Warranty, free service and rework policy for an imperfect manufacturing system with SAR sensitive demand under emission taxation

Abstract

The aim of this study is to illustrate the impact of warranty/free service period, specific absorption rate (SAR) of the products, rework policy and emission taxation on the optimal business policy of an imperfect production inventory system in the current highly uncertain/intensified market situation. In this study, the customers’ demand is considered to be influenced by the warranty/free service period along with a permissible SAR of the items. As a result, the manufacturer invests in order to provide warranty period/free service period and fixing an appropriate SAR for the products which are shown in production cost, service cost and SAR reduction investment. Three distinct scenarios are analysed separately regarding the marketing assimilation of defective items. Each suggested scenario relying on the system is quantitatively validated using an example. Furthermore, manufacturers are bound to pay carbon emission tax due to the carbon emission during the production process. Due to high non-linearity of the objective function, a numerical example is solved using the artificial hummingbird algorithm (AHA). From the numerical experiment, it is observed that the optimal policy of the system is strongly influenced by the price and duration of the warranty, emission taxation rate and moderately affected by the SAR of the product. Finally, a sensitivity analysis is carried out, and its effect are shown graphically in order to provide guidance to the competent manager of the firm.