MTBF and Maintenance Costs

As you have learned from your reading, knowing when a part or system will fail is important for a company.
Mean time between failures (MTBF) is the expected time between failures of a part, process, or system and is
a common matrix for a firm to use to understand how often a failure will occur.
Assume that you are the manager of a production line and are responsible for keeping the machines running
24 hours per day, 365 days per year. When a machine breaks, it must be repaired and put back onto operation
as soon as possible. The problem is that your machines are always breaking down, and you really do not have
a good understanding of how often a machine breaks down.
Hint: For this assignment, you will NOT be using the OM software but should use Excel to work the problem.
You decide to run a test to determine the mean time between failures. During the test, you start with 20
operational machines on your production line producing widgets. You record breakdowns during an 80-hour
observation period in which three of the machines broke down. One at 35 hours into the test, one at 50 hours
into the test, and the 3rd failure comes at 75 hours.

Use Excel and the data you collected to calculate the MTBF of your machines. Analyze your results and place
them on the spreadsheet.
Continue to Step 2: Calculate the Expected Breakdown Maintenance Costs . . .
After collecting and analyzing the MTBF data, you were surprised at how often your machines really broke
down. At your last company, you remember that they had a service firm that would come in and perform
preventive maintenance (PM) on your machines and you wonder if this would be an option to reduce
breakdowns. However, before you go to your boss to pitch the idea, you want to see if using an outside PM
firm would reduce your cost.
So you do some research on the cost and run another study on the number of breakdowns of your machines.
Over the last 12 months, the machines have broken down at the rate indicated in the following table:
Number of Breakdowns Number of Months that Breakdowns Occurred
0 0
1 7
2 3
3 2
You also do some research on breakdown cost and find that the average cost of a breakdown to your firm is
$350. You find a service firm and request a price quote from them. The PM service firm costs $200 per month,
but they tell you that you can still expect on average of 2 breakdowns per month even with the PM service.
Use Excel and the data to calculate the expected breakdown maintenance cost versus hiring the PM firm to
service your machines.
Analyze your results and indicate which of the options you will recommend to your boss – hire the firm or
continue dealing with the breakdowns at the current rate?

Sample Solution