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On reliability improvement program for second-hand products sold with a two-dimensional warranty

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  • Wang, Yukun
  • Liu, Yiliu
  • Liu, Zixian
  • Li, Xiaopeng

Abstract

The growing market for second-hand products facilitates the acceptance of warranty provided by dealers to promote sales and provide assurance for customers. Offering warranty results in additional cost due to warranty claims servicing. Such cost can be reduced through upgrade and preventive maintenance (PM) that improve the reliability of the product. Reliability improvement is worthwhile only if the cost incurred is less than the reduction in the warranty cost. For repairable second-hand products sold with a two-dimensional warranty, this paper investigates the worthiness of reliability improvement from the dealer’s viewpoint. A new modeling approach is proposed and studied, allowing the same product to have distinct degradation processes due to customer usage intensity variation. The effects of customer usage heterogeneity, upgrade and PM actions on the product reliability and the corresponding expected cost to the dealer are characterized. Optimal reliability program including the upgrade degree and PM policy is derived so that the expected total cost of the second-hand product to the dealer can be minimized. Numerical examples are utilized to illustrate the applicability of the proposed model. In addition, some practical implications from a sensitive analysis regarding the important parameters are elaborated.

Suggested Citation

  • 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.
    • Handle: RePEc:eee:reensy:v:167:y:2017:i:c:p:452-463
    DOI: 10.1016/j.ress.2017.06.029
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    Cited by:

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    2. Santos, Augusto César de Jesus & Cavalcante, Cristiano Alexandre Virgínio & Wu, Shaomin, 2023. "Maintenance policies and models: A bibliometric and literature review of strategies for reuse and remanufacturing," Reliability Engineering and System Safety, Elsevier, vol. 231(C).
    3. Zhu, Xiaoyan & Jiao, Can & Yuan, Tao, 2019. "Optimal decisions on product reliability, sales and promotion under nonrenewable warranties," Reliability Engineering and System Safety, Elsevier, vol. 192(C).
    4. Anshu Dai & Guanzhou Wei & Zhaomin Zhang & Shuguang He, 2020. "Design of a flexible preventive maintenance strategy for two-dimensional warranted products," Journal of Risk and Reliability, , vol. 234(1), pages 74-87, February.
    5. Wang, Dongfan & He, Zhen & He, Shuguang & Zhang, Zhaomin & Zhang, Yiwen, 2021. "Dynamic pricing of two-dimensional extended warranty considering the impacts of product price fluctuations and repair learning," Reliability Engineering and System Safety, Elsevier, vol. 210(C).
    6. 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.
    7. 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.
    8. Fang, Chih-Chiang, 2020. "Optimal price and warranty decision for durable products in a competitive duopoly market," Reliability Engineering and System Safety, Elsevier, vol. 203(C).
    9. Dai, Anshu & Wei, Guanzhou & Wang, Dongfan & He, Zhen & He, Shuguang, 2021. "The opportunity study of PM strategy for second-hand products sold with a two-dimensional warranty," Reliability Engineering and System Safety, Elsevier, vol. 214(C).
    10. Santos, Augusto César de Jesus & Cavalcante, Cristiano Alexandre Virginio & Ren, Junru & Wu, Shaomin, 2023. "A novel delay time modelling method for incorporating reuse actions in three-state single-component systems," Reliability Engineering and System Safety, Elsevier, vol. 234(C).
    11. Esmat Baghdadi & Mahmood Shafiee & Babakalli Alkali, 2022. "Upgrading Strategy, Warranty Policy and Pricing Decisions for Remanufactured Products Sold with Two-Dimensional Warranty," Sustainability, MDPI, vol. 14(12), pages 1-15, June.
    12. Xiaolin Wang & Wei Xie, 2018. "Two-dimensional warranty: A literature review," Journal of Risk and Reliability, , vol. 232(3), pages 284-307, June.
    13. Zheng, Rui & Zhou, Yifan, 2021. "Comparison of three preventive maintenance warranty policies for products deteriorating with age and a time-varying covariate," Reliability Engineering and System Safety, Elsevier, vol. 213(C).

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