A game-theoretic model for outsourcing maintenance services

Proactive maintenance improves the operational availability of a system and increases the owner's profit. To create more economic value along this direction, it is popular to outsource maintenance services to a service agent. However, due to various uncertainties in equipment failures and spare part logistics, making a service agreement between the owner and the service agent can be quite complex. In this paper, a game-theoretic cooperative model is presented to facilitate contract negotiation in such a joint decision-making process. In particular, the owner determines the time for preventive replacement and the service agent makes up a plan on ordering a spare part such that their overall profit is maximized. To sign a long-term contract, the two players need to share the overall profit in a fair manner based on Shapley values that satisfy certain axioms of fairness. Numerical examples are provided to illustrate the solution methodology and to highlight the managerial implications in reliability and maintenance management.