Given a product design and a repair network for capital goods, a level of repair analysis determines for each component in the product (1) whether it should be discarded or repaired upon failure and (2) at which location in the repair network to do this. In this paper, we show how the problem can be modelled as a minimum cost flow problem with side constraints. Advantages are that (1) solving our model requires less computational effort than solving existing models and (2) we achieve a high model flexibility, i.e., many practical extensions can be added. Furthermore, we analyse the added value of modelling the exact structure of the repair network, instead of aggregating all data per echelon as is common in the literature. We show that in some cases, cost savings of over 7% can be achieved. We also show when it is sufficient to model the repair network by echelons only, which requires less input data.
Basten, R. J. I., Heijden, van der, M. C., & Schutten, J. M. J. (2011). A minimum cost flow model for level of repair analysis. International Journal of Production Economics, 133(1), 233-242. https://doi.org/10.1016/j.ijpe.2010.03.025