In recent decades, high profits of extended warranty have caused that third-party firms consider it as a lucrative after-sales service. However, customers division in terms of risk aversion and effect of offering extended warranty on manufacturers’ basic warranty should be investigated through adjusting such services. Since risk-averse customers welcome extended warranty, while the customers without taking on risk may remain at the level of basic warranty. In this paper, a multi-objective integer nonlinear programming model is presented for integrating the supply chain of after-sales services. In the suggested model, firstly strategies used by the manufacturers in the basic warranty period and the third party’s policy during the extended warranty period, including the development of a new imperfect maintenance approach, are regulated. Then, the effects of these strategies on the desirability of customers with different levels of risk-taking are analyzed. To optimize the model, the scatter search based approach was introduced for extracting set of non-dominated solutions. The results indicated that increasing level of customers’ risk-taking convinces manufacturers to diminish the basic warranty period and the third party can apply less costly preventive maintenance. Key Words: Warranty, Extended warranty, After-sales services, Customers’ risk-taking, Pareto-set solutions, Multi-objective scatter search

Nowadays, offering extended warranty is considered as a lucrative source of income from the perspective of the after-sale service providers. Meanwhile, the main concern is presence or absence of base warranty and strategies adopted by the manufacturer during this period. Moreover, extended warranty structure must be responsive and customer oriented, which not only control the services cost but also to handle the customers’ requirement in a timely manner. In this paper, an extended warranty distribution network is designed from the perspective of a third party (3P) for supporting multi-indenture products in conjunction with base warranty. The proposed network is two-echelon; in this regard, a depot repair center is considered as the first echelon and a number of operational repair centers are selected at the second echelon. In order to decrease the cost of maintenance and spare parts logistics, a novel imperfect preventive maintenance approach is established based on the concept of virtual age. The third party aims to determine the optimum level of spare parts for each component of products at each repair centers in a way that: (1) total expected backorders is minimized (2) total maintenance and retrieval costs of product components are controlled. For optimizing the proposed model, an exact hybrid solution approach regarding Branch-and-Bound algorithm and Variable Neighborhood Search is presented. The obtained results showed the presence of a base warranty on a product has more advantages for third parties even without preventive maintenance.

A common way to address customer concerns in the post-warranty period is to provide an extended warranty. Although sometimes the manufacturer is reluctant to offer an extended warranty, an agent takes on this task to maintain market share. In this regard, a three-level-servicing-contract among manufacture, agent and customer is presented in which both warranty period and useful life of the product are considered as function of age and usage. The proposed model considers two approaches to control the number of product failures and reduce cost: (1) the technology level used in manufacturing as an effective factor in product reliability; and (2) non-periodic maintenance activities to maintain the product reliability at an acceptable level. In addition, in this study, to calculate the costs imposed on each side of the contract more accurately, the time-value-of-money is considered in the calculation of financial flows. To illustrate the effectiveness of the proposed approach, three comparative studies are provided. The first comparative study shows the impact of the provision of an extended warranty, while the second comparative study proves the importance of preventive maintenance to reduce costs. The results of the last one show the effect of considering the time-value-of-money in calculating cash flows.

This paper examined a warranty model where after the end of the two-phase warranty period, an extra warranty period is provided to the customer. The two-phase warranty period is split into two sections; the first period is free replacement / repair warranty (FRRW) period and the other is period of Pro-Rata Warranty (PRW). If the product failure occurs during the FRRW period, the damaged product is repaired by the manufacturer free or replaced by a new product. If this failure occurs in PRW period, the manufacturer and the customer are both responsible for paying for the repair costs; and if the failure happens during the extended warranty period, only minimal repairs is made. As customer consumption rate differs in a given period, it is advisable to classify customers based on their rate of consumption before determining the type of warranty policy, which will reduce the cost of warranties. Then, for each type of customer, a maintenance policy are supplied. In addition, the percentage of low consuming customer (high-consumption) will be effective in the overall costs.

