Optimizing maintenance service contracts under imperfect maintenance and a finite time horizon

R. Pascual, D. Godoy and H. Figueroa

Applied Stochastic Models in Business and Industry, 2013, vol. 29, issue 5, 564-577

Abstract: When a company decides to outsource a service, the most important reasons for doing so usually are to focus on core business, to be able to access high‐quality services at lower costs, or to benefit from risk sharing. However, service contracts typically follow a structure whereby both owner and contractor attempt to maximize expected profits in a noncoordinated way. Previous research has considered supply chain coordination by means of contracts but is based on unrealistic assumptions such as perfect maintenance and infinite time‐span contracts. In this work, these limitations are overcome by defining the supply chain through a preventive maintenance strategy that maximizes the total expected profit for both parties in a finite time‐span contract. This paper presents a model to establish such conditions when maintenance is imperfect, and the contract duration is fixed through a number of preventive maintenance actions along a significant part of the asset life cycle under consideration. This formulation leads to a win–win coordination under a set of restrictions that can be evaluated a priori. The proposed contract conditions motivate stakeholders to continually improve their maintenance services to reach channel coordination in which both parties obtain higher rewards. Copyright © 2012 John Wiley & Sons, Ltd.

Date: 2013
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://doi.org/10.1002/asmb.1943

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wly:apsmbi:v:29:y:2013:i:5:p:564-577

Access Statistics for this article

More articles in Applied Stochastic Models in Business and Industry from John Wiley & Sons
Bibliographic data for series maintained by Wiley Content Delivery ().