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Flexible decision models for a two-dimensional warranty policy with periodic preventive maintenance

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  • Wang, Jinting
  • Zhou, Zhuang
  • Peng, Hao

Abstract

We study the consumer's and the manufacturer's optimal strategies for items sold with periodic preventive maintenance (PM) under a two-dimensional warranty policy. The cooperative and non-cooperative interactions between the manufacturer and the consumer are investigated for both the base warranty (BW) period and the extended warranty (EW) period. Under the BW, we propose a new upgrade model where the cost of PM is shared by two sides. In the EW period, consumers are assumed to have the option to either accept or reject PM at each time based on his utility. Two upgrade models are built and the revenue functions are analyzed. Profit maximization and cost minimization for both sides are analyzed by a game-theoretic approach. It is shown that the manufacturer's and the consumer's decisions are different, so the induced hazard rate functions are also different. In static and dynamic scenarios, we derive the equilibrium number of PM, the equilibrium value of acceptance probability and the equilibrium upgrade level for both the BW and the EW cases. Numerical examples are discussed to demonstrate the applicability of the methodologies. The results about the optimal solutions of the expected profit functions for the consumers and the manufacturer are provided.

Suggested Citation

  • Wang, Jinting & Zhou, Zhuang & Peng, Hao, 2017. "Flexible decision models for a two-dimensional warranty policy with periodic preventive maintenance," Reliability Engineering and System Safety, Elsevier, vol. 162(C), pages 14-27.
    • Handle: RePEc:eee:reensy:v:162:y:2017:i:c:p:14-27
    DOI: 10.1016/j.ress.2017.01.012
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    References listed on IDEAS

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    Cited by:

    1. Xiaodong Zhu & Lingfei Yu & Wei Li, 2019. "Warranty Period Decision and Coordination in Closed-Loop Supply Chains Considering Remanufacturing and Consumer Behavior," Sustainability, MDPI, vol. 11(15), pages 1-26, August.
    2. Xiaodong Zhu & Lingfei Yu, 2019. "The Impact of Warranty Efficiency of Remanufactured Products on Production Decisions and Green Growth Performance in Closed-Loop Supply Chain: Perspective of Consumer Behavior," Sustainability, MDPI, vol. 11(5), pages 1-24, March.
    3. Wang, Xiaolin & Zhao, Xiujie & Liu, Bin, 2020. "Design and pricing of extended warranty menus based on the multinomial logit choice model," European Journal of Operational Research, Elsevier, vol. 287(1), pages 237-250.
    4. Peng, Shizhe & Jiang, Wei & Wei, Lai & Wang, Xiao-Lin, 2022. "A new cost-sharing preventive maintenance program under two-dimensional warranty," International Journal of Production Economics, Elsevier, vol. 254(C).
    5. Hooti, Fatemeh & Ahmadi, Jafar & Longobardi, Maria, 2020. "Optimal extended warranty length with limited number of repairs in the warranty period," Reliability Engineering and System Safety, Elsevier, vol. 203(C).
    6. Park, Minjae & Jung, Ki Mun & Park, Dong Ho, 2018. "Optimization of periodic preventive maintenance policy following the expiration of two-dimensional warranty," Reliability Engineering and System Safety, Elsevier, vol. 170(C), pages 1-9.
    7. Liu, Bin & Shen, Lijuan & Xu, Jianyu & Zhao, Xiujie, 2020. "A complimentary extended warranty: Profit analysis and pricing strategy," International Journal of Production Economics, Elsevier, vol. 229(C).
    8. Safaei, Fatemeh & Taghipour, Sharareh, 2022. "Optimal preventive maintenance for repairable products with three types of failures sold under a renewable hybrid FRW/PRW policy," Reliability Engineering and System Safety, Elsevier, vol. 223(C).
    9. Wang, Xiaolin & Li, Lishuai & Xie, Min, 2020. "An unpunctual preventive maintenance policy under two-dimensional warranty," European Journal of Operational Research, Elsevier, vol. 282(1), pages 304-318.
    10. Lijun Shang & Guojun Shang & Qingan Qiu, 2022. "A Bivariate Post-Warranty Maintenance Model for the Product under a 2D Warranty," Mathematics, MDPI, vol. 10(12), pages 1-18, June.
    11. Zhao, Xiujie & Liu, Bin & Xu, Jianyu & Wang, Xiao-Lin, 2023. "Imperfect maintenance policies for warranted products under stochastic performance degradation," European Journal of Operational Research, Elsevier, vol. 308(1), pages 150-165.
    12. Liu, Peng & Wang, Guanjun & Su, Peng, 2021. "Optimal maintenance strategies for warranty products with limited repair time and limited repair number," Reliability Engineering and System Safety, Elsevier, vol. 210(C).
    13. Huang, Yeu-Shiang & Ho, Jyh-Wen & Hung, Jin-Wei & Tseng, Tzu-Liang (Bill), 2021. "A customized warranty model by considering multi-usage levels for the leasing industry," Reliability Engineering and System Safety, Elsevier, vol. 215(C).
    14. Yukun Wang & Yiliu Liu & Aibo Zhang, 2019. "Preventive maintenance optimization for repairable products considering two-dimensional warranty and customer satisfaction," Journal of Risk and Reliability, , vol. 233(4), pages 553-566, August.
    15. Xiaolin Wang & Wei Xie, 2018. "Two-dimensional warranty: A literature review," Journal of Risk and Reliability, , vol. 232(3), pages 284-307, June.
    16. Wang, Yukun & Liu, Yiliu & Liu, Zixian & Li, Xiaopeng, 2017. "On reliability improvement program for second-hand products sold with a two-dimensional warranty," Reliability Engineering and System Safety, Elsevier, vol. 167(C), pages 452-463.

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