Optimizing reliability and service parts logistics for a competitive and time-varying installed base

Performance based contracting (PBC) emerges as a new after-sales service practice to support the operation and maintenance of capital equipment or systems. Under the PBC framework, the goal of the study is to increase the system operational availability while minimizing the logistics footprint through the design for reliability. Some recent works considered the situation where the number of installed systems randomly increases over the planning horizon, resulting in a non-stationary maintenance and repair demand. To the extent that more than one firm supply the system in a competitive environment and customer could select between these suppliers based on their prices and after sales services, the existing models may be oversimplifications of reality. In this paper, we modelled such a service parts problem under a duopoly Bertrand competition in a supplier’s level as a game and solved it with a combined bisectional algorithm and imperialistic competition meta-heuristic.

Keywords:

Reliability , Repairable spare parts , Non-stationary demand , Bertrand competition.