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Optimal production run length and warranty period for an imperfect production system under selling price dependent on warranty period

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  • Chen, Cheng-Kang
  • Lo, Chih-Chung
  • Weng, Tzu-Chun

Abstract

This paper extends the extant literature to consider that the selling price of the product sold with warranty policy is a function of the length of the warranty period for an imperfect production system. A product under a free replacement/repair warranty policy is considered and the lifetime distribution of the product is assumed to be exponentially distributed. We seek to maximize the total profit per item through optimal determinations of the production run length and the warranty period. Based on the proposed mathematical model, we will derive some lemmas and the propositions to carry out an efficient solution procedure to determine the optimal warranty period and production run length. The numerical examples are given to illustrate the features of the proposed maximizing profit model and to show all of the possible cases of the solution procedure.

Suggested Citation

  • Chen, Cheng-Kang & Lo, Chih-Chung & Weng, Tzu-Chun, 2017. "Optimal production run length and warranty period for an imperfect production system under selling price dependent on warranty period," European Journal of Operational Research, Elsevier, vol. 259(2), pages 401-412.
  • Handle: RePEc:eee:ejores:v:259:y:2017:i:2:p:401-412
    DOI: 10.1016/j.ejor.2016.10.038
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    References listed on IDEAS

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    Cited by:

    1. Ateka Banu & Shyamal Kumar Mondal, 2018. "An integrated inventory model with warranty dependent credit period under two policies of a manufacturer," OPSEARCH, Springer;Operational Research Society of India, vol. 55(3), pages 677-702, November.
    2. Luo, Ming & Wu, Shaomin, 2019. "A comprehensive analysis of warranty claims and optimal policies," European Journal of Operational Research, Elsevier, vol. 276(1), pages 144-159.
    3. Ivan Darma Wangsa & Hui Ming Wee & Shih-Hsien Tseng, 2019. "A coordinated vendor–buyer system considering loss and damage claims, insurance cost and stochastic lead time," International Journal of System Assurance Engineering and Management, Springer;The Society for Reliability, Engineering Quality and Operations Management (SREQOM),India, and Division of Operation and Maintenance, Lulea University of Technology, Sweden, vol. 10(3), pages 384-398, June.
    4. Luo, Ming & Wu, Shaomin, 2018. "A value-at-risk approach to optimisation of warranty policy," European Journal of Operational Research, Elsevier, vol. 267(2), pages 513-522.

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