Joint determination of lease period and preventive maintenance policy for leased equipment with residual value

This paper investigates the influence of the length of the lease period on the maintenance policy for leased equipment with residual value. The length of the lease period increases, however, the lessor’s income increases, and the maintenance cost of the equipment rises as well. Therefore, the lease payment and maintenance service of the equipment are crucial items in the lease contract for the lessor’s profit. If the equipment breaks down within the lease period, minimal repairs will be performed on the equipment and the lessor may incur a penalty cost if the repair time exceeds a pre-specified tolerable time. The imperfect preventive maintenance (PM) actions are carried out when the age of the equipment reaches a controlled-limit during the lease period. Under this maintenance scheme, the mathematical model of profit is constructed and then the optimal maintenance policy and the length of the lease period are obtained such that the expected total profit is maximized. Finally, numerical examples are given to illustrate the effects of the optimal length of the lease period and the maintenance policy for profit model.

► To maximize the expected total profit, optimal length of lease period and maintenance policy is unique.
► Under optimal policy, the equipment is restored to its original state after each preventive maintenance (PM) action.
► When failure rate or the PM cost increases, the number of PM actions increases but controlled-limit decrease.
► The optimal number of PM and profit under the considered residual value are higher than the non-considered one.