Research on Pricing of Flexible Two-Dimensional Extended Warranty Considering Preventive Maintenance

Facing the uncertainty in transaction of two-dimensional extended warranty, a flexible pricing model is presented considering imperfect preventive maintenance combined with the degradation characteristics of item. The measure of two-dimensional preventive maintenance is carried out based on specified age interval or usage interval, the effect of imperfect preventive maintenance is described by age reduction model. The extended warranty cost is modeled from the perspective of manufacturer and customer, the method of gridding search is employed to optimize the maintenance strategy under different cases. Moreover, customized extended warranty price and warranty services are proposed on the basis of consumer usage rates. The results demonstrate that it is helpful to maximize the benefit of vendor by providing customized warranty strategy, the implementation of preventive maintenance during the whole warranty period can effectively reduce warranty cost for both sides.

Download Full-text

Customized Preventive Maintenance Strategies for Products Sold with Two-Dimensional Warranty

Mathematical Problems in Engineering ◽

10.1155/2021/5576455 ◽

2021 ◽

Vol 2021 ◽

pp. 1-12

Author(s):

Fangqi Dong ◽

Huaqiang Wang ◽

Feng Men ◽

Lijun Liang

Keyword(s):

Numerical Analysis ◽

Preventive Maintenance ◽

Programming Model ◽

Two Dimensional ◽

Maintenance Costs ◽

Maintenance Strategies ◽

Warranty Period ◽

Extended Warranty ◽

Warranty Cost ◽

Warranty Costs

Two-dimensional warranty has played a significant role in improving product quality and competitiveness. However, two-dimensional basic warranty (BW) and extended warranty (EW) have not yet been combined effectively, and the customized maintenance strategies based on the consumers’ heterogeneity have been quite limited, which result in high maintenance costs. In this paper, the possibility of reducing warranty cost over BW and EW is explored by classifying customers based on their usage rates and then offering them with customized preventive maintenance (PM) strategies. By considering the purchasing ratio of EW contracts, the PM strategies for BW and EW are closely combined by the bi-level programming model. Numerical analysis is given to show the application of the proposed warranty strategy, and the significant findings and sensitivity of the main parameters are analyzed in the end. The findings demonstrate that the customized PM strategies combining BW and EW can effectively reduce warranty costs within the warranty period and provide a scientific guidance for manufacturers to design a more reasonable PM strategy.

Download Full-text

Design of a flexible preventive maintenance strategy for two-dimensional warranted products

Proceedings of the Institution of Mechanical Engineers Part O Journal of Risk and Reliability ◽

10.1177/1748006x19868892 ◽

2019 ◽

Vol 234 (1) ◽

pp. 74-87

Author(s):

Anshu Dai ◽

Guanzhou Wei ◽

Zhaomin Zhang ◽

Shuguang He

Keyword(s):

Customer Satisfaction ◽

Preventive Maintenance ◽

Numerical Experiments ◽

Failure Process ◽

Maintenance Cost ◽

Two Dimensional ◽

Maintenance Strategy ◽

Different Types ◽

Warranty Cost ◽

Usage Rates

Offering appropriate preventive maintenance strategy has an effective impact on achieving higher customer satisfaction. This article presents a flexible preventive maintenance strategy, where customers are grouped into two groups according to their usage rates, and then different preventive maintenance programs are applied to different types of customers. The product follows a two-dimensional failure process and the preventive maintenance cost is shared between the manufacturer and customer on a pro rata basis. The manufacturer’s warranty cost is minimized by jointly optimizing the pro rata proportion of the preventive maintenance cost, the preventive maintenance number and the corresponding preventive maintenance levels. Numerical experiments are presented to illustrate the effectiveness of the proposed approach. Results prove that the flexible preventive maintenance strategy outperforms the conventional unified preventive maintenance strategy in terms of total warranty cost. Besides, some managerial suggestions are also given to provide guidance of implementing the proposed preventive maintenance strategy.

Download Full-text

Two-dimensional preventive maintenance optimum for equipment sold with availability-based warranty

Proceedings of the Institution of Mechanical Engineers Part O Journal of Risk and Reliability ◽

10.1177/1748006x18813821 ◽

2018 ◽

Vol 233 (4) ◽

pp. 648-657

Author(s):

Chun Su ◽

Longfei Cheng

Keyword(s):

Preventive Maintenance ◽

Two Dimensional ◽

Maintenance Strategy ◽

Maintenance Policy ◽

Numerical Example ◽

Warranty Period ◽

Warranty Cost ◽

Complex Equipment ◽

Object Of Study ◽

Preventive Maintenance Policy

Selecting complex equipment with availability requirements as the object of study, this article investigates an availability-based warranty policy. Under this policy, apart from providing repairs or replacements upon failures, the manufacturer guarantees a negotiated availability level of products during the warranty period. In order to satisfy the availability requirement of the warranted products with rational cost, two-dimensional preventive maintenance strategy is carried out by the manufacturer, which is scheduled by considering the age and usage of the warranted items. By optimizing two-dimensional preventive maintenance strategy, this study aims to meet products’ availability requirement with the lowest cost from the manufacturer’s perspective. Moreover, customized preventive maintenance programs are designed for different customer categories. Finally, we provide a numerical example to verify the effectiveness of the proposed availability-based warranty policy. The results demonstrate that two-dimensional preventive maintenance strategy is superior in terms of warranty cost and operational availability. Meanwhile, customized preventive maintenance policy is more beneficial to both the transaction sides.

