IDEAS home Printed from https://ideas.repec.org/a/spr/annopr/v316y2022i1d10.1007_s10479-020-03758-7.html
   My bibliography  Save this article

Optimizing production and maintenance for the service-oriented manufacturing supply chain

Author

Listed:
  • Zhong-Zhong Jiang

    (Northeastern University
    Ministry of Education)

  • Na He

    (Northeastern University)

  • Xuwei Qin

    (Northeastern University
    Ministry of Education)

  • Minghe Sun

    (the University of Texas at San Antonio)

  • Pengfei Wang

    (Northeastern University)

Abstract

This work investigates a service-oriented manufacturing supply chain in which a manufacturer and an operator make decisions about equipment quality and maintenance service. Both the manufacturer and the operator have to make tradeoffs between equipment quality and maintenance service to maximize their own profit, which can lead to supply chain conflict. Decision models under decentralized decisions are formulated first for the manufacturer and the operator to make their respective independent optimal decisions, and a decision model under centralized decisions is formulated to obtain optimal decisions for the supply chain. The results show that channel coordination is not achievable and an agreement cannot be reached with decentralized decisions. To address this issue, two, i.e., a cost-sharing and a performance-based, strategies are introduced to coordinate the supply chain. The results reveal that the manufacturer and the operator are motivated to find the optimal decisions to maximize the profit of the supply chain when the subsidy rate or the penalty rate is equal to the profit margin of the operator. The models and the coordination strategies are extended to the situation considering the learning behavior of the manufacturer. The results show that the learning behavior impacts the profit of the supply chain with coordination and the preferences of the coordination strategy in the supply chain.

