On the application of copula in modeling maintenance contract

This paper deals with the application of copula in maintenance contracts for a nonrepayable item. Failures of the item are modeled using a two dimensional approach where age and usage of the item and this requires a bi-variate distribution to modelling failures. When the item fails then corrective m...

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Bibliographic Details
Published in:IOP conference series. Materials Science and Engineering 2016-02, Vol.114 (1), p.12085-12092
Main Authors: Iskandar, B P, Husniah, H
Format: Article
Language:English
Subjects:
Bivariate copula
Contracts
Failure analysis
Game theory
Maintenance
maintenance contract
Maintenance contracts
Mathematical analysis
Mathematical models
Modelling
non-cooperative game theory
Optimization
Two dimensional models
twodimensional maintenance region
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Summary:This paper deals with the application of copula in maintenance contracts for a nonrepayable item. Failures of the item are modeled using a two dimensional approach where age and usage of the item and this requires a bi-variate distribution to modelling failures. When the item fails then corrective maintenance (CM) is minimally repaired. CM can be outsourced to an external agent or done in house. The decision problem for the owner is to find the maximum total profit whilst for the agent is to determine the optimal price of the contract. We obtain the mathematical models of the decision problems for the owner as well as the agent using a Nash game theory formulation.
ISSN:1757-8981
1757-899X
DOI:10.1088/1757-899X/114/1/012085