Optimal maintenance service strategy for OEM entering competitive MRO market under opposite patterns. (January 2022)

• Record Type: Journal Article
• Authors: Zhu, Ying; Xia, Tangbin; Chen, Zhen; Pan, Ershun; Xi, Lifeng
• Is Part Of: Reliability engineering & system safety. Volume 217(2022)
• Publication Date: 2022-01
• Subjects: Maintenance service strategy -- Mro market -- Original equipment manufacturer -- Independent maintenance provider -- Entry pattern; Reliability (Engineering) -- Periodicals; System safety -- Periodicals; Industrial safety -- Periodicals; Fiabilité -- Périodiques; Sécurité des systèmes -- Périodiques; Sécurité du travail -- Périodiques; 620.00452
• DOI: 10.1016/j.ress.2021.108060
• Languages: English
• ISSNs: 0951-8320

Abstract

Highlights: The optimal maintenance service strategy is proposed for OEM entering MRO market. A joint decision on price, PM frequency and PM level is unprecedentedly studied. The dual relationship between OEM and IMP is characterized. Cooperative and non-cooperative entry patterns for OEMs are both considered. The findings help OEMs enter an MRO market in the most profitable way. Abstract: Increasing demand and high profitability of maintenance services in modern industry have prompted original equipment manufacturers (OEMs) to enter maintenance, repair and overhaul (MRO) markets. However, the intensive competition among incumbent independent maintenance providers (IMPs) increases the difficulty of winning market share. Meanwhile, the supply and demand relationship with IMPs on spare parts make it more complicated to obtain higher profit. Hence, an optimal maintenance service strategy (MSS) is urgently needed for OEMs. In addition, independent operation (non-cooperative pattern) and cooperating with incumbent IMP (cooperative pattern) are two entry patterns. It is necessary for OEMs to figure out the optimal MSS under each pattern and the profitability of these two patterns. Therefore, this paper investigates the MSS optimization issue under cooperative and non-cooperative patterns from the perspective of an OEM entering a competitive MRO market. The maintenance service competition is introduced by defining a customer choice model. Moreover, the interaction between maintenance services and spare parts sales is captured in the profit function. Then, a joint decision on price, preventive maintenance (PM) frequency and PM level is unprecedentedly studied under each pattern to maximize the profit. The findings help OEMs enter an MRO market in the most profitable way.