A System Dynamics Model for Evaluating the Firms’ Capabilities in Maintenance Outsourcing and Analyzing the Profitability of Outsourcing

Abstract

Outsourcing is recognized as a tool to gain strategic advantages. Maintenance outsourcing is a common practice in many industries, including chemical, petroleum, petrochemical, and medical equipment manufacturing. Nevertheless, outsourcing is associated with many risks. This study, based on the system dynamics, we designed a model to identify variables, influencing the effectiveness of equipment, efficacy, and profitability. We also examined the extent of the effects of these variables and assessed their relationships to decide on maintenance outsourcing in gas refineries. First, the influential variables were identified by reviewing the literature and considering the experts’ opinions. Next, a system dynamics model was designed, and the optimal values of the variables were investigated by creating five different scenarios. The results showed how the investigated variables affected our goals and how we could achieve them by keeping the values of these variables close to those determined in the selected scenarios. If the variable of equipment effectiveness was preferred by the managers, scenario 3 would be selected, as the equipment effectiveness reached its maximum level in this scenario. On the other hand, if the efficacy and profitability variables were preferred, scenario 4 would be selected in which efficacy and profitability were at maximum levels.