Suggested Citation

  • Zhong-Zhong Jiang & Na He & Xuwei Qin & Minghe Sun & Pengfei Wang, 2022. "Optimizing production and maintenance for the service-oriented manufacturing supply chain," Annals of Operations Research, Springer, vol. 316(1), pages 33-58, September.
    • Handle: RePEc:spr:annopr:v:316:y:2022:i:1:d:10.1007_s10479-020-03758-7
    DOI: 10.1007/s10479-020-03758-7
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10479-020-03758-7
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s10479-020-03758-7?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Tarakci, Hakan & Tang, Kwei & Teyarachakul, Sunantha, 2009. "Learning effects on maintenance outsourcing," European Journal of Operational Research, Elsevier, vol. 192(1), pages 138-150, January.
    2. Wang, Yulan & Wallace, Stein W. & Shen, Bin & Choi, Tsan-Ming, 2015. "Service supply chain management: A review of operational models," European Journal of Operational Research, Elsevier, vol. 247(3), pages 685-698.
    3. Yun Fong Lim & Yunzeng Wang & Yue Wu, 2015. "Consignment Contracts with Revenue Sharing for a Capacitated Retailer and Multiple Manufacturers," Manufacturing & Service Operations Management, INFORMS, vol. 17(4), pages 527-537, October.
    4. Qin, Xuwei & Shao, Lusheng & Jiang, Zhong-Zhong, 2020. "Contract design for equipment after-sales service with business interruption insurance," European Journal of Operational Research, Elsevier, vol. 284(1), pages 176-187.
    5. Murthy, D. N. P. & Asgharizadeh, E., 1999. "Optimal decision making in a maintenance service operation," European Journal of Operational Research, Elsevier, vol. 116(2), pages 259-273, July.
    6. Paul Milgrom & Ilya Segal, 2002. "Envelope Theorems for Arbitrary Choice Sets," Econometrica, Econometric Society, vol. 70(2), pages 583-601, March.
    7. Fu-Shiang Tseng & Yingchieh Yeh, 2014. "Maintenance outsourcing coordination with risk-averse contractors," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 65(11), pages 1760-1769, November.
    8. Hakan Tarakci, 2016. "Two types of learning effects on maintenance activities," International Journal of Production Research, Taylor & Francis Journals, vol. 54(6), pages 1721-1734, March.
    9. Saif Benjaafar & Guangwen Kong & Xiang Li & Costas Courcoubetis, 2019. "Peer-to-Peer Product Sharing: Implications for Ownership, Usage, and Social Welfare in the Sharing Economy," Management Science, INFORMS, vol. 65(2), pages 477-493, February.
    10. Yun Fong Lim & Bingnan Lu & Rowan Wang & Wenjia Zhang, 2020. "Flexibly Serving A Finite Number of Heterogeneous Jobs in A Tandem System," Production and Operations Management, Production and Operations Management Society, vol. 29(6), pages 1431-1447, June.
    11. Ashish Arora & Jonathan P. Caulkins & Rahul Telang, 2006. "Research Note--Sell First, Fix Later: Impact of Patching on Software Quality," Management Science, INFORMS, vol. 52(3), pages 465-471, March.
    12. Sang-Hyun Kim & Morris A. Cohen & Serguei Netessine, 2007. "Performance Contracting in After-Sales Service Supply Chains," Management Science, INFORMS, vol. 53(12), pages 1843-1858, December.
    13. Pascual, R. & Ortega, J.H., 2006. "Optimal replacement and overhaul decisions with imperfect maintenance and warranty contracts," Reliability Engineering and System Safety, Elsevier, vol. 91(2), pages 241-248.
    14. B. Kirubakaran & M. Ilangkumaran, 2016. "Selection of optimum maintenance strategy based on FAHP integrated with GRA–TOPSIS," Annals of Operations Research, Springer, vol. 245(1), pages 285-313, October.
    15. Lu, Hsi-Peng & Weng, Chien-I, 2018. "Smart manufacturing technology, market maturity analysis and technology roadmap in the computer and electronic product manufacturing industry," Technological Forecasting and Social Change, Elsevier, vol. 133(C), pages 85-94.
    16. Sang-Hyun Kim & Brian Tomlin, 2013. "Guilt by Association: Strategic Failure Prevention and Recovery Capacity Investments," Management Science, INFORMS, vol. 59(7), pages 1631-1649, July.
    17. Ata Allah Taleizadeh, 2018. "A constrained integrated imperfect manufacturing-inventory system with preventive maintenance and partial backordering," Annals of Operations Research, Springer, vol. 261(1), pages 303-337, February.
    18. Nitish Jain & Sameer Hasija & Dana G. Popescu, 2013. "Optimal Contracts for Outsourcing of Repair and Restoration Services," Operations Research, INFORMS, vol. 61(6), pages 1295-1311, December.
    19. R. Jamshidi & Mir Mehdi Seyyed Esfahani, 2015. "Reliability-based maintenance and job scheduling for identical parallel machines," International Journal of Production Research, Taylor & Francis Journals, vol. 53(4), pages 1216-1227, February.
    20. Gao, Guang-Xin & Fan, Zhi-Ping & Fang, Xin & Lim, Yun Fong, 2018. "Optimal Stackelberg strategies for financing a supply chain through online peer-to-peer lending," European Journal of Operational Research, Elsevier, vol. 267(2), pages 585-597.
