Journal of Manufacturing Systems 43 (2017) 58–78 Contents lists available at ScienceDirect Journal of Manufacturing Systems j ourna l ho me pa g e: www.elsevier.com/locate/jmansys Technical Paper Optimizing upgrade and imperfect preventive maintenance in failure-prone second-hand systems A. Khatab a,∗ , C. Diallo b , I.B. Sidibe c a Laboratory of Industrial Engineering, Production and Maintenance (LGIPM), Lorraine University, National School of Engineering, Metz, France b Department of Industrial Engineering, Dalhousie University, Halifax, Canada c Centre de Formation et de Perfectionnement en Statistique (CFP-Stat), Bamako, Mali a r t i c l e i n f o Article history: Received 14 February 2016 Received in revised form 27 January 2017 Accepted 6 February 2017 Keywords: End-of-life systems Upgrade Imperfect preventive maintenance Reliability Optimization a b s t r a c t Upgrade operations are improvement actions that can be carried out on recovered end-of-life systems to rejuvenate them and make them fit for subsequent lifecycles. These operations are costly but improve the reliability of these second-hand systems and consequently can reduce their maintenance costs. In this paper, a mathematical model for the joint determination of the optimal acquisition age, upgrade level, and imperfect preventive maintenance strategy is developed for a second-hand system. The system is acquired and upgraded, if necessary, before being put into operation and preventively maintained each time its reliability reaches a minimum required reliability threshold. Preventive maintenance actions are imperfect and modeled using the hybrid hazard rate approach. Optimality conditions are derived and discussed for general cost structures of the acquisition and upgrade actions. A test case is provided to illustrate the validity of the proposed approach. Numerical experiments and sensitivity analysis are also conducted to investigate the interactions between the upgrade level decisions, the optimal maintenance policy decisions and the total costs incurred during the lifetimes of these refreshed second- hand systems. Crown Copyright © 2017 Published by Elsevier Ltd on behalf of The Society of Manufacturing Engineers. All rights reserved. 1. Introduction In the past decade, concerns for sustainability have led to the adoption of legislation to force the collection and recovery of end-of-life products, and electronics in particular. This has generated a stream of parts and products that can be reconditioned/refreshed to be reused on assembly lines or in maintenance activities. Many well established e-commerce platforms such as Amazon and EBay facilitate the posting and the sale of used products. The used product market is a lucrative business and has become increasingly attractive. It covers a wide range of used products from mobile phones and transportation engine parts, up to heavy industrial machinery. This new source for components raises many interesting decision-making questions and research problems some of which have been extensively studied by researchers. For example, closed-loop supply chain design and management models, optimal inventory control policies for returned products, and remanufacturing production planning strategies have flourished during the past decade [1–6]. However, important research questions relating to quality, reliability, maintenance engineering and warranty policies for remanufac- tured systems that will be reintroduced into the market as second-hand or refreshed products have been largely ignored [7,8]. In order to generate demand for reconditioned or second-hand products, manufacturers or dealers/brokers have introduced a com- bination of initiatives to promote and infer the quality of their products. These initiatives include significant price reductions, generous warranty coverage (same coverage as new systems, free preventive maintenance in the first year of the refreshed system), upgrade of recovered systems before resale [9]. Usually, end-of-life (EOL) products are recovered, sorted and tested before remanufacturing and reuse. Upgrade activities are carried out to bring the recovered systems to better condition and thus effectively reducing their age [10,11]. The cost of this rejuvenating/refreshing action depends on the improvement level carried out and is an expense that can increase the sale price of the reconditioned systems. However, the age reduction provides better reliability that can translate into better performance during operational lifetime. Therefore, trade-offs have to be made to find the best upgrade level for a given age of used products recovered. ∗ Corresponding author. E-mail addresses: abdelhakim.khatab@univ-lorraine.fr (A. Khatab), Claver.Diallo@dal.ca (C. Diallo), bouransidibe@gmail.com (I.B. Sidibe). http://dx.doi.org/10.1016/j.jmsy.2017.02.005 0278-6125/Crown Copyright © 2017 Published by Elsevier Ltd on behalf of The Society of Manufacturing Engineers. All rights reserved.