Incentive maintenance outsourcing contracts for channel coordination and improvement

Tarakci, Hakan; Tang, Kwei; Moskowitz, Herbert; Plante, Robert

doi:10.1080/07408170600692259

Cited by 58 publications

(41 citation statements)

References 15 publications

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“…Within a deterministic framework, Tarakci et al (2006a) and Tarakci et al (2006b) analyze several mechanisms, including a pricing scheme for maintenance contracts, to ensure that the optimal intervals for preventive maintenance from the perspectives of both service provider and equipment owner coincide. Tseng and Yeh (2013) extend the single processor case discussed in Tarakci et al (2006a) for riskaverse customers.…”

Section: Literature Reviewmentioning

confidence: 99%

Optimal design of uptime-guarantee contracts under IGFR valuations and convex costs

Hezarkhani

2017

European Journal of Operational Research

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An uptime-guarantee contract commits a service provider to maintain the functionality of a customer's equipment at least for certain fraction of working time during a contracted period. This paper addresses the optimal design of uptime-guarantee contracts for the service provider when the customer's valuation of a contract with a given guaranteed uptime level has an Increasing Generalized Failure Rate (IGFR) distribution. We first consider the case where the service provider proposes only one contract and characterize the optimal contract in terms of price as well as guaranteed uptime level assuming that the service provider's cost function is convex. In the second part, the case where the service provider offers a menu of contracts is considered. Given the guaranteed uptime levels of different contracts in the menu, we calculate the corresponding optimal prices. We also give the necessary and sufficient conditions for the existence of optimal contract menus with positive expected profits.

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Section: Literature Reviewmentioning

confidence: 99%

Optimal design of uptime-guarantee contracts under IGFR valuations and convex costs

Hezarkhani

2017

European Journal of Operational Research

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“…It should be noted that [7,8] have already used the concept of bonus functions to encourage good maintenance quality in the context of maintenance outsourcing. In [7,8], however, both PM and CM are outsourced, which makes it different from the cases discussed in this paper.…”

Section: Decision Variablesmentioning

confidence: 99%

“…In the literature, the types of maintenance outsourcing that have been studied so far include: Type-1 outsourcing: outsourcing both CM and PM [1][2][3][4][5][6][7][8][9], and Type-2 outsourcing:…”

Section: Prior Workmentioning

confidence: 99%

“…PM policies in the context of outsourcing both PM and CM have been discussed by a number of authors (see [1][2][3][4][5][6], for example). [7,8] use incentive contracts to induce the contractor to select the maintenance policy that optimises the total profit of the manufacturer and the contractor. In addition to the consideration of CM and PM, [9] considers inspection policies and optimises the contract parameter under different scenarios.…”

Section: Prior Workmentioning

confidence: 99%

“…The issues of the optimum strategies of maintenance outsourcing have been studied by a number of authors [1][2][3][4][5][6][7][8][9][10][11][12][13]. Existing research has been focused on either outsourcing both preventive maintenance (PM) and corrective maintenance (CM) or outsourcing CM only.…”

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Assessing maintenance contracts when preventive maintenance is outsourced

2012

Reliability Engineering & System Safety

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In some companies, corrective maintenance is conducted in-house but preventive maintenance might be outsourced. This raises a need to optimise some parameters such as the number of contracts from a perspective of the equipment owner. This paper considers a maintenance policy for such a situation, analyses the roles of the parameters in a PM model, proposes approaches to defining bonus functions, and finally discusses special cases of both the PM policy and the bonus function.Numerical examples are also given to explore the impact of parameters on the expected lifecycle cost rate.

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

Pascual

Godoy

Figueroa

2012

Appl Stoch Models Bus & Ind

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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.where t represents time, k corresponds to the index of the k-th preventive action, and˛is the maintenance improvement factor, 0 6˛6 1 3. Corrective maintenance is minimal. 4. Direct (spare+labor) costs and length of PM are C p (money units, mu) and T p (time units, tu), respectively. 5. Direct costs and length of corrective maintenance are, respectively, C r (mu) and T r (tu). 6. The interval between PM is T (tu).

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Incentive maintenance outsourcing contracts for channel coordination and improvement

Cited by 58 publications

References 15 publications

Optimal design of uptime-guarantee contracts under IGFR valuations and convex costs

Optimal design of uptime-guarantee contracts under IGFR valuations and convex costs

Assessing maintenance contracts when preventive maintenance is outsourced

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

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