow time, tardiness, makespan
and availability, subject to the constraints created by
the stoppages scheduled for maintenance reasons
(Lee 1999, Qi et al. 1999, Lee and Chen 2000,
Kubiak et al. 2002, Cassandry and Kutanoglu 2003,
2005, Aggoune 2004, Crespo Marquez et al. 2006,
Chen 2007, 2008; Kuo and Chang 2007, Ruiz et al.
2007; Liao and Tsai 2009). Single machine and flow
shop are the most common systems studied by the
literature; moreover, it is worth observing that only
specific models, such as Yulan et al. (2008), consider
cost as part of a multiple objective function of the joint
scheduling problem.
Notwithstanding this wide literature on joint deci-
sions between production and maintenance, to the best
of our knowledge, no one has expressly discussed in the
past the problem of rescheduling planned maintenance
interventions and of the resulting inefficiencies. To this
end, we propose a cost model for assessing the
rescheduling inefficiencies. The model is developed
starting from the research work on MRP nervousness
presented, for example, in Ho et al. (1995), Ho and
Carter (1996) and Kadipasaoglu and Sridharan (1997).
These papers tackle the topic of rescheduling produc-
tion orders generated by MRP, and thus represent a
good basis for developing our research into the issue of
rescheduling maintenance orders. The final outcome of
this article is a model that is an analytical approxima-
tion of the rescheduling costs. The model can be used
to support cost-based decisions within the maintenance
scheduling system. For developing the model we have
investigated, through case studies, the operational
variables typical of the scheduling system and their
effects on costs. The cost model is proposed as a
supporting tool for rescheduling decisions jointly
achieved, in an inter-organisational context, by the
third party, providing the maintenance service, and the
customer. The recent trends observed on outsourcing
in maintenance as a common industrial practice
(Taracki et al. 2006), and the strategic importance of
coordinated actions between the producer and the
service provider (Kumar et al. 2004), are the main
motivations for focusing our research on improving
the interaction and the relationship between these two
players and for selecting this problem scope.
Furthermore, this research originates from the request
of an important provider of maintenance services to
better investigate how the rescheduling problem is
tackled in real companies: this is another proof of
interest from the industrial field.
In the remainder of this article, outsourcing in
maintenance is first introduced with its main features;
the cost model is then put into this context and briefly
presented in its intended use (Section 2). The
rescheduling problem is analysed in more detail
(Section 3), assuming the perspective of the provider
of maintenance services: the results of an exploratory
case study analysis are herein shown to identify the
variables of the problem. As a follow up, the cost
model is formulated and discussed in its use in
practice (Section 4). The model is then validated
(Section 5) based on the data sets taken from different
industrial settings. Concluding remarks (Section 6)
eventually discuss the implications that can be
elicited, from our work, for industrial practice and
scientific research.
2. Problem scope
The recent trends in industry show that outsourcing in
maintenance has become a common practice in
different sectors (Taracki et al. 2006, Garg and
Deshmukh 2010).
According to Harland et al. (2003), outsourcing is
motivated by the objective to involve specialists to
provide competences, technologies and resources.
Basically, three fundamental factors bring companies
to use outsourcing in maintenance: (i) cost reduction,
since specialised providers are more experienced, have
more sophisticated equipments and decision models,
hence they can provide better service efficiency;
(ii) more skills, since using external resources is a
way to get rapidly new skills via qualified people and
specific instruments; (iii) a higher service level, since
this can be linked to a system of rewards/penalties
established in the contract in a so-called bonus/malus
formula and measured on Service Level Agreements
(SLAs) for which the provider is duly responsible.
The development of appropriate contracts is essen-
tial to take advantage of these factors. Indeed,
according to Panesar and Markeset (2008), a good
contract is needed in order to create an environment
 Production Planning & Control 3
243

Table 1. Candidate processes for a maintenance service contract.

Outsourced processes Activities

Operative/operational maintenance
Maintenance management
Contractual management
Data management
Spare parts management
Maintenance engineering
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Includes all the activities at operational level, such as equipment repair, intervention
preparation, intervention reporting and so forth.
Includes all the activities at management level, such as work order request management,
work order assignment, data storage, resources management, and so forth.
Includes all the activities needed to transfer administrative information, contracts and
documents between customer and provider.
Includes all the activities necessary for the acquisition and transfer of equipment data
from the customers site to the providers service workshop, for their further analysis
in maintenance engineering, condition monitoring, and so forth.
Includes the acquisition and storage of spare parts, as well as analysis on data regarding
spare parts logistics.
Includes all the activities aimed at improving performance of the maintenance contract

by leveraging on preventive (cyclic time based and condition based) maintenance and
proactive maintenance.
KPI monitoring Includes the monitoring at different levels of analysis (KPIs at operative, tactical, and
strategic levels) of maintenance activities.
Training activities Includes the activities offered to the customers maintenance personnel in order to
enable the transfer of information and knowhow required by maintenance
interventions.

