A multi-criteria approach for performance based maintenance with variable fleet size

Performance based logistics (PBL) emerges as a new after-sales contract to sustain the operation and maintenance of capital equipment. This paper proposes a multi-criteria decision model to assist service providers in optimizing sustainment activities by minimizing cost and maximizing equipment availability. Under the PBL agreement, the service provider is responsible for attaining the equipment availability goal by delivering repair services in a timely manner. Our study focuses on the integrated firms who design and manufacture the original equipment, and also provide after-sales services. We model and optimize the service logistics network by considering the increment of fleet size due to the market expansion. A multi-resolution spare parts inventory policy is applied to dynamically adjust the optimal base stocking level. The study provides some theoretical insights into the life cycle cost reduction between reliability design and spare parts investment.