Spare parts inventory control under a fixed-term contract with a long-down constraint

We are interested in service contracts for spare parts. We introduce a new performance measure, XLD (extreme long down), that limits the number of deliveries that are later than an agreed threshold during the contract period. We consider a single item, single location stockpoint serving multiple systems where demand is satisfied in an alternative way if the stockpoint is out of stock. Using a finite horizon Markov decision process, we derive the...