facilitating the execution of the maintenance activities
planned in the outsourcing scope. A general prerequi-
site for the success of outsourcing is the proper
establishment of contractual agreements, as they are
the instruments which will allow both customer and
service provider to share what has to be done in the
outsourcing scope (Kumar et al. 2004). In particular,
contract clauses have to be established in order to
define the equipment for the maintenance services to be
provided; services are then declared (services can range
in a very wide spectrum from, e.g. field services to do
repairs, expert assistance for diagnostics; logistics
support; advanced training; etc.); finally, the job
responsibilities for each party, maintenance processes
and related work flows are agreed upon with regard to
the equipment and services established in the contract
(Kumar et al. 2004).
Table 1 presents, with no claim of exhaustiveness, a
range of candidate processes for maintenance out-
sourcing, and it is the synthesis of different parts
adapted from different authors at the scientific and
international levels. A main inspiration can be the
above-mentioned work by Kumar et al. (2004). Also,
we think that it is important to refer to technical
publications, because they provide contributions con-
cerning the practices issued in industry for contract
setup and execution; in this regard, we can mention for
example Gomez et al. (2009). Other references can be
sourced from the literature on after sales management
(see, e.g. Legnani et al. 2009), discussing the configu-
ration of assistance processes according to the after
sales strategy of a company.
A proper monitoring of key performance indicators
(KPIs) is a strategic process for the contract success.
It is needed, first of all, in order to control how far the
contract is meeting the established SLAs and, as a
consequence, to calculate related penalties/rewards.
Besides, measuring maintenance activities allows for
checking whether management practices are properly
deployed in the processes and work flows are linked to
the contract; a positive measurement is a leading
indicator of the quality of the contract execution and,
as a consequence, an outlook on its future, positive
results.
It is also strategic, especially in performance-based
contracting (Kim et al. 2007), that decisions made in
the maintenance management process are coordinated
between the customer of the service, and the provider
of the service: indeed, maintenance work order assign-
ments to proper resources and times should result from
a joint decision, in order to take into account the
respective exigencies issued by the customer (i.e.
production exigencies) and the provider (i.e. mainte-
nance exigencies).
Considering these two relevant processes, we pro-
pose a cost model in order to measure the inefficiencies
resulting from the modifications of a previously
committed maintenance schedule. The model proposed
allows, on the one hand, for a more effective costs
control on the part of the maintenance service
provider; on the other hand, it enables to quantify
more precisely possible economic compensation for the
flexibility exhibited in such rescheduling situations by
the maintenance service provider.
 4
244 M. Tantardini et al.
3. Problem setting
A multiple exploratory case study investigation see
Yin (1994) for details on the research methodology
was carried out in seven companies providing mainte-
nance services, with the objective of assessing the
relevance of the rescheduling problem within real
industrial companies, understanding the rescheduling
variables and their effects on cost and, finally, with the
aim of recognising to what extent the rescheduling
costs are considered and quantified in a maintenance
service contract.
In sampling, we have included the different typol-
ogies of companies that could provide us with different
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viewpoints on the rescheduling problem. This is the
reason why we have included pure service companies
providing maintenance services, manufacturing firms
providing maintenance as after sales services and a
consulting company in outsourcing maintenance inter-
ventions in our case study analysis (this company
advises manufacturing companies on how to structure
the outsourced maintenance contracts).
We have decided to consider all these groups of
companies because all of them could be affected by the
problem of rescheduling planned maintenance inter-
ventions and could be interested in understanding how
to better manage such an issue. In fact, all these groups
of companies are interested on the one hand in defining
the fair pricing for the maintenance service contract
and on the other hand are interested in being able to
evaluate the inefficiencies brought by the modification
of already committed interventions. Moreover, includ-
ing all these groups of companies could make easier for
us in assessing the problem of rescheduling in a broad
sample of companies and business context, with the
ultimate goal to highlight all the cost components that
are worth to be considered in the rescheduling cost
model.
Among these three groups of companies, we have
decided to study only multinational companies with
hundreds of employees because we believe that within
these companies it is more likely to highlight possible
best practices and thus an overview of the industrial
state-of-the-art on the topic of rescheduling mainte-
nance interventions. Specific case studies were then
selected from a list of companies based in the North of
Italy that we know they put emphasis and invest in the
development of best practices in maintenance. Table 2
presents the sample of companies interviewed.
3.1. Company A
The manager of company A reports on the high
relevance of the rescheduling problem. Since the
Table 2. Characteristics of the sample of companies target
of the interviews.
Company Services provided
A Multinational company, provider of
maintenance services
B After sales department of a company
producing engineered-to-order (ETO)
equipment
C Consulting company in maintenance
outsourcing
D Multinational company, provider of
maintenance services
E Multinational company, provider of
maintenance services
F After sales department of a metalwork
multinational mass producer
G After sales department of a company produc-
ing ETO equipment for processing
industries
human resources are involved in carrying out mainte-
nance interventions for different customers in different
plants, rescheduling an intervention may result in the
need to modify other interventions. Consequently,
rescheduling is more expensive as the maintenance
intervention has to be rescheduled in periods showing
already committed interventions for the maintenance
resources provided to operate a given contract, and
when such interventions require highly skilled techni-
cians who are often more saturated because of their
higher costs. Should it not be possible to obtain a
skilled resource in-house for the period required, it is
then necessary to hire competences from third parties,
which are very expensive. Besides, inefficiencies deriv-
ing from rescheduling also affect the management of
technical materials (spare parts, tools and equipment).
For example, when an anticipation for an intervention
is required, the materials might not be available in
stock, and this could cause a costly expediting. On the
contrary, when an intervention has to be postponed,
the service provider may require extending the hiring of
some specific equipment necessary for the maintenance
intervention.
Last but not the least, the manager underlines that
it is important to know about the rescheduling request
with an adequate anticipation: a low time to the
intervention that is going to be rescheduled causes high
inefficiencies, especially in the case of anticipation.
Even if rescheduling is perceived as a critical issue,
the associated costs are currently neither measured
(apart from the costs of hiring external resources) nor
expressly considered in the maintenance contract.
Thus, the service provider currently has no levers to
 Production Planning & Control
demonstrate such inefficiencies to the customer and to
obtain an acknowledgement for its flexibility whenever
a change to the schedule is requested. Nonetheless, to
reduce the inefficiencies, the manager of company A
sometimes agrees with the customer the possibility for
the providers company workforce to carry out addi-
tional activities (e.g. set-up) in order to avoid a possible
under-saturation, induced by a rescheduling decision.
3.2. Company B
Also the manager of company B reports on the
criticality of rescheduling, usually occurring as a
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consequence of demand variations. The logic in this
case is, in fact, to give priority to production needs,
rather than to maintenance needs; the current mindset
of the manager is that maintenance has to be able to
follow production for all the changes required.
Nonetheless, modifying an already defined mainte-
nance intervention is recognised as leading to ineffi-
ciencies (e.g. in terms of expediting spare parts
production).
Next to the likely higher expected maintenance
costs in the case of postponement of an intervention
(higher risk of failure means higher expected costs for
corrective maintenance), when an already committed
intervention has to be modified, rescheduling costs
arise also for the resources directly involved. For
example, the technicians may need to reschedule their
business commitments. Moreover, since company B
provides maintenance activities for equipment world-
wide, rescheduling an intervention could imply waste
in very high travel costs. Last but not the least, another
important waste, pointed out by company B, concerns
the time of the maintenance planner to administer the
rescheduling decisions.
Nonetheless, company B is not used to think in
terms of rescheduling inefficiencies and in the contracts
there are neither KPIs related to reschedules, nor the
related costs allocated. Henceforth, company B cur-
rently offers a high flexibility to the customer that is
not expressly acknowledged.
3.3. Company C
Rescheduling decisions are particularly frequent in this
company. Inefficiencies resulting from reschedules are
more or less critical depending on the entity of the
temporal shift required by the reschedule and on the
average time between two consecutive interventions in
the program. For example, when interventions are
close in time one to another, rescheduling one may
imply to reschedule the other. Furthermore, also the
2455
spare parts management is adversely affected by
rescheduling.
This leads to a list of inefficiencies that are usually
under-estimated or even not taken into account in the
real practice of the company. Indeed, the manager
states that the rescheduling costs are not communi-
cated to the customer and are not currently inserted
into the contracts because they are difficult to be
measured. However, to reduce the inefficiencies, the
manager states that sometimes he defines in the
contract an upper bound for rescheduling decisions:
