To reduce the high cost of purchasing equipment, many companies tend to lease a new or a remanufactured equipment rather than to purchase it. The consumer willing to lease a remanufactured equipment if the lessor ensures a maximum availability of the equipment during a lease contract period. In this paper, the equipment is leased for a period of time with maximum usage per period. If the total usage per period exceeds the maximum usage allowed in the contract, then the customer (as a lessee) will be charged an additional cost. To reach a high availability, the lessor needs a performance based preventive maintenance (pm) policy. Since the lessor objective function is to maximize their profit with keep the reliability as high as possible, then the decision variable for the lessor is to find the optimal down-time allowed and the optimal pm efforts for a given price of the lease. Numerical examples are given to illustrate the optimal solution.
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