Design and Pricing of Maintenance Service Contract Based on Nash Non-Cooperative Game Approach

Abstract

Nowadays manufacturers are facing fierce challenge. Apart from the products, providing customers with multiple maintenance options in the service contract becomes more popular, since it can help to improve customer satisfaction, and ultimately promote sales and maximize profit for the manufacturer. By considering the combinations of corrective maintenance and preventive maintenance, totally three types of maintenance service contracts are designed. Moreover, attractive incentive and penalty mechanisms are adopted in the contracts. On this basis, Nash non-cooperative game is applied to analyze the revenue for both the manufacturer and customers, and so as to optimize the pricing mechanism of maintenance service contract and achieve a win-win situation. Numerical experiments are conducted. The results show that by taking into account the incentive and penalty mechanisms, the revenue can be improved for both the customers and manufacturer. Moreover, with the increase of repair rate and improvement factor in the preventive maintenance, the revenue will increase gradually for both the parties.