the customer has to pay a lump sum roughly defined
on the spot situation for each additional change over
a defined limit.
3.4. Company D
The manager of company D confirms that reschedul-
ing is a frequent problem. Rescheduling need is due to
production causes in 70% of the cases, in the remain-
ing 30% of the cases it is due to maintenance reasons
(e.g. the occurrence of a failure requires a new
schedule).
Rescheduling results in higher inefficiencies, as
external resources are also required and as the inter-
ventions are shifted to more expensive periods (e.g.
when other interventions are already committed, or
during week-ends).
Currently, rescheduling costs are neither considered
in the contracts nor measured: the provider is expected
to have enough flexibility in order to chase production
modifications and no formal extra-cost is charged to
the customer asking for rescheduling events. However,
if production requires rescheduling an intervention in
either a too expensive (due to high risk of failure) or
unfeasible period (because it has previously been
committed for the resources), the service provider
signals the impossibility to carry out such an interven-
tion, and a new date is agreed upon.
In conclusion, the manager of company D under-
lines the importance of flexible schedules, with very
narrow planning windows and quick feedback on the
need for rescheduling in production. Furthermore, to
achieve even more flexibility, the manager of company
D only schedules activities for 80% of the human
resources available. The rest of the workforce is in fact
kept free to absorb the variations.
3.5. Company E
The manager of company E asserts that each modifi-
cation of the maintenance schedule requires a
re-organisation in terms of human resources activities
 6
246 M. Tantardini et al.
and availability of required materials or equipment. In
particular, the inefficiencies resulting from reschedul-
ing become more critical as the intervention to be
rescheduled is close to the current time period. More
precisely, the manager of company E states that the
more you need to anticipate the intervention, or the
closer the intervention to be rescheduled is to the cur-
rent date, the more likely the reschedule required could
be unfeasible or anti-economical.
The manager of company E affirms that the
flexibility to respond to the production exigencies is
appreciated by the customer, although not formally
acknowledged. On the other hand, company E neither
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measures nor encloses rescheduling costs in the main-
tenance contract.
Notwithstanding these facts, in order to reduce the
impact of the inefficiencies related with rescheduling,
company E asks the customer to communicate the
need to reschedule as soon as possible, in order to
allow to organise at best the activities and involved
resources: to this regard, sometimes company E
stipulates a minimum time acceptable in the contract
to issue a request for rescheduling maintenance activ-
ities. Furthermore, company E may ask to enclose a
contract clause for the possibility to employ its human
resources for other activities (e.g. improvement activ-
ities, set-ups, etc.), whenever they are called upon for
rescheduled activities.
3.6. Company F
The manager of company F points out that reschedul-
ing costs depend on the type of intervention required:
rescheduling the greasing of a bearing is much less
critical than rescheduling the replacement of an
important component in a big piece of equipment.
Thus, for measuring rescheduling costs it is necessary
to consider the number of shifts required by the
intervention, the type of interventions to be shifted and
whether rescheduling an intervention implies modify-
ing other interventions.
Actually, rescheduling inefficiencies are related to
the complexity of the interventions already scheduled
in a maintenance program. Another important cause
of inefficiency is the time between two interventions: if
these are too close after rescheduling, this may cause
other changes to the maintenance program, which
normally results in inefficiency too.
Rescheduling also results in inefficiencies at labour
cost level, and this is related to the scarcity of
resources: for example, when the same maintenance
technicians are shared among different plants and
different customers or when the human resources are
highly saturated, the resulting rescheduling costs may
increase dramatically.
In fact, in the above situations, rescheduling one
activity might be very complex due to the constraints
from the other interventions committed and might
likely require rescheduling other activities in order to
obtain a feasible plan, or might also require hiring
temporary workers.
The manager of company F does not measure the
rescheduling costs precisely. He only uses a rough
estimation for remarking to the customer that the high
flexibility for rescheduling has a cost for the provider.
This is a lever in order to obtain an economic
compensation when the number of required resched-
uled activities increases too much.
3.7. Company G
The manager of company G highlights the fact that
production has always priority over maintenance, thus
it is a goal for the provider of maintenance services to
be flexible enough in order to avoid high costs in
rescheduling interventions. Moreover, the manager
remarks that rescheduling events is not only due to
production exigencies. In fact, in 30% of the cases it is
required to modify the scheduled event because of a
problem related to maintenance (e.g. the spare parts or
the tools are not available on the dates agreed upon for
the intervention).
Basically, even if rescheduling decisions result in
quite strong and frequent inefficiencies (the manager
highlights that the customer requires to reschedule
about 25% of the interventions), their measurement is
not always straightforward and, subsequently, neither
is their association to the right responsibilities. This is
the reason why the rescheduling costs are not included
in negotiations with the customer.
On the other hand, the manager of company G
knows well the entity of the rescheduling costs and the
main drivers. Hence, out of his normal activities, first
of all, he devotes 5% of his time to rescheduling.
Besides, he knows that rescheduling generates extra-
costs related to obtaining spare parts, in the case of
anticipated events, or with storing spare parts, in the
case of postponement. Costs related to spare parts are
proportional to the periods of shift of the maintenance
interventions and to the material itself.
To reduce the impact of rescheduling inefficiencies,
the manager of company G requires that the notice for
a rescheduling decision arrives at least two weeks in
advance to the scheduled event. In rare cases the notice
arrives only one week in advance.
Eventually, also for this company the inefficiencies
resulting from rescheduling are not acknowledged by
 Production Planning & Control
the customer: company G only requires an economic
compensation for the direct costs of manpower when
the maintenance activity is shifted to the week-end. In
Table 3 we have summarised the main findings in the
case study analysis.
3.8. Summary of the case study analysis
The multiple case study analysis highlighted several
interesting findings, enlisted in the remainder.
(1) Rescheduling is a very critical problem in all
the companies that we have interviewed: it is
frequent and the associated costs are not
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considered negligible.
(2) Rescheduling costs are hardly measured by
service providers; also, they are not normally
considered in the maintenance contract, except
for some formula for economic compensation,
defined with respect to very specific situations
(e.g. manpower working during the week-end,
costs of hiring external resources, excessive
number of reschedules with respect to a fixed
upper bound, etc.).
(3) Avoiding to better formalise the rescheduling
costs in the contract seems to be a missed
opportunity for the service provider: indeed, in
most of the cases, a formulation acknowledging
the flexibility offered to the customer may be
interesting.
(4) Rescheduling costs vary depending on the
following operational variables.
(I) Period when the planned maintenance
activity has to be rescheduled. For exam-
ple, rescheduling an intervention in the
week-end or in a period in which the
resources are committed to other activi-
ties is more expensive.
(II) Typology of maintenance activity that
has to be rescheduled. Depending on the
typology of maintenance activity to be
rescheduled, the cost may increase. For
example, rescheduling an activity done on
critical equipment may be more expensive
than rescheduling a simple activity, done
on redundant equipment.
(III) Number of interventions to be resched-
uled. Each rescheduling requires the
modification of an already defined plan
(both workforce plan and spare parts
supply plan). For example, modifying
a workforce plan may both require to
re-arrange some intervention and to
2477
waste transportation tickets already
bought.
(IV) Anticipation of the rescheduling notice.
When the need to reschedule an inter-
vention is communicated with poor
advance, then higher costs for both
workforce and materials are to be
expected because it is required to
re-arrange the intervention in a short
time with a limited number of levers to
manage efficiently such rescheduling.
(V) Number of shifting periods. The higher
the number of shifting periods, the higher
the cost for both workforce and spare
parts. Increasing the number of periods of
anticipation means increasing the proba-
bility not to have both the workforce
(because committed to other interven-
tions) and the spare parts (because not
yet in stock) available. On the contrary,
increasing the number of postponement
periods means increasing, for example,
inventory costs and failure risk (with the
associated costs). Furthermore, increasing
the number of shifting periods may lead to
high changes in timing between interven-
tions: this could likely increase the need to
reschedule other interventions that may
then result either too close or too far-off
one from the other.
(VI) Resources shared with different cus-
tomers/plants. As resources are shared
with different customers/plants, resche-
duling costs may increase because it
would be more complex to highlight an
effective and efficient reschedule consid-
ering the different constraints. Indeed, it
could be required to hire external
resources or to reschedule some interven-
tion in other plants/for other customers,
with the related costs (e.g. travel costs to
move from one plant to the other).
The operational variables summarised above have
helped us to develop the cost model for rescheduling
interventions, and to assess their relevance in the total
cost function of the maintenance service.
4. Model formulation
Rescheduling maintenance interventions impacts on
the following three areas of costs:
. administrative staff;
. maintenance materials;
. maintenance workforce.
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8
Table 3. Summary of case studies.
248

