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The effect of lifetime buys on warranty repair operations

Author

Listed:
  • K Sahyouni

    (Northwestern University)

  • R C Savaskan

    (Kellogg School of Management, Northwestern University)

  • M S Daskin

    (Northwestern University)

Abstract

Lifetime buys are a common practice in the electronics and telecommunication industries. Under this practice, manufacturers procure their repair parts inventory in one order to support the spare part needs of a product for the duration of its warranty repair period. In this paper, we consider a repair operation in which defective items under warranty are returned to a manufacturer who either repairs these items using its spare parts inventory or replaces each defective unit with a new product. We show how fixed repair capability costs, variable repair costs, inventory holding costs, and replacement costs affect a firm's optimal repair and replacement decisions. The model is used to gain insights for products from a major mobile device manufacturer in the United States.

Suggested Citation

  • K Sahyouni & R C Savaskan & M S Daskin, 2010. "The effect of lifetime buys on warranty repair operations," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 61(5), pages 790-803, May.
    • Handle: RePEc:pal:jorsoc:v:61:y:2010:i:5:d:10.1057_jors.2008.143
    DOI: 10.1057/jors.2008.143
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    References listed on IDEAS

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    1. Nicholas C. Petruzzi & Maqbool Dada, 1999. "Pricing and the Newsvendor Problem: A Review with Extensions," Operations Research, INFORMS, vol. 47(2), pages 183-194, April.
    2. Murthy, D. N. P. & Djamaludin, I., 2002. "New product warranty: A literature review," International Journal of Production Economics, Elsevier, vol. 79(3), pages 231-260, October.
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    4. Zuo, Ming J. & Liu, Bin & Murthy, D. N. P., 2000. "Replacement-repair policy for multi-state deteriorating products under warranty," European Journal of Operational Research, Elsevier, vol. 123(3), pages 519-530, June.
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    Citations

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    Cited by:

    1. Wagner, Regina & Blecker, Thorsten, 2015. "Material Requirements Planning under Phase-out Conditions," Chapters from the Proceedings of the Hamburg International Conference of Logistics (HICL), in: Blecker, Thorsten & Kersten, Wolfgang & Ringle, Christian M. (ed.), Operational Excellence in Logistics and Supply Chains: Optimization Methods, Data-driven Approaches and Security Insights. Proceedings of the Hamburg , volume 22, pages 73-95, Hamburg University of Technology (TUHH), Institute of Business Logistics and General Management.
    2. van der Heijden, Matthieu & Iskandar, Bermawi P., 2013. "Last time buy decisions for products sold under warranty," European Journal of Operational Research, Elsevier, vol. 224(2), pages 302-312.
    3. Chen, Jiguang & Hu, Qiying, 2015. "Optimal payment scheme when the supplier’s quality level and cost are unknown," European Journal of Operational Research, Elsevier, vol. 245(3), pages 731-742.
    4. Shuai Zhang & Kai Huang & Yufei Yuan, 2021. "Spare Parts Inventory Management: A Literature Review," Sustainability, MDPI, vol. 13(5), pages 1-23, February.
    5. Shafiee, Mahmood & Chukova, Stefanka, 2013. "Maintenance models in warranty: A literature review," European Journal of Operational Research, Elsevier, vol. 229(3), pages 561-572.
    6. Hur, Mansik & Keskin, Burcu B. & Schmidt, Charles P., 2018. "End-of-life inventory control of aircraft spare parts under performance based logistics," International Journal of Production Economics, Elsevier, vol. 204(C), pages 186-203.
    7. Robotis, Andreas & Boyaci, Tamer & Verter, Vedat, 2012. "Investing in reusability of products of uncertain remanufacturing cost: The role of inspection capabilities," International Journal of Production Economics, Elsevier, vol. 140(1), pages 385-395.
    8. Jessika Luth Richter & Sahra Svensson‐Hoglund & Carl Dalhammar & Jennifer D. Russell & Åke Thidell, 2023. "Taking stock for repair and refurbishing: A review of harvesting of spare parts from electrical and electronic products," Journal of Industrial Ecology, Yale University, vol. 27(3), pages 868-881, June.

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    Keywords

    logistics; inventory; repair;
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