A dominant maintenance strategy assessment model for localized third-party logistics service under performance-based consideration

Yi-Kuei Lin*, Jong Jang Lin, Ruey Huei Yeh

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

7 Scopus citations

Abstract

The partnerships of performance-based contracting (PBC) between government and original equipment manufacturer (OEM) have been well demonstrated in most studies, but very few attempts have been made at such partnerships between a foreign government (FG) and a localized third-party logistics (3PL) supplier while they operated the same system. This article constructs a principal-agent model to support resource allocation, and then uses it to analyze commonly observed risk-aversion contracting between a FG customer (principal) and a localized 3PL logistics supplier (agent) with cooperative game combinations by fixed payment, cost-sharing incentive, as well as a performance incentive conditions. Finally, a real military logistics service application in Taiwan is demonstrated by the assessment model to generate the maximum utilities while under cost-sharing incentive condition by using offset obligation between FG and OEM.

Original languageEnglish
Pages (from-to)221-240
Number of pages20
JournalQuality Technology and Quantitative Management
Volume10
Issue number2
DOIs
StatePublished - 1 Jan 2013

Keywords

  • Dominant strategy
  • Performance-based contracting
  • Principal-agent
  • Risk-aversion
  • Third-party logistics (3PL)

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