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dc.contributor.authorHong, Sukhwaen_US
dc.date.accessioned2017-04-04T19:49:50Z
dc.date.available2017-04-04T19:49:50Z
dc.date.issued2015-08-28en_US
dc.identifier.otheretd-09112015-072217en_US
dc.identifier.urihttp://hdl.handle.net/10919/76865
dc.description.abstractThis paper presents a novel approach for designing and optimizing maintenance service contracts through the application of mechanism design theory. When offering a contract to its customer, the maintenance service provider seeks to specify contract terms - such as price, service features and incentives - that maximize the provider's profit, satisfy customer needs, allocate risks effectively and mitigate moral hazards. Optimal contract design has to account for asymmetric information and uncertainties associated with customer characteristics and behaviors. We illustrate our mechanism design approach by applying it to the contract design challenge of a gas turbine manufacturer, which also provides maintenance services for its aircraft engines. In our solution approach, we compute an optimal set of contracts. The entire set is presented to the customer and is designed such that the customer will accept one of the contract alternatives without negotiations. In addition to eliminating the costs and delays associated with negotiations, this approach also reveals the customer's private information to the service provider, which the provider can use to its benefit in maintenance management and future contract renewals. Furthermore, we design and incorporate win-win incentive mechanisms into the contracts, which reward the customer for actions that reduces maintenance costs. We present a deterministic and a stochastic mechanism design model, the latter accounting for uncertainties associated with customer actions, engine performance, and maintenance costs during the contract execution phase.
dc.language.isoen_USen_US
dc.publisherVirginia Techen_US
dc.rightsI hereby certify that, if appropriate, I have obtained and attached hereto a written permission statement from the owner(s) of each third party copyrighted matter to be included in my thesis, dissertation, or project report, allowing distribution as specified below. I certify that the version I submitted is the same as that approved by my advisory committee. I hereby grant to Virginia Tech or its agents the non-exclusive license to archive and make accessible, under the conditions specified below, my thesis, dissertation, or project report in whole or in part in all forms of media, now or hereafter known. I retain all other ownership rights to the copyright of the thesis, dissertation or project report. I also retain the right to use in future works (such as articles or books) all or part of this thesis, dissertation, or project report.en_US
dc.subjectIncentivesen_US
dc.subjectMaintenance contractsen_US
dc.subjectMechanism design theoryen_US
dc.subjectMoral hazarden_US
dc.subjectStochastic optimizationen_US
dc.titleMechanism Design Theory for Service Contractsen_US
dc.typeThesisen_US
dc.contributor.departmentIndustrial and Systems Engineeringen_US
dc.description.degreeMaster of Scienceen_US
thesis.degree.nameMaster of Scienceen_US
thesis.degree.levelmastersen_US
thesis.degree.grantorVirginia Polytechnic Institute and State Universityen_US
thesis.degree.disciplineIndustrial and Systems Engineeringen_US
dc.contributor.committeechairWernz, Christianen_US
dc.contributor.committeememberJin, Ranen_US
dc.contributor.committeememberBish, Ebru K.en_US
dc.type.dcmitypeTexten_US
dc.identifier.sourceurlhttp://scholar.lib.vt.edu/theses/available/etd-09112015-072217/en_US
dc.date.sdate2015-09-11en_US
dc.date.rdate2016-09-30
dc.date.adate2015-10-05en_US


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