Case A Case B Case C Case D Case E Case F Case G

Are rescheduling Very much Very much Very relevant and Very relevant and Relevant and Generally yes, but Yes, about 25% of
problems relevant? particularly frequent frequent depend on the the planned
frequent intervention to interventions are
be rescheduled rescheduled

Which costs are  Equipments and  Equipments and  Equipments and  Manpower  Equipments and  Manpower  Equipments and
affected? materials materials materials materials materials
 Manpower  Expected costs of  Manpower  Manpower  Manpower
corrective main-  Administrative  Administrative
tenance staff activities
 Manpower and
manpower-
related
(e.g. travels)
 Administrative
staff

Which are the main  Presence of other  Presence of other  Number of shift  Presence of other  Time to the  Number of shift  Number of shift
rescheduling opera- interventions interventions periods interventions intervention periods periods
tional variables? already commit- already commit-  Time between already commit-  Number of shift  Number of inter-  Materials
ted in the ted in the two consecutive ted in the periods ventions to be required
period period interventions period rescheduled  Time to the
 Highly skilled  Number of shift  Periods with  Time between intervention
technicians periods higher costs for two consecutive
required  Time to the carrying out interventions
 Number of shift intervention interven-  Typology and
periods tions (e.g. complexity of the
 Time to the weekends) interventions to
intervention  External be rescheduled
resources  External
M. Tantardini et al.

required resources
required
Are costs measured No (apart from the No No, because they No No Not measured pre- Costs are measured
and enclosed in the costs of hiring are difficult to cisely, not but not enclosed
contract? external be measured included into the in the contract
resources) contract apart the direct
costs of mainte-
nance during
week-ends
How the provider Provider sometimes No specific actions Sometimes an When the number Manager requires
manage as to asks to carry out upper bound for  When the resche-  Sometimes it is of rescheduling that the notice
reduce the resche- additional activ- rescheduling duling date is agreed the mini- activities for a reschedul-
duling ities (e.g. set-up) decisions is set: unfeasible for the mum anticipation required ing decision
inefficiencies? in order to avoid for further provider, a new to issue a request increases too arrives at least
a possible reschedules date is agreed for rescheduling much the man- two weeks in
under-saturation required the upon maintenance ager uses a advance to the
induced by a customer has to  Manager sched- activities rough estima- scheduled event
rescheduling pay a fixed sum ules activities for  Provider some- tion of resche-
decision 80% of the time times asks to duling costs for
of human carry out addi- remarking the
resources avail- tional activities cost of the
able, the rest is (e.g. set-up) in flexibility
kept free to order to avoid
absorb the under-saturations
variations
 Production Planning & Control
In our model we have only considered the real costs
that are related to the resources provided in the
maintenance service contract and that are therefore
both easier to be expressed concretely and easier to be
allocated to the responsibilities of the involved parties.
With such logic, the failure risk cost associated to the
shift of an already committed event is, for example, not
considered in our model for various reasons. First,
such a cost could be difficult to be measured and be
shared by the parties, because it is based on a
probabilistic approach (see, e.g. Fumagalli et al.
2010). Second, a failure risk cost becomes a real cost
only as the failure happens and when the failure
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happens after a rescheduling request, it could be not
that easy to attribute the proper responsibilities.
Moreover, for the sake of simplicity, we have
considered all the various maintenance interventions as
having the same degree of criticality/complexity.
Consequently, despite the suggestions from the
manager of company F, rescheduling any intervention
has been considered in our model to have the same
unitary cost. Therefore, the operational variable II
(Section 3.1) was not included in our proposal.
We have also considered, for the sake of simplicity,
that performing maintenance activities has the same
cost in each planned period. Therefore, despite the
suggestions from the manager of company D, we have
not identified more expensive or cheaper periods in
which to reschedule maintenance interventions. The
operational variable I (Section 3.1) was thus not
included in the proposed model.
4.1. Administrative staff
Every time a rescheduling is requested, the planner of
the service provider needs to re-process maintenance
requirements and resource availability, to define a new
feasible schedule.
The unit cost value depends on the fact that
resources are shared with different customers/plants
(cf. Section 3.1, operational variable VI). The more the
resources are shared with different customers, the
higher the cost because of the constraints increase.
Moreover, such administrative cost associated with the
rescheduling activity is mainly related to the number of
rescheduling actions (operational variable III in
Section 3.1).
We assume that the same unit cost may apply to
both anticipating and postponing events. Nonetheless,
it is worth considering the complexity of rescheduling
multiple interventions, in order to finally model a
more expensive cost if compared to rescheduling
a single intervention. Thus, we set a linear cost
2499
function with the number of interventions to be
rescheduled.
4.2. Maintenance materials
Rescheduling also affects the technical materials costs.
This occurs whenever the maintenance activity requires
a replacement of components (spare parts) or the use
of special equipment/tools (e.g. cranes, scaffoldings).
We assume these costs to be directly proportional
to the number of periods of anticipation (or postpone-
ment): if the temporal shift gets higher, the costs
increase (cf. Section 3.1 operational variable V). This is
expected to represent well the following cases: (i) the
costs for urgent deliveries due to expediting, which can
be considered proportional to the anticipation; (ii) the
warehousing costs for equipment/spare parts or the
costs of extension for the hiring of special equipment/
tools, proportional to the postponement.
Costs are also dependent on the typology of
material. Finally, they are set to be inversely propor-
tional to the time to the intervention (cf. Section 3.1
operational variable IV): if the rescheduling is issued
with a certain anticipation, managers may have more
levers in order to reduce the inefficiencies due to
rescheduling.
4.3. Maintenance workforce
Maintenance workforce costs are associated to the
inefficiencies due to the rescheduling of human
resources. We assume that such costs are assessed
mainly when the human resources of the providers
company are shared among different customers.
In fact, in this case, the rescheduling decision in
order to respond to a request of one customer affects
the provision of such common resources to provide the
service to another customer, thus finally impacting on
the service duties of different contracts.
The unitary costs increase as the workforce is more
specialised and skilled. Besides, we make a distinction
whether it is required to anticipate or to postpone the
intervention. When it is required to anticipate an
intervention, we suppose the costs to be directly
proportional to the number of required periods of
anticipation (cf. Section 3.1 operational variable V),
because it is likely that the resources are already
committed to other interventions. Instead, when an
intervention has to be postponed, we have considered
that the resulting cost is a fixed value, not related with
the number of shifting periods. Thus, the number of
shifting periods is not regarded as influent on
the cost formulation because, with postponement,
 10
250 M. Tantardini et al.

Table 4. Rescheduling cost components.

