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IMA Journal of Management Mathematics Advance Access published online on July 11, 2008
IMA Journal of Management Mathematics, doi:10.1093/imaman/dpn014
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© The authors 2008. Published by Oxford University Press on behalf of the Institute of Mathematics and its Applications. All rights reserved.

Multi-criteria decision model for selecting repair contracts by applying utility theory and variable interdependent parameters

Anderson Jorge de Melo Brito{dagger}, Adiel Teixeira de Almeida Filho{ddagger} and Adiel Teixeira de Almeida§

Federal University of Pernambuco, Caixa Postal 7462, Recife, PE 50.630-970, Brazil

{dagger} Email: gpsidufpe{at}gmail.com

{ddagger} Email: ataf{at}ufpe.br

§ Email: aalmeida{at}ufpe.br

Received on 9 October 2007. Accepted on 3 June 2008.

The selection of contracts is a very important stage for the process of outsourcing maintenance in the current trend towards reducing costs and increasing competitiveness by focussing on core competences. The prominence of this theme can be seen in many studies carried out on outsourcing repair and maintenance contracts, most of which deal with qualitative aspects. However, quantitative approaches, such as multi-criteria decision aid, play an important role in helping decision makers (DMs) to deal with multiple and conflicting criteria and uncertainties in the selection process for outsourcing contracts. In this context, several decision models have been developed using different multi-criteria methods. This paper presents a multi-criteria methodology to support the selection of repair contracts in a context where information is imprecise, when DMs are not able to assign precise values to importance parameters of the criteria used for contract selection. Utility functions are integrated with the variable interdependent parameters method to evaluate alternatives through an additive value function regarding mean time to repair, contract cost, the geographical spread of the candidate's (bidder's) service network, the candidate's reputation and the compatibility of company cultures. To illustrate the use of the model, a numerical application is presented.

Keywords: utility theory; repair contract; multi-criteria method


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