Evaluating the effectiveness of spare parts replenishment methods for warranty service satisfaction

Abstract

After a mobile communication device (MCD) has been sold, the customer may find that there is a defect. MCD manufacturers usually contract a third-party warranty service provider (WSP) to perform repairs of manufacturing defects and to ship a repaired MCD back to the customer. The contract established between the MCD manufacturer and the WSP clearly specifies the minimum required service levels for repair lead time and fill rate that must be met by the WSP. In this research, the ability of two distinct spare parts replenishment methods to meet minimum required service levels at a minimum cost was evaluated using a discrete event simulation approach. The results show that both methods satisfy minimum service level requirements with no significant difference in average total system cost. However, the results also indicate that their performance with respect to average repair lead time and average fill rate is significantly different.