A closed-loop support system for repairable parts based on performance

Performance-based contracting (PBL), as a novel approach, is replacing traditional service procurement practices. In this paper, we set up a closed-loop support system for repairable parts with an M/M/m/N queuing service facility and a spare parts warehouse. We derived the steady-state probability of inventory levels in warehouse and the performance measures of the support system. Under the performance-based contracting, we propose optimization policies for the support system.