Using the Markov Chain to Understand the Impact of Contract Cancellation During the Early Stages of Technology Adoption: A Case Study of South African Locomotive Procurement

Southern African rail operators are under pressure to meet rising demand because of globalization and rapid technological advancement. This study examined the effects of South African railway company contract cancellation with locomotive suppliers. The study relied on the case study and secondary data to meet the research objectives. The total number of locomotives in the fleet that was the subject of the investigation was 83, and the model involved making transitions between active or in-service to the depot for maintenance and in-service to the factory for repairs. According to the Markov model, the number of locomotives in service was expected to decline and stabilize at approximately 59%, meaning a bigger proportion would be unavailable for service. The locomotives sent to the factory for repairs were expected to grow exponentially and stay at approximately 17% of the fleet, while those at the depot were expected to stay at approximately 23%. This research showed that companies should reduce failure and improve repair rates before cancelling contracts or developing internal capabilities to ensure technology performs as expected without supplier support.