Warranty and maintenance contracts play an important role in product life cycle.  Different failures which occur during useful life cycle of products in additional reducing reliability, make expense for consumer and service agent. This study considers warranty periods and maintenance services costs from service agent and consumer viewpoints under two-dimensional warranty policy. By regarding agent service and consumer decisions, the interactions between them are modeled during the base warranty and extended warranty periods. Maintenance policies are performed as preventive maintenance (PM) in specific interval with fixed level, and corrective maintenance (CM) is carried out as home and road repairs. Finally, for making equilibrium between profits of consumers with different usage rates and agent services, preventive maintenance number and warranty services price are investigated by the Stackelberg equilibrium. A real case study from a truck after sales services agent of Iran is presented to illustrate the application of the proposed model.

This study considers optimal warranty and maintenance services from service agent and consumer view points for vehicles under two dimensional warranty policy. The interactions between the agent service and consumers are modeled by estimating their profits and then are examined by game theory in the base warranty and extended warranty. Maintenance policies are performed as period preventive maintenance (PM), home and road corrective maintenance (CM). Then, the agent and the consumer’s profits are optimized and the number of period preventive maintenance (PM) and the price of warranty services are estimated by the stackelberg equilibrium. For demonstrating the applicability of this research, finally the proposed model is investigated by using of real data from a truck service agent.

The increased competition in markets, make manufacturers find a better way to attract customers. It is critical to make customers sure about the quality and reliability of products. One way to ensure customers is providing warranty policies to reduce not only the risk of production failures, but also to understand customers’ wants and requirements. This research seeks to recognize the effects of decision making of customers on short-term and long-term results of warranty providers with agent based modeling. Cusomers of this market have different risk prefrences and make decision in two ways: logically and socially. The reults confirm that the type of customers and their decisions influence the number of customers who will to extend their contract and the profitability of warranty providers. Concering to all states, the fisrt warranty provider in short term and the second warranty provider in long term are more capable of keeping customers and make profit.

This study develops warranty cost models for repairable products subject to Lemon Laws, encompassing Critical and Non-Critical components forming a multi-component system. Failures can arise naturally or be induced by other components (i.e., failure interaction), defining a lemon if recurrent failures reach a threshold (k) during the warranty period. A lemon declaration triggers a refund or replacement by the manufacturer. Four warranty cost models are proposed from the manufacturer's standpoint, considering failure mechanisms. Increasing failure thresholds in the warranty scheme substantially decreases warranty cost rates. For instance, a threshold (k) of 5 in refund and replacement schemes yields the lowest cost rates of 33.7159 and 25.8249, respectively. Failure interactions escalate total warranty costs; for instance, in a refund scheme (k = 5), costs with failure interaction reach 31.0169 compared to 28.7603 without. Similar trends apply to replacement schemes. Moreover, a lower warranty cost rate will extend the period, indicating regulation fulfillment due to a closer warranty period to the Lemon period. Sensitivity analysis also underscores the role of higher reliability in reducing warranty costs and complying with Lemon Laws. Finally, maintenance strategies and product reliability are emphasized to fulfill Lemon Laws with minimal costs, i.e., fewer warranty claims.

Marketing campaigns has widely used warranty period as a quality indication of product offer. However this subject has been refered as a quality issue but the basic principle of such a period determination is a cost benefit trade off for every manufacturer.The model proposed in this paper is a renewable warranty policy in which the warranty period of components will extend after a failure. Furthermore an algorithm is presented that takes the reliability distribution of the components being analysed, in order to reach an optimal policy while considering a predetermined budget. Reliability determination and application of proposed algorithm has also been applied to powertrain system to represent the suggested algorithm.

Due to fierce competition and customer demand, manufacturers have started selling products with different warranty policies and pro-rata warranty is one of the most widely used warranty policy. In this paper we propose a warranty model for pro-rata, fixed period warranty policy with risk averse manufacturer that determines optimal warranty price under inflationary condition.
This model has been proposed for products with time dependent failure intensity with Non homogeneous Poisson’s process for failure intensity function, and concave utility function. Using the exponential utility function, the decision model is developed to maximize the manufacturer’s certainty profit equivalent. Risk preference model is developed to find the optimal warranty price through the use of the manufacturer’s utility function for profit. Finally, the sensitivity of the warranty price models is analyzed using numerical examples with respect to such factors as (1) the manufacturer's risk preferences, (2) product failure rate parameters, (3) warranty period length, and (4) inflation and discount rate.