Abstract
For products with a two-dimensional (2D) warranty policy, customers are heterogeneous on usage rates. In this study, we propose a systematic warranty-reliability-price combination decision model for repairable products with a 2D Free Replacement-Repair Warranty (FRW). The effects of customers’ heterogeneous usage rate on both reliability design and the demand function of 2D warranted products are considered in the model. The optimal warranty-reliability-price combination is obtained by maximizing total expected profits over products’ life cycle. Two marketing scenarios are discussed, i.e., a stable market and a dynamic market. The optimality conditions for the two scenarios are investigated. The applicability of the model is demonstrated via a case study of an industrial 3D printer manufacturer, and it shows the consistency of the model.
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