Designing Contracts for Aero-engine MRO Service Providers: Models and Simulation

The aero-engine Maintenance-Repair-Overhaul (MRO) service provider has begun to adopt the product-service system (PSS) offering in order to maintain their competitiveness. Such total solution approach combines an availability-based service contract with product offerings (e.g., leasing). The current MRO service provider's contract design method is inadequate to support this offering. Miscalculation often occurs, because many of the decisions are often based on intuitions and experiences, resulting in lower quality, higher cost and longer turnaround time for the maintenance. This paper proposes an enhanced contract design method that is more scientific through the simulation modelling. The models incorporate both customers' requirements and the shop floor's operational availability. The paper provides discussion on how the results of the simulation of the models can be used to support decision making and the design of availability based contracts.