Anticipation Postponement

Administrative staff (Equation (1)) arac * Na arac * Np

J P
P E J P
P E
Maintenance materials (Equation (2)) acm"j am"j A"j  pcm"j pam"j P"j 
j1 "1 j1 "1
PJ PE PJ PE
Maintenance workforce (Equation (3)) acw"j aw"j A"j  pcw"j pw"j P"j 
j1 "1 j1 "1

Notes: Here:
j 1, . . . , J
workstations (subject of the maintenance service contract)
" 1, . . . , E
maintenance interventions
arac fixed unitary cost for administrative rescheduling
Na, Np number of anticipated (Na) or postponed (Np) interventions
acm"j, pcm"j materials costs, related to anticipating (postponing) one period the "-th planned maintenance intervention on
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workstation j.
am"j, pm"j smoothing coefficient for materials costs related to anticipating/postponing the "-th planned maintenance
intervention on workstation j.
A"j, P"j number of anticipation/postponement periods for the "-th planned maintenance intervention on workstation j.
acw"j, pcw"j workforce costs related to anticipating (postponing) one period the "-th planned maintenance intervention on
workstation j.
aw"j, pw"j smoothing coefficient for workforce costs related to anticipating/postponing the "-th planned maintenance
intervention on workstation j.
P"j binary variable: it is equal to 1 in case the "-th maintenance intervention on workstation j is postponed,
otherwise 0.

the workforce is likely to be idle or featuring a lower
workload. In fact, when postponing an intervention
conflicts with other activities already scheduled rarely
emerge. Consequently, it is reasonable to measure
solely a fixed cost resulting from the rescheduling
inefficiencies caused by the variation of the human
resources program (e.g. the resource has to modify its
travelling plan to the sites).
Similarly to materials, the anticipation/postpone-
ment costs are also considered to be inversely propor-
tional to the time to the intervention (cf. Section 3.1,
operational variable IV): the longer the time to
intervention, the lower the impact of its modification.
4.4. Mathematical formulation
Table 4 reports the mathematical formulation for the
different cost components. An important element of
the formulation of costs for maintenance material and
workforce is the presence of some coefficients for
smoothing, introduced in order to consider the effect of
issuing a request to reschedule with proper
anticipation.
We have exploited the research work on MRP
nervousness presented in Ho et al. (1995), Ho and
Carter (1996) and Kadipasaoglu and Sridharan (1997),
in order to define the values of the smoothing
coefficients am"j, pm"j, aw"j, pw"j. The formula
for the smoothing coefficients am"j, pm"j, aw"j,
pw"j defined in Equation (4) allows for controlling the
smoothing effect of the rescheduling costs. The value
of such coefficients depends on how much the com-
munication to reschedule the intervention is noticed in
advance to the planned intervention and on the two
parameters ( and D) that enable to adapt the cost
model to each particular provider.
tm"j T1
  
 D 1  "j
"j "j , tm"j , T, D 1
4
where:
tm"j period when the "-th maintenance interven-
tion has been planned in the previous
schedule
T period when the rescheduling decision is
issued
"j parameter, ranging from 0 to 1, measuring
the providers flexibility in either anticipat-
ing or postponing interventions
D parameter, ranging from 1 to tm"j  (T  1),
defining the number of periods during
which rescheduling costs shall be assumed
as steady
As "j tends to 1 (i.e. high flexibility), the smoothing
coefficient in Equation (4) tends to 0. In such a
situation it is possible to avoid extra-costs for the
service provider, thus it is not costly to reschedule the
maintenance interventions. Besides, as the parameter D
decreases, the smoothing coefficient is rapidly cut.
 Production Planning & Control
Figure 1. Smoothing coefficient value for D 1.
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Figure 2. Smoothing coefficient value for D 4.
This is used to represent the sensitiveness of the
provider at the time to the intervention. When the
provider has a high sensitiveness (i.e. low D), resche-
duling costs can be dramatically reduced if the
customer issues the need to change with some, even
short, anticipation. In Figures 1 and 2 we present how
the value of the smoothing coefficient "j varies by
modifying the aforementioned parameters.
In real practice, the parameter  should be adopted
to define a general feature of the provider. The more
the provider has resources to be flexible (e.g. it has a
capacity buffer for the maintenance workforce, the
spare parts provisioning is flexible enough due to some
agreements with spare parts providers), the more
flexibility there will be during contract operation. In
Figure 1, the effect of higher flexibility is shown: for
example, when  0.4 the provider requires the
customer to anticipate the rescheduling request by
eight periods in order to reduce the related costs by a
similar amount that a company with  0.7 has with
an anticipation of only four periods.
The parameter D is used to define the number of
periods with steady rescheduling costs. For example, as
shown in Figure 2, even in the case of low provider
flexibility ( 0.1) there is a reduction equal to 10% of
rescheduling costs if the customer anticipates the
request in a range between 5 and 8 periods, while
rescheduling costs cannot be reduced between 1 and
4 periods.
11
251
4.5. Model implementation
Measuring actual costs for each rescheduling decision
is not an immediate activity. This is because the data to
be considered are dispersed throughout the organisa-
tion: the cost data are available at the administration
level while operational variables, such as the number of
anticipated or postponed interventions, result from
rescheduling. Thus, measuring actual costs for each
rescheduling decision may cause administrative delays
but, due to the time constraints imposed by the
rescheduling request issued by the customer, delays
are scarcely acceptable. The cost model presented in
this article is intended as an analytical approximation
to allow managers a quick estimation of rescheduling
costs and thus for enclosing them in the daily
decision-making process.
To be put in practice, the cost model requires being
set-up with the unitary costs of Equations (1)(3). Such
costs have to be thought of as standard costs for a
rescheduling decision: a costing framework is then
required in order to develop such standards.
To this regard, we consider the framework of
Mirghani (2001) as reference model for planned
maintenance costing. Aligned to known general refer-
ences for accounting (see, e.g. Horngren et al. 2000),
Mirghani underlines the co-existence of two
approaches in a maintenance accounting system:
(i) the cost traceability, obtained by means of recording
costs in planned maintenance orders; (ii) the cost
allocation, in the case of support services (maintenance
engineers, planners, utilities, etc.) or when cost tracing
is not economically feasible.
We consider cost traceability for the calculation of
the unitary costs for maintenance workforce and
materials on each planned maintenance order (i.e. for
the calculation of acm"j, pcm"j, acw"j, pcw"j and of their
smoothing coefficients am"j, pm"j, aw"j, pw"j). The
standard cost so obtained is based on the number of
shifting periods (operational variable V), to calculate
the unitary costs acm"j, pcm"j, acw"j, pcw"j, and the
anticipation of the rescheduling notice (operational
variable IV), to smooth the unitary costs so calculated
accordingly with the flexibility of the provider. Cost
allocation is instead adopted solely for evaluating the
unitary cost of the administrative staff arac. The total
budgeted cost of the maintenance planner to admin-
ister rescheduling decisions is needed to this end: the
total number of interventions to be rescheduled (oper-
ational variable III) on the contracts managed by the
planner is then used as basis for the allocation of this
cost, so as to obtain the arac standard cost.
Once standard costs are available, our model can
be adopted as a decision-making tool and can also
 12
252 M. Tantardini et al.
Table 5. Summary of information required to run the
model.
Standard Reschedule
costs of parameters of
the service the customer
contract request
Administrative staff arac Na
(Equation (1)) arac Np
Maintenance materials acm"j am"j A"j
(Equation (2)) pcm"j pm"j P"j
Maintenance workforce acw"j aw"j A"j
(Equation (3)) pcw"j pw"j P"j
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quickly provide an estimation of the rescheduling costs
for a reschedule required by the customer when a
contract is run during the year. Table 5 summarises the
outputs of our model and the inputs that have to be
prepared by the accounting system.
5. Model validation
In this phase we aim at evaluating the relevance of the
rescheduling costs and at validating the ability of the
model to properly represent them. We have collected
the real data from contracts with two maintenance
service providers and we have simulated a number of
different scenarios in order to assess the impact of
rescheduling inefficiencies.
Data were taken from two service providers inter-
ested in evaluating the practical relevance of our model
in their context. Indeed, their interest was to quantify
the rescheduling problems and their effects on cost and
to recognise, as a consequence, to what extent they
should change their management process, in order to
limit the rescheduling inefficiencies.
In particular, with real data we have generated a
joint production and maintenance master schedule, by
using a cost-optimisation logic (i.e. joint optimisation
of master schedule between production and mainte-
nance). The model we used for creating the joint
schedule has been presented in previous works
(Portioli-Staudacher and Tantardini 2008) and it is a
mixed-integer linear programming optimisation model
derived from the model presented by Weinstein and
Chung (1999). The model jointly schedules production
and maintenance activities with the aim of minimising
the sum of production and maintenance costs.
Maintenance costs are given by the sum of preven-
tive maintenance costs and of expected costs of
corrective maintenance. The latter are given by mul-
tiplying the cost for a corrective maintenance inter-
vention and the failure rate in every period which
increases as time elapses from the last maintenance
intervention this enables to consider the growing risk
of failure. For modelling failure rates we used the same
logic as in Pistikopoulos et al. (2001), that is to have
constant and increasing rates in different periods.
More precisely, maintenance costs express the total
costs of the maintenance service, divided among:
(1) the cyclic preventive maintenance during the
weekly timetable, (2) the cyclic preventive maintenance
during the week-end and (3) the corrective mainte-
nance, based on a stochastic failure rate. The model
also considers the following production costs: (1) setup
costs, (2) manufacturing costs, (3) inventory costs,
(4) labour costs in regular time and (5) labour costs in
overtime.
After obtaining the joint master schedule, we tried
to figure out some likely causes for rescheduling, based
on the experience gained from the managers inter-
viewed in the exploratory case study analysis. Such
causes for rescheduling imposed the definition of new
schedules, i.e. to re-run the model for joint production
and maintenance planning.
Therefore, after rescheduling, maintenance costs in
the joint production and maintenance master schedule
have been compared with the rescheduling costs: thus,
assessing the impact of the latter and the validity of
considering them expressly as a relevant component of
the total costs of the maintenance service. In the
remainder of this article we summarise the results from
two representative cases of the four investigated in this
validation phase.
5.1. Validation company 1
The automated production line of validation company
1 works three shifts per day, 5 days per week, 48 weeks
per year, 120 h per week. The actual time available for
production is 20% less because of micro-stoppages and
other production inefficiencies.
It is also possible to use over-time work during the
week-end for a maximum of 16 h (i.e. 8 h on Saturday
and 8 h on Sunday). Working cost during regular time
is 50E/h, while during the week-end it is 62.5E/h
(i.e. 25%).
During maintenance interventions, it is required to
stop the whole line and to stop production. In order to
avoid frequent stoppages, as the line is stopped
maintenance is provided to all the different stages of
the line. We have thus modelled the whole line as a
single machine with production rate equal to the rate
of the slowest stage in the line and with maintenance
time equal to the maximum maintenance time of the
different machines in the line.
 Production Planning & Control 13
253

