Abstract
This paper deals with a Maintenance Service Contract (MSC) involving three parties — Manufacturer, Service Agent and Customer. We formulate decision problems of the three parties using Stackelberg game theory formulation and integrate the three interdependent decision models using a bi-level optimization formulation. As the objective functions and their constraints are all in non-linier form, then we need to use Karush-kuhn Tucker condition to convert the optimization problem into a single level optimization. A genetic algorithm is used to obtain the optimal solution (i.e. the best option and its optimal price) for each party.
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