Optimization of Extended Warranty Cost for Multi-Component Products with Failure Interaction

Rongcai Wang,Zhonghua Cheng,Qian Wang,Liqing Rong,Enzhi Dong,Stefan Balint

doi:10.1155/2021/5564740

Rongcai Wang, Zhonghua Cheng + Show 4 more

Open Access

https://doi.org/10.1155/2021/5564740

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Abstract

In practice, the assumption of failure independence between components is seldom valid, especially for those complex systems with complicated failure mechanism. Users can decide whether to purchase extended warranty (EW) at the end of basic warranty, and there are many factors that influence this decision, such as product reliability and EW price. In order to solve the problem of EW pricing for multi-component systems with failure interaction reasonably, considering the failure interaction characteristics between components of the multi-component systems, under the condition of type II failure interaction, this paper constructed a dependent failure rate model and developed a EW cost model of two-component systems. Thus, after optimizing the preventive maintenance (PM) strategy, this paper obtained the optimal PM interval when EW cost is the lowest, which is a win-win strategy to reduce the EW price for manufacturers and users under the premise of ensuring the manufacturer's profit demand. Finally, the validity of the model was verified by a numerical example and sensitivity analysis for important parameters was presented.

Highlights

Due to the fierce market competition nowadays, manufacturers seek different market competition strategies to seize market share and improve customer satisfaction, and providing attractive warranty policies is a common marketing measure
According to the function period of the warranty policy in the product usage phase, warranty policies can be divided into two basic types: basic warranty (BW) and extended warranty (EW)
We present a EW warranty cost model for a twocomponent product with type II failure interaction. rough the two-component system research, this paper optimizes the maintenance strategy during EW period under the condition of type II failure interaction and obtains the optimal preventive maintenance (PM) interval and the lowest EW cost and EW price, which provides a scientific basis and managerial suggestions for manufacturers to formulate EW strategy for multicomponent products with failure interaction

Summary

Introduction

Due to the fierce market competition nowadays, manufacturers seek different market competition strategies to seize market share and improve customer satisfaction, and providing attractive warranty policies is a common marketing measure. Wang et al [35] proposed a new shock failure model based on the consideration of type III failure interaction, and based on this model, they studied the incomplete maintenance decisionmaking method under the N-type replacement strategy and obtained the minimal average cost rate of the system, verifying the feasibility of this strategy. For multicomponent products with complex failure characteristics, optimizing maintenance strategies of EW and reducing EW cost are of great significance for enhancing market competitiveness and improving customer satisfaction. Rough the two-component system research, this paper optimizes the maintenance strategy during EW period under the condition of type II failure interaction and obtains the optimal PM interval and the lowest EW cost and EW price, which provides a scientific basis and managerial suggestions for manufacturers to formulate EW strategy for multicomponent products with failure interaction.

Model Assumptions and Notations

Numerical Example

Conclusions and Future Research