Warranty service contracts design for deteriorating products with maintenance duration commitments
Li, Ting and He, Shuguang and Zhao, Xiujie and Liu, Bin (2023) Warranty service contracts design for deteriorating products with maintenance duration commitments. International Journal of Production Economics, 264. 108982. ISSN 0925-5273 (https://doi.org/10.1016/j.ijpe.2023.108982)
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Abstract
With the increasing diversification of customers’ demand and purchasing behaviors, more and more manufacturers have focused their attention on the warranty service contracts design. The maintenance duration of the sold product, which plays an important role in the normal production and operation process of the user, is frequently taken into consideration in warranty contracts. In this study, we design different warranty contracts with various combinations of maintenance duration and availability requirements. The manufacturer commits to compensate for each overdue repair or failing to satisfy the availability target. The customers’ choice behavior is described by the multinomial logit (MNL) model, and customers often form their own minimum acceptable levels (also referred to as reference points) of maintenance duration and availability when making purchasing decisions, which have an impact on the contract choice. The expected warranty servicing profit is maximized to determine the optimal price, maintenance duration and availability. Finally, the proposed warranty contracts are demonstrated by numerical examples. We find that the maintenance duration affects not only the warranty cost but also the customer choice, which further affects the optimal contract pricing and profits.
ORCID iDs
Li, Ting, He, Shuguang, Zhao, Xiujie and Liu, Bin ORCID: https://orcid.org/0000-0002-3946-8124;-
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Item type: Article ID code: 86189 Dates: DateEvent31 October 2023Published20 July 2023Published Online17 July 2023AcceptedSubjects: Social Sciences > Industries. Land use. Labor > Management. Industrial Management Department: Strathclyde Business School > Management Science Depositing user: Pure Administrator Date deposited: 20 Jul 2023 09:29 Last modified: 02 Oct 2024 07:09 URI: https://strathprints.strath.ac.uk/id/eprint/86189