Two-stage renewing warranty policy with the threshold of maintenance times

Abstract

Compared with non-renewing warranty, renewing warranty is more attractive to the customers. To reduce the possible cost pressure of the manufacturers, this study proposes a novel two-stage renewing warranty model with a threshold of maintenance times. Based on a preset allocation ratio, the warranty period is divided into two stages, i.e. the renewing warranty stage and the minimal repair warranty stage. In the first stage, when the number of maintenance actions exceeds the given threshold, the failed item will be replaced with a new one and attached with a new warranty period; otherwise, the product will enter the second stage when its operating time exceeds the time span of the renewing warranty stage. When the product fails in the second stage, only minimal repair is performed. On this basis, four types of maintenance schemes are proposed, and the corresponding warranty cost and profit models are developed to optimise the warranty policy. A numerical example is provided to illustrate the effectiveness of the proposed model, and sensitivity analysis is conducted. The results show that by considering the threshold of maintenance times, the warranty cost can be reduced and the manufacturer's expected profit can be improved simultaneously.