On the 2nd International Workshop and Congress on eMaintenance in December 2012, Olle Wijk gave a presentation on a paper entitled "Simulation as Support for PBL Contract Design" and was authored by Wijk and Andersson. Both authors work at Systecon. The abstract appears below.
Simulation as Decision Support in PBL
Olle Wijk, PhD & Patric Andersson, MSc
When negotiating Performance Based Logistic
(PBL) terms between a customer and a potential
supplier, the terms need to be set appropriately in
order to give the supplier the right incentive to provide logistic functions that will enable high system performance.
A simulation model of the logistic scenario will give good insight to the physics involved indicating limitations and what can be achieved with statistical confidence; such information can be of great use when negotiating PBL contract terms.
In this paper a general simulation based method is proposed for decision support that can be used both from customer and supplier point of view. The proposed method uses a Monte Carlo based simulation technique to estimate probability distributions describing the possible outcomes for the logistic scenario. Reward or penalty fees for fulfilling/breaking the PBL terms can be set appropriately once the probability distributions of interest have been estimated. It is furthermore shown that by saving relevant simulation results in a spreadsheet it is possible to evaluate the consequences of updated PBL terms on-the-fly without need of conducting new simulations.