Optimal warranty option and post-warranty maintenance strategy under a warranty menu: from a consumer perspective

Abstract

ABSTRACT As manufacturers continue to provide new and unique products and services for their customers, we argue that warranty menus with differentiated options are an often-overlooked unique selling point. Meanwhile, there is a huge swathe of customers who own durable products which are still in use even after the expiration of a warranty. It is in this area that we develop a research perspective which urges customers to consider warranty plans and post-warranty maintenance strategies simultaneously when making a purchasing decision. In this paper, through the lens of a consumer, we propose an integrated model of warranty and post-warranty maintenance under a flexible renewable warranty. This model takes into account repair limits and multiple failure types with time-varying probabilities. As part of this, a new post-warranty maintenance strategy is designed, in which the repair time-based corrective replacement and the age-based preventive replacement are combined. The life cycle cost rate of the product is minimised by a synthetic decision-making about the consumer’s warranty purchase and post-warranty maintenance strategy. Numerical studies show that there exists a joint optimal solution, which can help the customer to develop an optimal overall warranty-maintenance strategy under the warranty menu with minimised cost rate. Highlights An integrated model of warranty and post-warranty maintenance is developed. The warranty product has minor and catastrophic failures with time-varying probabilities. A flexible renewable warranty is considered for the consumer. A post-warranty maintenance strategy with the repair time limit is proposed. The optimal warranty-maintenance strategy is derived to minimise the Life cycle cost rate.