Tubular electric heaters are used in the industry for heating liquids and gases. The flexibility in fit to applications of any shape or size is the main advantage of the tubular heater. Normally the heater tubes are placed inside the tank in which the liquids and gases flow. The heat transfer occurs mainly through convection mode. Baffles are used to enhance the heat transfer. But at the same time, it will increase the possibility of failure due to localized hot spot. In this work, an investigation on the failure of an industrial heater is carried out using computational fluid dynamics and suggested design modifications based on the computational investigations are presented. Three-dimensional numerical simulations of turbulent fluid flow and heat transfer in an industrial tubular air heater with segmented baffles have been conducted by varying parameters such as baffles spacing and baffle cut ratio. The design modifications for removing hot spots are done by conducting simulations by including breath holes in the baffle, baffle-heating tube clearance, and flow deflector.