Strategic maintenance decision making under adverse contribution margins—a case study in a cement plant

Abstract

The research in a cement plant on decision-making with respect to improvements to address equipment failure in the kiln utilized the identification of the costs associated with the failure as a precursor to the development of the appropriate strategies. The cost model utilized included the losses related to opportunity losses, the direct losses related to the repair, and the losses that contributed to an increase in variable costs. In this paper, the application of the sum of the latter two components of the model to identify viable maintenance and operational improvements from an economic perspective was carried out. This is extremely relevant when the company is constrained by low-selling price and low demand. Low-selling price translates into low-contribution margins and therefore requires a more prudent allocation of resources to obtain immediate positive results. This is illustrated in this paper based on the case study in a cement kiln covering a five-year period.