Optimizing maintenance service contracts under imperfect maintenance and a finite time horizon
Article first published online: 13 AUG 2012
Copyright © 2012 John Wiley & Sons, Ltd.
Applied Stochastic Models in Business and Industry
Volume 29, Issue 5, pages 564–577, September/October 2013
How to Cite
Pascual, R., Godoy, D. and Figueroa, H. (2013), Optimizing maintenance service contracts under imperfect maintenance and a finite time horizon. Appl. Stochastic Models Bus. Ind., 29: 564–577. doi: 10.1002/asmb.1943
- Issue published online: 8 OCT 2013
- Article first published online: 13 AUG 2012
- Manuscript Revised: 6 JUL 2012
- Manuscript Accepted: 6 JUL 2012
- Manuscript Received: 2 MAY 2011
- service contracts;
- imperfect maintenance;
- finite time horizon
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.