Impact of operational systems on supplier's response under performance-based contracts
Date of Issue2013
School of Mechanical and Aerospace Engineering
Performance-based contract has developed into a new service strategy in after-market operations that aims to compensate for performance outcomes. One of the key components of a performance-based contract is performance measure that is affected by factors such as base stock, reliability and response time. To achieve a desired performance level, the supplier has to improve the component reliability and the repair time. The component reliability in a repairable part inventory system is a function of the number of operational systems and the service capacity. In this research, we consider a single echelon repairable part inventory system and conduct a parametric analysis to evaluate the impact of the total number of systems on the supplier's decisions under a performance contract. The results show that the numbers of systems plays a key role on the supplier's response when the customer uses the average number of backorders as the negative incentive.
DRNTU::Engineering::Industrial engineering::Supply chain
Procedia computer science
© 2013 The Author(s). This paper was published in Procedia Computer Science and is made available as an electronic reprint (preprint) with permission of the Author(s). The paper can be found at the following official DOI: http://dx.doi.org/10.1016/j.procs.2013.01.067. One print or electronic copy may be made for personal use only. Systematic or multiple reproduction, distribution to multiple locations via electronic or other means, duplication of any material in this paper for a fee or for commercial purposes, or modification of the content of the paper is prohibited and is subject to penalties under law.