Optimal maintenance policy and length of extended warranty within the life cycle of products

Abstract

This paper investigates maintenance policy and length of extended warranty for repairable products from the seller’s viewpoint. When the product failed within the base and extended warranty periods, product failures are rectified using minimal repair. To reduce the number of product failures, the seller performs imperfect preventive maintenance (PM) actions when the age of the product reaches a controlled-limit within the base and extended warranty periods. After the base warranty period expires, the seller gives a discount of purchasing extended warranty expense if the consumer purchases the extended warranty for products. Under this maintenance scheme, the mathematical model of profit is constructed and then the optimal controlled-limit, the number and degree of PM and the length of extended warranty are obtained such that the expected total profit is maximized for the seller. Finally, numerical examples are given to illustrate the influences of the optimal length of the extended warranty and the maintenance policy for profit model.