TY - JOUR
T1 - Maintenance outsourcing contracts for new technology adoptions
AU - Tseng, Fu Shiang
AU - Tang, Kwei
AU - Moskowitz, Herbert
AU - Plante, Robert
PY - 2009
Y1 - 2009
N2 - An external contractor receives a payment from a manufacturer for periodically performing preventive maintenance and for performing minimal repairs whenever process failures occur. Suppose a new technology will be available in the future, but the timing is uncertain. We propose specifying one or multiple time points in a maintenance contract, at which the manufacturer can adopt (switch to) the new technology, if it becomes available, and change the preventive maintenance schedule for the remaining time in the contract period. A model is developed to determine the value of using these (switch) points in a maintenance contract to the manufacturer. The numerical results show that, with a higher arrival rate of the new technology, the value becomes greater, and thus, the optimal switch point should be set earlier. Furthermore, if the new technology reduces maintenance costs, using switch points adds more value to a cost-plus-margin method than either the fixed payment or cost-plus-fixed-fee methods. On the other hand, if adopting the new technology results in higher maintenance costs, the value using switch points is higher for the fixed payment method.
AB - An external contractor receives a payment from a manufacturer for periodically performing preventive maintenance and for performing minimal repairs whenever process failures occur. Suppose a new technology will be available in the future, but the timing is uncertain. We propose specifying one or multiple time points in a maintenance contract, at which the manufacturer can adopt (switch to) the new technology, if it becomes available, and change the preventive maintenance schedule for the remaining time in the contract period. A model is developed to determine the value of using these (switch) points in a maintenance contract to the manufacturer. The numerical results show that, with a higher arrival rate of the new technology, the value becomes greater, and thus, the optimal switch point should be set earlier. Furthermore, if the new technology reduces maintenance costs, using switch points adds more value to a cost-plus-margin method than either the fixed payment or cost-plus-fixed-fee methods. On the other hand, if adopting the new technology results in higher maintenance costs, the value using switch points is higher for the fixed payment method.
KW - Contract valuation
KW - Maintenance contract
KW - Technology adoption
UR - http://www.scopus.com/inward/record.url?scp=67349265168&partnerID=8YFLogxK
U2 - 10.1109/TEM.2009.2013824
DO - 10.1109/TEM.2009.2013824
M3 - 期刊論文
AN - SCOPUS:67349265168
SN - 0018-9391
VL - 56
SP - 203
EP - 218
JO - IEEE Transactions on Engineering Management
JF - IEEE Transactions on Engineering Management
IS - 2
ER -