Investigation of Performance-Based Contract

The after-market services have become a key revenue stream for companies selling capital-intensive products, such as aircraft engines, wind turbines, and computer servers, among others. Performance-based Contracting (PBC) has emerged as a new service paradigm that compensates the supplier based on the product performance instead of the efforts and materials consumed. This book focuses on the incentive design and its interaction with service capacity allocation for a supplier who is offering performance-based services to a strategic customer with a fleet of long-life products. A win-win service program is designed to motivate the supplier for optimizing the resource distribution to service capacity by explicitly taking into account the change of fleet size.