Service contract with periodic preventive maintenance for a dump truck sold with a two-dimensional warranty

Abstract

This paper deals with maintenance service contract for a dump truck sold with a two-dimensional warranties. We consider a situation where an agent offers two maintenance contract options and the owner of the equipment has to select the optimal option either the OEM carried out all repairs and preventive maintenance activities (option one) or the OEM only carries out failure while the costumer undertakes preventive maintenance action in-house (option two). As the number of preventive maintenance and corrective maintenance that occurs in the area of servicing contracts is very influential in determining the value of the contract, we have to determine the optimal time between preventive maintenance that can minimize the cost of repair in the contract area. Moreover, we also study the maintenance service contract considering reduction of the intensity function after preventive maintenance from both the owner and OEM point of views. In this paper, we use a Weibull intensity function to consider a product with increasing failure intensity. We use a non-cooperative game formulation to determine the optimal price structure (i.e., the contract price and repair cost) for the OEM and the owner. A numerical example derived from the model has shown that if the owner choose option one then the owner obtain a higher profit compared with the profit resulted from option two. The result agree with earlier work which uses the accelerated failure time (AFT) for the failure modeling, while here we model the failure of the dump truck without the use of the AFT.