11Reliability and Service Integration

11.1 Introduction

The product‐service system (PSS) is emerging as a new business model in designing and marketing capital equipment as the economy is moving from fragmented products and services to integrated operations. The fusion of product and service markets will have profound impacts on how firms design, manufacture, and support capital goods in this fast‐paced, technology‐driven world. Under the umbrella of Industry 4.0, the technologies underpinning product‐service integration are digital industrialization, the Internet of Things, Big Data analytics, condition‐based monitoring, and performance contracting. In this chapter, we design integrated PSSs from two aspects: minimizing the product lifecycle cost and maximizing the service profit margin. The decision variables include reliability, spare parts inventory, and the maintenance strategy. Particularly, Section 11.2 discusses the technological factors and theoretical advances in PSS. Section 11.3 presents a reliability‐inventory allocation model to minimize the product life cycle cost across design, manufacturing, and after‐sales support. Section 11.4 extends the reliability‐inventory optimization model to a variable size of fleet. In Section 11.5 we further incorporate preventive maintenance (PM) into the reliability‐inventory allocation model. Section 11.6 presents a case study on designing an integrated PSS for the wind power industry.

11.2 The Rise of Product‐Service System

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