Adapting modern portfolio theory for prioritising asset care planning in industry

Van den Honert, Andrew Francis ; Vlok, Pieter-Jan (2014-05)

CITATION: Van den Honert, A. F. & Vlok, P. J. 2014. Adapting modern portfolio theory for prioritising asset care planning in industry. South African Journal of Industrial Engineering, 25(1):107-116, doi:10.7166/25-1-673.

The original publication is available at http://sajie.journals.ac.za

Article

Productivity improvement within any organisation can lead to increased turnover. This study focuses on developing a maintenance productivity improvement model that is based upon an established financial investment portfolio technique known as the Modern Portfolio Theory (MPT). The model can be used as a tool to minimise and diversify the long term risk associated with variances or fluctuations in the increase in productivity in multiple maintenance service centres. This is achieved by optimising the most efficient way of splitting resources, such as time and money, between these multiple service centres, resulting in increased productivity and a more constant maintenance work load. This model is verified through the use of an efficient frontier, resulting in a graphical method to determine the link between the expected increase in productivity and the standard deviation of the increase in productivity. Ultimately this model can be adapted for use in many sectors within an organisation, over and above the application in maintenance prioritisation. This study concludes that the model offers a simple tool to aid decision-making among various combinations of assets within a maintenance context; and this model, adapted from MPT, was successfully validated with the use of an efficient frontier.

’n Verbetering in produktiwiteit kan lei tot groei in omset in enige organisasie. Die fokus van hierdie studie is die ontwikkeling van ’n produktiwiteitsverbeteringsmodel in instandhouding. Die model is gebaseer op die gevestigde finansiële beleggings portefeulje tegniek bekend as die ‘Moderne Portefeulje Teorie’ (MPT). Die model kan gebruik word om die langtermyn risiko as gevolg van afwykings en/of verwisselinge in die produktiwiteit van verskeie onderhoudswerkswinkels te verminder en/of te diversifiseer. Die verbetering kan bereik word deur die optimering van die mees doeltreffende manier om hulpbronne te verdeel tussen verskeie dienssentrums. ‘Hulpbronne’ kan byvoorbeeld tyd of geld wees. Die optimering lei tot ’n verbetering in produktiwiteit van ’n organisasie sowel as ’n meer konstante werkslading vir die onderhoudswerkswinkels. Die model is geverifieer met die gebruik van ’n doeltreffende begrensing wat lei tot ’n grafiese voorstelling om die verband tussen die verwagte toename in produktiwiteit en die standaard afwyking van die toename in produktiwiteit te bepaal. Die toekomstige vooruitsig vir hierdie model is dat dit kan aangepas word om van toepassing te wees in vele segmente van ’n organisasie. Die resultate van hierdie studie toon dat hierdie model as ’n eenvoudige instrument kan gebruik word om met die besluitneming in verband met die onderhoud van verskeie kombinasies van bates te vergemaklik. Die resultate toon dat die model, wat gebaseer is op die MPT, suksesvol geverifieer is deur die gebruik van ’n doeltreffende grens.

Please refer to this item in SUNScholar by using the following persistent URL: http://hdl.handle.net/10019.1/97593
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