Performance-based maintenance contract for equipments used in mining industry

In this paper, we study performance based maintenance contracts for dump trucks operated in a mining industry. The service contract is characterised by two dimensional limits - one limit representing age and the other limit usage. In a performance based service contract uses an attractive incentives to motivate the the agent to increase the equipment´s performance beyond the target, and this in turn gives benefit for both the owner of the trucks and the Agent of service contract. In this paper, we study performance based maintenance service contracts for equipment used in a mining industry and the equipment is sold with two dimensional warranties and the perfomances considered includes availability and safety measures. We consider a situation where an agent offers several service contract options and the owner of equipment has to select the optimal option. We obtain the optimal strategy (pricing structure) for the agent and the optimal option for the owner using a stackelberg game formulation in which the agent is as a leader and the owner as a follower.