Joint quality and maintenance decisions under servitization business model

ABSTRACT

Under servitization (one paradigm of non-ownership-transfer) business model such as sharing, a manufacturer is responsible not only for product design but also for maintenance. This paper deals with joint decision of product quality and maintenance under servitization. A model minimising total cost is formulated to obtain the optimal product quality, maintenance effort and maintenance times. We find that the total cost first decreases then increases with product quality, maintenance effort and maintenance times. Moderate quality and maintenance effort level are the best for the manufacturer, because too high or too low quality and effort cause too high total cost. However, preventive maintenance should be implemented as many times as possible until the failure cost is reduced to zero as long as each maintenance can save cost. Moreover, in the optimal joint decision, the product quality, maintenance effort and maintenance times are negatively correlated in pairs. In addition, we explore the impact of unit failure cost, product lifecycle, production cost, maintenance cost, and failure intensity on the manufacturer’s optimal decisions. In extensions, we further take penalty cost, exponential failure distribution, discount rate, and customer usage into account. This paper provides insight for the manufacturer to jointly consider product design and maintenance under servitization.

KEYWORDS:

• non-ownership-transfer
• servitization
• sharing
• leasing
• quality design
• maintenance

Disclosure statement

No potential conflict of interest was reported by the author(s).

Data availability statement

Data sharing is not applicable to this article as no new data were created or analysed in this study.

Correction Statement

This article has been corrected with minor changes. These changes do not impact the academic content of the article.

Additional information

Funding

This work was supported by National Natural Science Foundation of China: [Grant Number 72171105, 71871142]; Humanity and Social Science Youth Foundation of the Ministry of Education of China: [Grant Number 21YJC630133]; Youth Doctor Fund Project for Universities of Gansu Province: [Grant Number 2021A-006]; Fundamental Research Funds for the Central Universities: [Grant Number 21lzujbkyjh008].

Notes on contributors

Kangzhou Wang

Kangzhou Wang is a professor and doctoral supervisor of Operations Management at the School of Management, Lanzhou University, China. He received his PhD in Management Science and Engineering from Shanghai Jiao Tong University, China, in 2014. His work has been published in Production and Operations Management, International Journal of Production Research, International Journal of Production Economics, Journal of the Operational Research Society, Transportation Research Part D, etc. His research interest lies in operations and supply chain management, and he currently concerns Service-oriented Manufacturing, Shared Manufacturing and Cloud Manufacturing.

Hui Jing

Hui Jing obtained the Master's degree in Operations Management from the School of Management, Lanzhou University, China. Her research is mainly related to product reliability management under servitization business model.

Dong-dong Wang

Dongdong Wang is a Ph.D. student in Operations Management at the School of Management, Lanzhou University, China. His research interest focuses on product design under servitization business model.

Feng Jiang

Feng Jiang is a Ph.D. student in Operations Management at the School of Management, Lanzhou University, China. Her research interest lies in supply chain finance under servitization business model.