Maintenance outsourcing coordination with risk-averse contractors

Under a maintenance outsourcing contract, an external contractor receives a fixed payment from a manufacturer for periodically performing preventive maintenance and for performing minimal repairs whenever process failures occur. I. The contractor's maintenance policy results in a process uptime above a target level specified i. The contract. The contractor receives a bonus payment based o. The difference betwee. The uptime an. The target levels. We stud. The optimal designs of maintenance outsourcing contracts for achieving channel coordination whe. The contractor is risk averse towards uncertain repair costs caused by process failures. We find cases in which channel coordination cannot be achieved because o. The contractor's risk preference. Furthermore. The contractor's risk preference may make channel coordination more difficult or easier, depending o. The parameters considered i. The model.