Warranty and optimal upgrade strategy for used systems: An electric drill case study
Journal article, 2012
Offering warranty for a second-hand item stimulates the sales of the item, but at the same time, it accumulates additional warranty servicing cost. This additional cost can be reduced through actions that improve the reliability of the item, such as overhaul and upgrade. An upgrade action brings the second-hand item to an improved functional state and it effectively reduces the age of the item. In this paper, we propose a model aiming to determine the optimal upgrade action strategies that achieve a sensible trade-off between the cost of an upgrade action and the reduction of the expected warranty cost due to this action. A practical application case on electric drills is used to illustrate our findings.
imperfect preventive maintenance
shock model
upgrade action
Reliability
2nd-hand products
warranty
policies
second-hand item
cost-analysis
minimal-repair
Author
Mahmood Shafiee
Chalmers, Mathematical Sciences, Mathematics
University of Gothenburg
Stefanka Chukova
Victoria University of Wellington
M. Finkelstein
University of the Free State
Max-Plack-Institut fur demografische Forschung
Asia-Pacific Journal of Operational Research
0217-5959 (ISSN)
Vol. 29 4 Article Number: 1250023 -Subject Categories (SSIF 2011)
Other Mathematics
DOI
10.1142/S0217595912500236