Optimization of after-sales services with spare parts consumption and repairman travel

Abstract

This paper studies the optimization of discretionary after-sales services with spare parts consumption and repairman travel. Discretionary service means that the service quality and spare parts consumption are determined by the service provider. We assume that a long service time enables the service provider to perform a thorough repair, which leads to a high repair quality and low spare parts consumption. Each service encounter comprises both repairman travel and repair service steps. We find that the dual concerns of service quality and spare parts consumption lead to a counterintuitive impact of the spare parts price: the service provider would decrease the consumption of spare parts even if selling the spare parts becomes more profitable. In addition, we show that the repairman travelling time has different impacts on the optimal service time given the maximum sojourn time constraint. In particular, as the repairman travelling time increases, the service provider increases the repair time to keep the repair quality at a high level if no sojourn time is guaranteed; however, if a maximum sojourn time is guaranteed, the service provider decreases the repair time to meet the promise.