Table 6. Production data. Table 8. Rescheduling costs.

Production family Anticipate Postpone

X Y Administrative 400 E per 400E per

staff reschedule reschedule
Set-up costs 1000E 1000E Materials 2000E per shifting 500E per shifting
Set-up times 240 min 240 min period period
Variable production cost 0.2E/pc. 0.22E/pc. Workforce 2000E per 1000E per
Production rate 500 pcs./min 500 pcs./min shifting period reschedule
Inventory cost 0.04E/pc. 0.044E/pc.

situations mostly related to rescheduling are, referring

Table 7. Maintenance data.
to the words of the manager interviewed:
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Average cost for a preventive 11,000E
maintenance intervention in regular
time
Average cost for a preventive 13,000E
maintenance intervention in over time
Average cost for a corrective 17,000E
maintenance intervention
Average time for a preventive 16 h
maintenance intervention
Average time for a corrective 72 h
maintenance intervention
Production can be grouped into two families
(X and Y), quite similar one to the other apart from
the raw materials used. This is the reason why family Y
is 10% more expensive to produce than family X.
Each family is produced on alternate weeks with
batches of 2.5 million pieces. Set-up time is 4 h and 5
operators are required to change from family X to
family Y. Set-up cost is 1000E/set-up (5 operators * 4 h
* 50E/h). In Table 6 we present the production data,
while in Table 7 we present the maintenance data.
Maintenance activities are outsourced to the produc-
tion line manufacturer.
A preventive maintenance intervention takes 16 h
(12 h of maintenance plus 4 h for restarting produc-
tion). A corrective maintenance intervention instead
takes 72 h because providers technicians are required
to reach the customer site.
With the data provided by the manager inter-
viewed, we ran the joint model for production and
maintenance on a planning horizon of 28 weeks in
order to simulate at least 24 weeks (i.e. 6 months) at a
steady state.
The joint master schedule produced three interven-
tions: 1 in week 8, 1 in week 15, 1 in week 22, all of
them required during regular working time. From such
a solution, we have simulated different possible
scenarios that require rescheduling activities. The
. impossibility to carry out the maintenance
intervention in the planned period
(e.g. because reworks are required, because
tests are required on new products, etc.);
. increase of demand in periods coinciding with
already scheduled intervention.
Rescheduling activities result in high inefficiencies
in validation company 1 for three operational reasons:
. maintenance planners are highly saturated
and paid high salaries, so their time should
be used in an efficient way;
. technicians come from far away; the provider
of maintenance services is in fact geographi-
cally far from validation company 1;
. the preventive maintenance interventions are
quite complex, and they require a highly
skilled workforce.
Therefore, the fixed costs due to administrative
activities required for rescheduling are quite high
(i.e. 400E regardless of the number of periods of shift
required), while the costs related to material and
human resources may vary significantly in the case of
anticipations or postponements.
Anticipating interventions creates higher inefficien-
cies than postponing interventions. Nonetheless, such
inefficiencies also depend on the number of shifting
periods. In Table 8 we summarise the rescheduling
costs in the examined case.
It is then to be noticed that rescheduling costs
further depend on the time from the notice of the
rescheduling and the maintenance planned period. In
this situation it is fundamental to obtain the notice as
soon as possible. Therefore, when setting the param-
eters for the cost smoothing coefficients (in particular,
for  and D), the manager took into account all these
aspects. D was set equal to 4 with a week as the unit
period in order to maintain rescheduling costs steady in
the month. A graphical analysis of the different values
 14
254 M. Tantardini et al.

Table 9. Scenario analysis validation company 1 (MC versus RC).

