Citation:
Sarocha Phumbua and Benny Tjahjono. Understanding the implications of service contracting in product-service businesses. Operational Research Society Simulation Workshop (SW2012), 27-28 March 2012, Worcestershire, UK.
Abstract:
Service contracting has been adopted in several industries especially for high value assets with long life time.
Such a contract typically specifies asset usage information, availability or capability of the contracted assets
required by customers, and the scope of services the manufacturers are obliged to support the assets.
Consequently, such a contract imposes major risks to the manufacturers. This paper aims to explore approaches
that be used to assist manufacturers to model service contracts in order to understand the risk and reward prior to
committing a contract with customer. The work described in the paper involves the development of a simulation
model from a case of the ship building industry. The use of the model in aiding contracting decisions is
demonstrated through three experiments conducted at the case company. The outcomes have demonstrated the
potential of the approaches in practice and contributed to the Product-Service Systems modelling paradigm.