Design and analysis of a maintenance service contract

This paper studies a novel maintenance model with service contracts. We use a non-cooperative game formulation in which both parties, agent and unit owner, take the decisions by maximizing their expected profits to determine the agent´s optimal pricing strategy, the length of warranty and the number of repairmen for a monopolist service agent providing the maintenance service. We find that the optimal length of warranty and the number of repairmen are independent of the warranty price functions. Furthermore, for fixed lifetime of the unit, the number of customers hardly affects the optimal length of warranty.