The opportunity study of PM strategy for second-hand products sold with a two-dimensional warranty

Abstract

Preventive maintenance (PM) actions could bring the second-hand product to an improved health condition and ensure the product safety during usage. However, performing PM usually involves additional cost and brings financial burdens to both dealers and customers. How to find the trade-off between the benefits and related costs of PM is the main challenge for both sides. In this study, we investigate the opportunity of different PM strategies for second-hand products covered by a two-dimensional warranty from the perspectives of both dealers and customers. In the proposed model, the used product is upgraded before being delivered to the next customer, and then it could be preventively maintained according to different adopted PM strategies. In order to determine the maximum capital that the customer would like to invest in PM activities and the minimum price at which the dealer is willing to provide PM service, the dealer’s expected servicing cost and the customer’s total expected cost during the product lifecycle are derived respectively. In the end, the proposed model is validated through numerical experiments. Based on the numerical results, several practical implications are also given to help dealers in conducting PM strategy.