Event Costs

1 In week 6 the impossibility to carry out the maintenance event in week 8 arises. MC: 57,310E
Old schedule: w8w15w22 RC: 7286E
New schedule: w7w14w21 Impact:12.7%
2 In week 6 the planned event at week 15 must be anticipated. MC: 57,310E
Old schedule: w8w15w22 RC: 1880E
New schedule: w8w14w22 Impact: 3.3%
3 In week 13 the impossibility to carry out the maintenance event in week 15 arises. MC: 39,510E
Old schedule: w15w22 RC: 6280E
New schedule: w14w21 Impact: 15.9%
4 In week 6 an increase of 10% in demand volume for period 8 comes up. MC: 57,310E
Old schedule: w8w15w22 RC: 1880E
New schedule: w8w14w22 Impact: 3.3%
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5 In week 6 an increase of 20% in demand volume for period 8 is recorded. MC: 57,310E
Old schedule: w8w15w22 RC: 7286E
New schedule: w7w14w21 Impact: 12.7%
6 In week 6 an increase of 30% in demand volume for period 8 is registered. MC: 58,160E
Old schedule: w8w15w22 RC: 12,766E
New schedule: w6w13w21 Impact: 21.9%
7 In week 6 an increase of 10% in demand volume for periods 7 and 8 arises. MC: 57,310E
Old schedule: w8w15w22 RC: 2907E
New schedule: w9w16w23 Impact: 5.1%
8 In week 6 an increase of 20% in demand volume for periods 7 and 8 is registered. MC: 58,160E
Old schedule: w8w15w22 RC: 10,280E
New schedule: w6w14w22 Impact: 17.67%

helped the manager to set the proper value of .
In particular:
.  anticipation material 0.3;
.  anticipation human resources 0.5;
.  postponing material 0.6;
.  postponing human resources 0.8.
In Table 9 we present the results from the analysis
of the different scenarios tested for the case, where in
the column costs we report maintenance costs (MC)
and rescheduling costs (RC). MC represent the sum of
the preventive maintenance costs and the expected
corrective maintenance costs from the joint planning
model utilised for generating the schedule. Instead, RC
represent the expected rescheduling costs to change
from the old schedule to the new schedule, calculated
through our cost model. Therefore, RC are not
enclosed in MC.
The impact of rescheduling costs in validation
company 1 is critical since it varies a lot (from 3.3% to
about 22%). Not taking into account such costs in this
case actually means not controlling a relevant part of
the expenditures. Thus, it seems to be important for
this company to consider such costs in the maintenance
service contract.
In particular, having the knowledge of the costs due
to rescheduling inefficiencies may help envisioning the
integration of some mechanism in the maintenance
management process; this may help improving the
coordinated decisions between Customer (production)
and Provider (maintenance) even at the rescheduling
moment. Referring specifically to the data of this
particular case, for example, assume that the two
parties have agreed an upper limit in a default decision
in the contract for rescheduling at 10% of impact on
the total maintenance costs: then, only scenarios 2, 4
and 7 may be acceptable by default. This means that
other requests might be rejected (or subject to further
negotiations before deciding on the reschedule), with
the end effect of avoiding too frequent changes and,
finally, of keeping a better stability in the maintenance
program. Furthermore, highlighting a situation with
very high rescheduling costs may also suggest to the
two parties to explore different and likely cheaper
alternatives, for example by postponing a production
order or by redesigning maintenance activities distri-
bution over the following interventions.
5.2. Validation company 2
This company is a medium-sized manufacturing firm
that employs about 120 people. The annual turnover is
around 15 million euros and the core business is to
produce and sell valves for tires (for both cars and
 Production Planning & Control 15
255

Table 10. Vulcanisation department production data. Table 11. Vulcanisation department maintenance data.

Product family Average cost for a preventive maintenance 1000E

intervention in regular time
A B Average cost for a preventive maintenance 1500E
intervention in the week-end
Set-up cost 76E/set-up 76E/set-up Average cost for a corrective maintenance 5000E
Set-up time 3.5 h 3.5 h intervention
Variable production cost 0.065E/pc. 0.06E/pc. Average time for a preventive maintenance 16 h
Production rate 7800 pcs./h 7800 pcs./h intervention
Inventory holding cost 0.0013E/pc. 0.0012E/pc. Average time for a corrective maintenance 60 h
Weekly demand 500,000 pcs. 300,000 pcs. intervention

trucks). Moreover, the company produces manome- Table 12. Rescheduling costs vulcanisation department.
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ters, inflation equipment and a list of accessories for

the automotive industry.
Production volumes are around 50 million valves
per year. The production system consists of 4 stages:
machining department, mixture production depart-
ment, vulcanisation department and assembly depart-
ment. In our research we have focused on the
vulcanisation department that consists of 2 identical
machines each one working two production families.
The vulcanisation department works in regular
time 12 h per day. The maximum over time per day is
4 h; hence the vulcanisation department can work at
maximum 16 h per day. Working cost in regular time is
19E per hour. Overtime working cost is instead 50%
higher, i.e. 28.5E per hour. Maintenance is entrusted to
an external provider that carries out about one
intervention every 3 months.
In Tables 10 and 11 we report production data and
maintenance data as received from the manager
interviewed. Basically, the very high cost of corrective
maintenance interventions is due to the fact that, in the
case of unexpected failures, it is necessary to find very
quickly both specialised technicians and materials.
Since failures imply stopping production, having quick
repair is very important. This is the reason why
corrective maintenance costs are so high.
We have run the joint model for production and
maintenance planning with the data provided. It
emerged that the optimal solution was to have 1
intervention on machine 1 in week 14 and 1 interven-
tion on machine 2 in week 13. From such solution we
have simulated different likely scenarios that would
require rescheduling activities.
Consistently with managers suggestions, the sce-
narios that we have tested represent the following
situations:
. unavailability of one of the machines to be
maintained in the planned period, because of
constraints imposed by production (e.g. test
Anticipate Postpone
Administrative 50E per reschedule 50E per reschedule
staff
Materials 100E per shifting 100E per shifting
period period
Workforce 75E per reschedule 50E per reschedule
on a new product, re-works, unexpected
demand variation, etc.);
. 10% increase in demand in the period when
the interventions were scheduled and in the
close periods; we have not simulated higher
increases of demand because products are not
characterised by high variations in demand.
Rescheduling costs have been assessed as in
Table 12. The manager interviewed confirmed that it
is more critical to anticipate an intervention rather
than to postpone it: this is the main operational reason
for being efficient in a schedule for the case.
All the scenarios identified in this case have been
evaluated in three rescheduling moments, so as to be
able to assess diverse time to intervention. Parameters
for the smoothing coefficients have been selected by the
manager as follows:
. D 4;
.  (anticipation) 0.5;
.  (postponement) 0.6.
In Table 13 we summarise the results from the
analysis of the different scenarios tested in the case. In
Table 13 MC and RC follow the same logic as in
validation company 1.
Second companys rescheduling costs impact less
than in validation company 1. Moreover, costs have
a lower variation, ranging from 2.3% to 8.3%.
Anyhow, their relevance cannot be neglected, most of
all as the frequency of rescheduling requests increases.
 16
256 M. Tantardini et al.

Table 13. Scenario analysis validation Company 2 (MC versus RC).

Scenario Costs

1 In period 5 the unavailability of machine 1 to be maintained in week 14 is noted. MC: 6032E

Old schedule: w14(M1)w13(M2); RC: 137.5E
New schedule: w12(M1)w13(M2) Impact: 2.28%
2 In period 11 the unavailability of machine 1for week 14 is noted. MC: 4809E
Old schedule: w14(M1)w13(M2); RC: 400E
New schedule: w12(M1)w13(M2) Impact: 8.32%
3 In period 11 the unavailability of machine 1 for week 14 is noted, both in regular time and weekend. MC: 4809E
Old schedule: w14(M1)w13(M2); RC: 400E
New schedule: w12(M1)w13(M2) Impact: 8.32%
4 In period 5 an increase in demand of about 10% in week 14 arises. MC: 6032E
Old schedule: w14(M1)w13(M2); RC: 137.5E
New schedule: w12(M1)w13(M2) Impact: 2.28%
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5 In period 8 an increase in demand of 10% for week 14 arises. MC: 5582E