Download Full-text

Availability Optimization of Multicomponent Products with Economic Dependence under Two-Dimensional Warranty

Discrete Dynamics in Nature and Society ◽

10.1155/2021/2492430 ◽

2021 ◽

Vol 2021 ◽

pp. 1-17

Author(s):

Enzhi Dong ◽

Zhonghua Cheng ◽

Rongcai Wang ◽

Xiaona Zhang

Keyword(s):

Simulated Annealing ◽

Preventive Maintenance ◽

Simulated Annealing Algorithm ◽

Single Component ◽

Two Dimensional ◽

Economic Dependence ◽

Warranty Period ◽

Warranty Cost ◽

Annealing Algorithm ◽

Availability Model

For multicomponent products, the maintenance of every component separately will increase the downtime and reduce the availability of products during the warranty period. To solve this problem, the economic dependence between the components is considered in this paper. Firstly, a single-component two-dimensional (2D) preventive maintenance (PM) availability model is established, and the simulated annealing algorithm is adopted to calculate the optimal 2D PM interval to achieve the maximal availability of any single component. Then, to ensure that the warranty cost of each component does not exceed the budget, the PM benchmark interval is introduced, and the PM work is optimized following the method of grouping maintenance. Based on this, the 2D preventive grouping maintenance availability model of multicomponent products is established. Finally, an example is given to verify the proposed method, and the results indicate that the proposed method increases the availability of multicomponent products during the 2D warranty period.

Download Full-text

Failure modeling and optimizing preventive maintenance strategy during two-dimensional extended warranty contracts

Engineering Failure Analysis ◽

10.1016/j.engfailanal.2012.09.006 ◽

2013 ◽

Vol 28 ◽

pp. 90-102 ◽

Cited By ~ 44

Author(s):

Kamran Shahanaghi ◽

Rassoul Noorossana ◽

Seyed Gholamreza Jalali-Naini ◽

Majeed Heydari

Keyword(s):

Preventive Maintenance ◽

Two Dimensional ◽

Maintenance Strategy ◽

Failure Modeling ◽

Extended Warranty

Download Full-text

Preventive maintenance optimization for repairable products considering two-dimensional warranty and customer satisfaction

Proceedings of the Institution of Mechanical Engineers Part O Journal of Risk and Reliability ◽

10.1177/1748006x18804463 ◽

2018 ◽

Vol 233 (4) ◽

pp. 553-566

Author(s):

Yukun Wang ◽

Yiliu Liu ◽

Aibo Zhang

Keyword(s):

Customer Satisfaction ◽

Preventive Maintenance ◽

Product Performance ◽

Maintenance Optimization ◽

Two Dimensional ◽

Maintenance Strategy ◽

Minimal Repair ◽

Proposed Model ◽

Useful Life ◽

Practical Implications

Customer satisfaction with a purchased product is closely related to the product performance within the warranty region and even the performance during the remainder of its useful life. Every satisfied customer may boost the future sales of the same product with positive evaluations and recommendations to others, and thus will create more profits for the manufacturer. During the useful life of the product, the expected cost to the manufacturer normally depends on the warranty policy, product reliability and specific servicing strategies implemented. In this article, considering the effect of customer satisfaction on the manufacturer’s incurred cost, we investigate a periodic and imperfect preventive maintenance strategy for repairable products sold with a two-dimensional warranty policy. The customer satisfaction is measured with the probability of the customer making a repeat purchase from the same manufacturer. In the proposed model, the number of preventive maintenance actions and corresponding maintenance level are jointly derived with the objective of minimizing the expected total cost per product to the manufacturer. The performance of the proposed preventive maintenance strategy is compared with that of minimal repair corrective maintenance strategy in a numerical example, so as to illustrate its applicability. In addition, some practical implications from a detailed sensitivity analysis are elaborated.

Download Full-text

Two-dimensional warranty period optimization considering the trade-off between warranty cost and boosted demand

Computers & Industrial Engineering ◽

10.1016/j.cie.2019.03.014 ◽

2019 ◽

Vol 130 ◽

pp. 575-585 ◽

Cited By ~ 3

Author(s):

Zhaomin Zhang ◽

Shuguang He ◽

Zhen He ◽

Anshu Dai

Keyword(s):

Two Dimensional ◽

Trade Off ◽

Warranty Period ◽

Warranty Cost

Download Full-text

Analysis of a two-dimensional stair-case warranty policy with preventive maintenance

IMA Journal of Management Mathematics ◽

10.1093/imaman/dpaa005 ◽

2020 ◽

Vol 32 (1) ◽

pp. 51-67

Author(s):

Jinting Wang ◽

Sheng Zhu ◽

Simiao Du

Keyword(s):

Mathematical Model ◽

Preventive Maintenance ◽

Optimal Strategy ◽

Optimal Solution ◽

Two Dimensional ◽

Rectangular Region ◽

Numerical Example ◽

Warranty Cost

Abstract We develop a mathematical model to study optimal preventive maintenance (PM) strategy under a two-dimensional stair-case warranty policy considering both age and usage of a product. During the warranty term, sellers implement preventive maintenance within the stair-case region of the warranty policy and upon failure a product is repaired minimally and immediately. Our objective is to find the optimal PM strategy that minimizes the seller’s cost of warranty while jointly considering the age and usage intervals of the PM policy and the level of PM executed. We also discuss how our results compare to those in a two-dimensional warranty policy with a rectangular region, and we find that the stair-case policy is preferable for sellers. An algorithm is provided to find the optimal solution and a numerical example is presented to illustrate how to find an optimal strategy with our proposed method. We show numerically that the expected total warranty cost is convex both in the age and the usage of the product under certain conditions.

Download Full-text