A model for maintenance service contract design, negotiation and optimization

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. T...

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Bibliographic Details
Published inEuropean journal of operational research Vol. 201; no. 1; pp. 239 - 246
Main Author Wang, Wenbin
Format Journal Article
LanguageEnglish
Published Amsterdam Elsevier B.V 16.02.2010
Elsevier
Elsevier Sequoia S.A
SeriesEuropean Journal of Operational Research
Subjects
Applied sciences
Delay time
Exact sciences and technology
Firm modelling
Inspection
Maintenance
Maintenance Service contract Repair Inspection Reliability Delay time
Mechanical engineering. Machine design
OEM
Operational research and scientific management
Operational research. Management science
Optimization
Outsourcing
Reliability
Reliability theory. Replacement problems
Repair
Repair & maintenance
Service contract
Studies
Inspection
Service contract
Delay time
Maintenance
Repair
Reliability
Contracting service
Rupture
Subcontracting
Delay system
Proposals
Failures
Modeling
Original equipment manufacturer
Engineering design
Asymmetry
User service
Bargaining
Defect
Contract
Delayed time
Military equipment
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Summary: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.
ISSN:0377-2217
1872-6860
DOI:10.1016/j.ejor.2009.02.018