Old schedule: w14(M1)w13(M2); RC: 225E
New schedule: w12(M1)w13(M2) Impact: 4.03%
6 In period 11 an increase in demand of 10% for week 14 comes up. MC: 4809E
Old schedule: w14(M1)w13(M2); RC: 400E
New schedule: w12(M1)w13(M2) Impact: 8.32%
7 In period 8 an increase in demand of 10% during weeks 13 and 14 arises. MC: 5655E
Old schedule: w14(M1)w13(M2); RC: 450E
New schedule: w11(M1)w12(M2) Impact: 7.96%

Hence, the acceptance of a rescheduling request
issued by the customer may be assessed with these
numbers: referring to the data of the case, assume, for
example, that Customer and Provider have agreed in
the contract on an upper limit of 5% impact, as
threshold to accept by default the rescheduling request;
only scenarios 1, 4 and 5 may be executed under this
agreement.
As a conclusion to this case, then, we can confirm
the results of validation company 1. Indeed, consider-
ing expressly rescheduling costs is important also in
validation company 2 for supporting the decision-
making process about rescheduling events. The higher
the generated inefficiency, the higher the need for
highlighting a rescheduling alternative.
Moreover, it is worth observing that validation
company 2 is different from validation company 1.
At the beginning of the study in validation company 2,
the operational reasons for being efficient seemed quite
important but were dominated by the need to provide
quick repairs in order to reduce the impact of
production losses during corrective maintenance.
At the end of our study, we have shown that the
inefficiencies from rescheduling are significant indeed
and thus it is very important not to neglect them. This
conclusion can be used as a general remark for all
those companies recognising that the problem of
maintenance efficiency exists but declaring, at the
same time, that maintenance has to provide all the
flexibility to follow production for all the changes
required (see, e.g. in Section 3, our companies B and G
of the exploratory case study analysis).
6. Conclusions
Rescheduling maintenance interventions is a frequent
issue in maintenance service contracts. Nonetheless,
today the providers of maintenance services hardly
measure the inefficiencies deriving from rescheduling in
terms of costs.
In the current mindset of managers, production has
the highest priority and maintenance providers have to
be flexible enough to modify the schedules as produc-
tion requires. Provider flexibility is thus very appreci-
ated by the customer (production), but there is no
robust scheme to correspondingly acknowledge an
economic compensation.
This happens even if rescheduling costs are esti-
mated to be an important quota of the maintenance
costs. For example, in the validation case studies
presented in this article rescheduling costs can range
from a 2.3% to 22% of the total maintenance costs of
the master schedule. This underlines the importance of
considering them. Hence, some managerial implica-
tions have to be elicited from our research.
First of all, the service provider should consider
such rescheduling costs since they represent a relevant
 Production Planning & Control
part of its expenditures. Not measuring well these costs
means neglecting an important quota of the total costs
of the maintenance service contract and possibly
wrong understanding of the profitability of the
contract.
Therefore, enclosing rescheduling costs in the
maintenance contracts, in the negotiations between
providers and customers and, last but not least, in the
KPI monitoring process, could allow for the possibility
to provide a new support for decision making and the
information needed to calculate the economic com-
pensation for provider flexibility. As the formulation
of the cost model is clear and has been agreed upon by
the contracting parties, this can be the base ground for
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evaluating whether to accept or not a rescheduling
request and how much to compensate the rescheduling
decision and the related inefficiencies that have been
created by the decision.
Eventually, we consider that measuring reschedul-
ing costs should be used by the service provider as an
economic quantification of the flexibility provided to
the customer, regardless of the fact that there is an
express economical compensation associated to such
flexibility or not.
Basically, measuring and showing rescheduling
costs to the customer means making clearer the fact
that an extra-flexibility often not expressly stipulated
in the contract is actually provided to the customer.
In this article we have also proposed a cost model
for quantifying rescheduling costs that has been
validated and considered suitable for implementation
by managers of real companies. The model properly
considers the components of the rescheduling costs and
provides the correct associations between the opera-
tional variables affecting such costs that were high-
lighted in our case study analysis.
However, one point that requires attention in the
mathematical model proposed is the measurement of
providers flexibility through the smoothing coeffi-
cients. Their parameters, D and , are the base elements
for the theory on flexibility of maintenance service,
proposed in this article; it would be interesting to
further analyse such theory, in order to see whether a
correlation exists or not among different maintenance
organisations, featuring different levels of management
maturity and financial resources, and with different
production contexts.
Moreover, another development of our research
findings can be considered using our cost model to
assess investments on the improvement of flexibility of
a maintenance service (e.g. an investment in a capacity
buffer for the maintenance workforce or in a flexible
scheme for the quick spare parts provisioning). Indeed,
once good empirical proofs of our theory on the
17
257
flexibility of maintenance service are achieved, we
envision that this theory may be considered in the field
of life cycle costing (LCC) of physical assets. Using
LCC, we expect to discuss the benefits (reduction of
operating costs) of investing in an improved flexibility
of the maintenance services.
Concluding, in this article we have demonstrated
that neglecting rescheduling costs is a bad, but very
frequent practice for a maintenance service provider.
For future works, we expect new studies investigating
the problem of rescheduling planned maintenance
interventions, both by enlarging empirical proofs and
investigating the adoption of the model in the theory of
LCC of physical assets.
Acknowledgements
We would like to acknowledge the anonymous reviewers for
their constructive and helpful comments. This research is
part of the activities performed by ASAP service manage-
ment, a network of Universities and Companies devoted to
the development and dissemination of improvements in
managing services.
Notes on contributors
Marco Tantardini received his BSc,
MSc and PhD degrees in Industrial
Engineering at Politecnico di Milano,
where he currently received his post-
doctoral position at the Department
of Management, Economics and
Industrial Engineering. His research
interests concern the operational
excellence in service companies, in
manufacturing companies (in particular, in non-repetitive
manufacturing environments) and in supply chains. He is the
author and co-author of about 20 papers. Some of his recent
articles have focused on investigating how the implementa-
tion of the Lean principles affects the operations manage-
ment of non-repetitive manufacturing companies and of
service companies and on investigating the use of workload
control for the supply chain management of manufacturing
and service companies.
Alberto Portioli-Staudacher is a Full
Professor of Operations and Supply
Chain Management in Politecnico di
Milano, where he started working in
1990. His research interests are in the
area of operations, quality and supply
chain management, where he has
deepened the issue of operational
excellence and operational improve-
ment in both manufacturing and service organisation. He has
published four books and over 100 articles in international
journals and conference proceedings. He is running training
program on Lean Six Sigma and the Director of the
 18
258 M. Tantardini et al.
Executive MBA at MIP the Business School of Politecnico
di Milano where he is responsible of the operations and
quality management area. He leads research and consultancy
projects on operational excellence in manufacturing and
service companies in Italy and Europe.
Marco Macchi is a Researcher at
Politecnico di Milano, currently teach-
ing modelling of production systems
and logistics and design and manage-
ment of production plants, Vice
Director of the Executive Master on
Industrial Maintenance Management,
scientifically responsible of the
Observatory on Technologies and
Services for Maintenance, Secretary of the IFAC Working
Downloaded by ["Queen's University Libraries, Kingston"] at 05:15 06 January 2015
Group on Advanced Maintenance Engineering, Services and
Technology, Book Review Editor of Production Planning &
Control. He is author or co-author of four books and more
than 100 papers at national and international levels. His
research interests are in industrial engineering, with special
concern to maintenance management and industrial plant
automation.
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