Optimization of Leased Equipment Maintenance Policy Based on History Failure Data

Abstract

We propose a maintenance policy for new equipment on a repair-refund maintenance strategy in this paper and derive the optimal lease period from the lessor’s perspective based on independent and identical distribution of historical failure data which obey power law process. The cost model of a full refund and a proportional refund is studied, and the corresponding optimal leasing period is determined by reducing the expected total cost rate to the largest extent. We use a numerical example to illustrate the proposed cost model and analyze the sensitivity of related parameters. Furthermore, we show that the proportional refund policy is preferable than a full refund to the lessor. Finally, according to the simulation outcome, the proposed methods are effective and instructions for lessor in regard to equipment lease are provided.