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Sustaining system coordination in outsourcing the maintenance function of a process having a linear failure rate

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  • Andy Alexander
  • Yanjun Li
  • Robert Plante

Abstract

An increasing trend in manufacturing is the outsourcing of maintenance and repair activities to an external contractor. An outsourced maintenance contract is presented that details the costs, timing, and possible bonuses for maintaining uptime thresholds and covers both minimal corrective repairs and regularly scheduled preventive replacements. By negotiating an incentive-based maintenance contract, the manufacturer and contractor can achieve system coordination, a mutually beneficial relationship that maximizes system profit. We study the sensitivity of system coordination to the expected cost of minimal corrective process repairs. For a manufacturing process with a linear failure rate, we develop a complete characterization of the intervals for the expected cost of repair and the corresponding contract parameters wherein system coordination is guaranteed for any expected cost of repair that occurs within the interval.

Suggested Citation

  • Andy Alexander & Yanjun Li & Robert Plante, 2017. "Sustaining system coordination in outsourcing the maintenance function of a process having a linear failure rate," IISE Transactions, Taylor & Francis Journals, vol. 49(5), pages 544-552, May.
    • Handle: RePEc:taf:uiiexx:v:49:y:2017:i:5:p:544-552
    DOI: 10.1080/24725854.2016.1252074
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    References listed on IDEAS

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    1. Yu Liu & Yanfeng Li & Hong-Zhong Huang & Ming Zuo & Zhanquan Sun, 2010. "Optimal preventive maintenance policy under fuzzy Bayesian reliability assessment environments," IISE Transactions, Taylor & Francis Journals, vol. 42(10), pages 734-745.
    2. Saumil Ambani & Semyon Meerkov & Liang Zhang, 2010. "Feasibility and optimization of preventive maintenance in exponential machines and serial lines," IISE Transactions, Taylor & Francis Journals, vol. 42(10), pages 766-777.
    3. Rui Peng & Min Xie & Szu Ng & Gregory Levitin, 2012. "Element maintenance and allocation for linear consecutively connected systems," IISE Transactions, Taylor & Francis Journals, vol. 44(11), pages 964-973.
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    1. Sharafali, Moosa & Tarakci, Hakan & Kulkarni, Shailesh & Razack Shahul Hameed, Raja Abdul, 2019. "Optimal delivery due date for a supplier with an unreliable machine under outsourced maintenance," International Journal of Production Economics, Elsevier, vol. 208(C), pages 53-68.

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