Supply Chain Contracting for After-Sales Service and Product Support

Over the past decades, business model innovation in product and its service has been growing rapidly, especially for durable goods. Companies shift their strategies from selling physical products to delivering solutions and performance for customers. Within this context, the outcome-based service contracts, such as Performance-based Logistics and Power-by-the-Hour, have been developed in both public and commercial industry. At the same time, traditional service contracts such as Warranty and Time & Material contracts are still being used in many occasions. Under various business models, managing the after-sales service and product support becomes increasingly challenging. In this thesis, we study several important service contracting problems concerning optimal design of contract terms, spare parts inventory and service capacity management, and service outsourcing management. We provide managerial insights for selecting the best service contract, choosing the right performance measurement, optimally managing the service resources (spare parts and repair capacity), and incentivizing the supplier to improve the profit of the after-sales service and product support supply chains.