    21. Terrence August & Marius Florin Niculescu, 2013. "The Influence of Software Process Maturity and Customer Error Reporting on Software Release and Pricing," Management Science, INFORMS, vol. 59(12), pages 2702-2726, December.
    22. Terry A. Taylor, 2002. "Supply Chain Coordination Under Channel Rebates with Sales Effort Effects," Management Science, INFORMS, vol. 48(8), pages 992-1007, August.
    23. Gemma Berenguer & Pinar Keskinocak & J. George Shanthikumar & Jayashankar M. Swaminathan & Luk Van Wassenhove & Özgen Karaer & Tim Kraft & John Khawam, 2017. "Buyer and Nonprofit Levers to Improve Supplier Environmental Performance," Production and Operations Management, Production and Operations Management Society, vol. 26(6), pages 1163-1190, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Qin, Xuwei & Shao, Lusheng & Jiang, Zhong-Zhong, 2020. "Contract design for equipment after-sales service with business interruption insurance," European Journal of Operational Research, Elsevier, vol. 284(1), pages 176-187.
    2. Jackson, Canek & Pascual, Rodrigo & Mac Cawley, Alejandro & Godoy, Sergio, 2023. "Product–service system negotiation in aircraft lease contracts with option of disagreement," Journal of Air Transport Management, Elsevier, vol. 107(C).
    3. Li, Dong, 2020. "When less is more: Recovery technology investment and segmentation for uptime-centered services," European Journal of Operational Research, Elsevier, vol. 286(1), pages 267-281.
    4. Juan Camilo Serpa & Harish Krishnan, 2017. "The Strategic Role of Business Insurance," Management Science, INFORMS, vol. 63(2), pages 384-404, February.
    5. Li, Dong & Mishra, Nishant, 2021. "Engaging suppliers for reliability improvement under outcome-based compensations," Omega, Elsevier, vol. 102(C).
    6. Siqin, Tana & Choi, Tsan-Ming & Chung, Sai-Ho, 2022. "Optimal E-tailing channel structure and service contracting in the platform era," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 160(C).
    7. Dong Li & Nishant Mishra & Serguei Netessine, 2023. "Contracting for Product Support Under Information Asymmetry," Management Science, INFORMS, vol. 69(8), pages 4627-4645, August.
    8. Rahimi-Ghahroodi, S. & Al Hanbali, A. & Zijm, W.H.M. & Timmer, J.B., 2019. "Emergency supply contracts for a service provider with limited local resources," Reliability Engineering and System Safety, Elsevier, vol. 189(C), pages 445-460.
    9. Wang, Yingjia & Fan, Di & Fung, Yi-Ning & Luo, Suyuan, 2022. "Consumer-to-consumer product exchanges for original fashion brands in the sharing economy: Good or bad for fashion knockoffs?," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 158(C).
    10. Wang, Yulan & Wallace, Stein W. & Shen, Bin & Choi, Tsan-Ming, 2015. "Service supply chain management: A review of operational models," European Journal of Operational Research, Elsevier, vol. 247(3), pages 685-698.
    11. 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.
    12. Malgorzata Pankowska, 2019. "Information Technology Outsourcing Chain: Literature Review and Implications for Development of Distributed Coordination," Sustainability, MDPI, vol. 11(5), pages 1-28, March.
    13. Behzad Hezarkhani & Mahesh Nagarajan & Chunyang Tong, 2022. "Toward servitization: Optimal design of uptime‐guarantee maintenance contracts," Production and Operations Management, Production and Operations Management Society, vol. 31(10), pages 3806-3822, October.
    14. Nitish Jain & Sameer Hasija & Dana G. Popescu, 2013. "Optimal Contracts for Outsourcing of Repair and Restoration Services," Operations Research, INFORMS, vol. 61(6), pages 1295-1311, December.
    15. Lou, Yaqi & Feng, Lipan & He, Shuguang & He, Zhen & Zhao, Xiukun, 2020. "Logistics service outsourcing choices in a retailer-led supply chain," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 141(C).
    16. Moussawi-Haidar, Lama & Çömez-Dolgan, Nagihan, 2017. "Percentage rent contracts between co-stores," European Journal of Operational Research, Elsevier, vol. 258(3), pages 912-925.
    17. Feng Tian & Peng Sun & Izak Duenyas, 2021. "Optimal Contract for Machine Repair and Maintenance," Operations Research, INFORMS, vol. 69(3), pages 916-949, May.
    18. Song, Zhuzhu & Tang, Wansheng & Zhao, Ruiqing, 2017. "Ocean carrier canvassing strategies with uncertain demand and limited capacity," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 104(C), pages 189-210.
    19. Tian Heong Chan & Francis de Véricourt & Omar Besbes, 2019. "Contracting in Medical Equipment Maintenance Services: An Empirical Investigation," Management Science, INFORMS, vol. 65(3), pages 1136-1150, March.
    20. Jun Zhao, 2022. "Will the community O2O service supply channel benefit the elderly healthcare service supply chain?," Electronic Commerce Research, Springer, vol. 22(4), pages 1617-1650, December.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:annopr:v:316:y:2022:i:1:d:10.1007_s10479-020-03758-7. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.