Maintenance outsourcing: Sustaining system coordination under symmetric and asymmetric information

Arthur A Alexander, Purdue University


Effective and timely maintenance is critical to a manufacturer's continuous production and high productivity. As cost conscious companies pressure managers to increase quality while simultaneously cutting costs, the willingness to outsource internal processes has grown, and the manufacturing sector has responded by considering outsourcing maintenance and repair activities to an external contractor. Despite different profit and cost structures, the manufacturer and contractor can mutually benefit from an optimized outsourcing contract that guarantees channel coordination. This research explores the means and options the manufacturer possesses when faced with the difficulty of designing an outsourcing contract guaranteed to be accepted by the contractor that addresses improving process quality while maximizing unit-time profits for the manufacturer. Two scenarios are presented in this dissertation with the key difference being the level of information sharing between the manufacturer and contractor. The first scenario assumes full information sharing between both parties (symmetric information), while the second assumes the contractor decides to hide some key value (asymmetric information).




Li, Purdue University.

Subject Area

Management|Operations research

Off-Campus Purdue Users:
To access this dissertation, please log in to our
proxy server