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Spares provisioning under performance-based logistics contract: profit-centric approach

Author

Listed:
  • D Nowicki

    (Stevens Institute of Technology)

  • U D Kumar

    (Stevens Institute of Technology)

  • H J Steudel

    (University of Wisconsin)

  • D Verma

    (Stevens Institute of Technology)

Abstract

Performance-based logistics (PBL) is emerging as a preferred logistic support strategy within the public sector, especially the Department of Defence. Under a PBL strategy, the customer buys performance, such as operational availability, mission readiness and operational reliability, instead of contracting for a specified collection of resources defining the underlying support infrastructure. The literature on PBL is still in its infancy and additional research is required to optimize logistic resources such as spare parts, equipment, facilities, labour etc within a PBL context. In this paper, an optimization model is developed for spares provisioning under a multi-item, multi-echelon scenario. The objective of the optimization model is to maximize the profit to the supplier under a PBL contract.

Suggested Citation

  • D Nowicki & U D Kumar & H J Steudel & D Verma, 2008. "Spares provisioning under performance-based logistics contract: profit-centric approach," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 59(3), pages 342-352, March.
    • Handle: RePEc:pal:jorsoc:v:59:y:2008:i:3:d:10.1057_palgrave.jors.2602327
    DOI: 10.1057/palgrave.jors.2602327
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    References listed on IDEAS

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    Cited by:

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    2. Korkeamäki, Lauri & Kohtamäki, Marko & Parida, Vinit, 2021. "Worth the risk? The profit impact of outcome-based service offerings for manufacturing firms," Journal of Business Research, Elsevier, vol. 131(C), pages 92-102.
    3. Patra, Pradipta & Kumar, U. Dinesh & Nowicki, David R. & Randall, Wesley S., 2019. "Effective management of performance-based contracts for sustainment dominant systems," International Journal of Production Economics, Elsevier, vol. 208(C), pages 369-382.
    4. Ali M. S. Al-Raqadi, 2020. "Progressive evolutionary frameworks: application of ‘a system of forces’ and EoT for OPMP/SURSP," International Journal of System Assurance Engineering and Management, Springer;The Society for Reliability, Engineering Quality and Operations Management (SREQOM),India, and Division of Operation and Maintenance, Lulea University of Technology, Sweden, vol. 11(1), pages 155-174, February.
    5. Wang, Yukun & Gao, Weizheng & Li, Xiaopeng & Liu, Yiliu, 2024. "Joint optimization of performance-based contracting, condition-based maintenance and spare parts inventory for degrading production systems," Reliability Engineering and System Safety, Elsevier, vol. 243(C).
    6. Settanni, Ettore & Newnes, Linda B. & Thenent, Nils E. & Parry, Glenn & Goh, Yee Mey, 2014. "A through-life costing methodology for use in product–service-systems," International Journal of Production Economics, Elsevier, vol. 153(C), pages 161-177.
    7. Qin, Xuwei & Jiang, Zhong-Zhong & Sun, Minghe & Tang, Liang & Liu, Xiaoran, 2021. "Repairable spare parts provisioning for multiregional expanding fleets of equipment under performance-based contracting," Omega, Elsevier, vol. 102(C).
    8. Yang, Li & Ye, Zhi-sheng & Lee, Chi-Guhn & Yang, Su-fen & Peng, Rui, 2019. "A two-phase preventive maintenance policy considering imperfect repair and postponed replacement," European Journal of Operational Research, Elsevier, vol. 274(3), pages 966-977.
    9. Mirzahosseinian, H. & Piplani, R., 2011. "A study of repairable parts inventory system operating under performance-based contract," European Journal of Operational Research, Elsevier, vol. 214(2), pages 256-261, October.
    10. Xian Zhao & Jing Zhang & Xiaoyue Wang, 2019. "Joint optimization of components redundancy, spares inventory and repairmen allocation for a standby series system," Journal of Risk and Reliability, , vol. 233(4), pages 623-638, August.
    11. Wang, Jingjing & Zhao, Xian & Guo, Xiaoxin, 2019. "Optimizing wind turbine's maintenance policies under performance-based contract," Renewable Energy, Elsevier, vol. 135(C), pages 626-634.
    12. Nowicki, David R. & Randall, Wesley S. & Ramirez-Marquez, Jose Emmanuel, 2012. "Improving the computational efficiency of metric-based spares algorithms," European Journal of Operational Research, Elsevier, vol. 219(2), pages 324-334.
    13. Godoy, David R. & Pascual, Rodrigo & Knights, Peter, 2014. "A decision-making framework to integrate maintenance contract conditions with critical spares management," Reliability Engineering and System Safety, Elsevier, vol. 131(C), pages 102-108.
    14. Jin, Tongdan & Tian, Yu, 2012. "Optimizing reliability and service parts logistics for a time-varying installed base," European Journal of Operational Research, Elsevier, vol. 218(1), pages 152-162.

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