Integration of marketing and maintenance decisions in two-dimensional warranty contracts under a win-win strategy for two transaction sides

Abstract

ABSTRACT This study proposes a mathematical model to simultaneous decision-making about the marketing and maintenance decisions. Also, a win–win strategy for manufacturer and buyer is established under the two-dimensional basic and extended warranty coverages. The product demand and the extended warranty demand are, respectively, considered as functions of the basic and extended warranty regions. To illustrate the advantages of the model, three comparative studies are conducted. The first one approves the fact that concurrent optimization from the perspective of two transaction sides leads to better results compared to the single-objective optimization from each of views mentioned above. The second comparison shows that providing extended warranty benefits both the transaction sides. The third comparison proves that the implementation of a PM program throughout the warranty region has a significant effect on both the imposed cost on the customer during the post-warranty period and the manufacturer’s profit. Finally, a sensitivity analysis is conducted on some parameters to extend insights into the impact of them on the objective function.