Reliability value analysis of complex production systems based on the losses from failures

Purpose – The aim of this paper is to propose efficient models and algorithms for reliability value analysis of complex repairable systems linking reliability and losses from failures. Design/methodology/approach – The conventional reliability analysis is based on the premise that increasing the reliability of a system will decrease the losses from failures. In this paper it is demonstrated that a system with larger reliability does necessarily mean a system with smaller losses from failures. In other words, a system reliability improvement, which is disconnected from the losses from failures does not necessarily reduce the losses from failures. An efficient discrete‐event simulation model and algorithm are proposed for tracking the losses from failures for systems with complex topology. A new algorithm is also proposed for system reliability analysis related to productions systems based on multiple production units where the absence of a critical failure means that at least m out n production units are working. Findings – A model for determining the distribution of the net present value (NPV) characterising the production systems is developed. The model has significant advantages compared to models based on the expected value of the losses from failures. The model developed in this study reveals the variation of the NPV due to variation of the number of critical failures and their times of occurrence during the entire life‐cycle of the systems. Practical implications – The proposed models have been successfully applied and tested for reliability value analysis of productions systems in deepwater oil and gas production. Originality/value – The proposed approach has been demonstrated by comparing the losses from failures and the NPVs of two competing design topologies: one based on a single‐channel control and the other based on a dual‐channel control.