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A model for maintenance service contract design, negotiation and optimization

Wang, W 2009, 'A model for maintenance service contract design, negotiation and optimization' , European Journal of Operational Research, 201 , pp. 239-246.

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Abstract

A model is presented in this paper for maintenance service contract design, negotiation and optimization. The model was developed under the assumption that there are one customer and one unique service provider who is the Original Equipment Manufacturer (OEM) and is called the agent in this paper. This is typically applied to the situation where the OEM is the only possible service supplier such as in the case of major military equipment in the defense sector. Three contract options were considered, depending on the extent of outsourced maintenance activities. From an agent point of view, they are, (1), the agent carries out all repairs and inspections; (2), the agent carries out failure based repairs, and (3), the agent does inspections and repairs to the defects identified at inspections. For options two and three, the customer does the rest of maintenance. The relationship between inspections and failures was modeled using the delay time concept and a numerical example was illustrated. The cases of perfect information to both parties and information asymmetry were also discussed in the example. The model developed can be used for contract design, negotiation and optimization.

Item Type: Article
Uncontrolled Keywords: Maintenance Service contract Repair Inspection Reliability Delay time
Themes: Subjects / Themes > Q Science > QA Mathematics > QA275 Mathematical Statistics
Subjects outside of the University Themes
Schools: Colleges and Schools > College of Business & Law > Salford Business School > International Strategy People Management & Salford Law
Journal or Publication Title: European Journal of Operational Research
Publisher: Elsevier
Refereed: Yes
ISSN: 0377-2217
Funders: Engineering and Physical Sciences Research Council (EPSRC)
Depositing User: W Wang
Date Deposited: 24 Nov 2009 09:28
Last Modified: 20 Jan 2014 20:53
URI: http://usir.salford.ac.uk/id/eprint/2538

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