Optimal warranty option and post-warranty maintenance strategy under a warranty menu: from a consumer perspective

ABSTRACTAs manufacturers continue to provide new and unique products and services for their customers, we argue that warranty menus with differentiated options are an often-overlooked unique selling point. Meanwhile, there is a huge swathe of customers who own durable products which are still in use even after the expiration of a warranty. It is in this area that we develop a research perspective which urges customers to consider warranty plans and post-warranty maintenance strategies simultaneously when making a purchasing decision. In this paper, through the lens of a consumer, we propose an integrated model of warranty and post-warranty maintenance under a flexible renewable warranty. This model takes into account repair limits and multiple failure types with time-varying probabilities. As part of this, a new post-warranty maintenance strategy is designed, in which the repair time-based corrective replacement and the age-based preventive replacement are combined. The life cycle cost rate of the product is minimised by a synthetic decision-making about the consumer's warranty purchase and post-warranty maintenance strategy. Numerical studies show that there exists a joint optimal solution, which can help the customer to develop an optimal overall warranty-maintenance strategy under the warranty menu with minimised cost rate.Highlights An integrated model of warranty and post-warranty maintenance is developed.The warranty product has minor and catastrophic failures with time-varying probabilities.A flexible renewable warranty is considered for the consumer.A post-warranty maintenance strategy with the repair time limit is proposed.The optimal warranty-maintenance strategy is derived to minimise the Life cycle cost rate.KEYWORDS: Warranty-maintenance strategyflexible renewable warrantypost-warranty maintenancerepair limitsmultiple failureslife cycle cost rate Disclosure statementNo potential conflict of interest was reported by the author(s).Data availability statementThe data that support the findings of this study are included in the manuscript.Additional informationFundingThis work was supported by the National Natural Science Foundation of China [grant numbers 71931006, 71871119], Postgraduate Research & Practice Innovation Program of Jiangsu Province [grant number KYCX21_0363], and China Scholarship Council (CSC) [grant number 202106840023].Notes on contributorsPeirui QiaoPeirui Qiao is a Ph.D. candidate in the Department of Management Science and Engineering at Nanjing University of Science and Technology, China. Her research interests include warranty, maintenance, reliability and stochastic modelling.Ming LuoMing Luo is a Lecturer (Assistant Professor) in Operations Analytics in the University of Bristol Business School, University of Bristol, UK. He received MSc in Finance Investment and Risk and Ph.D. in Management Science from the University of Kent, UK. His research interests include warranty and maintenance management, reliability, supply chain management, stochastic optimisation, dependence modelling, and information theory in business context.Yizhong MaYizhong Ma is a Professor in the Department of Management Science and Engineering, Nanjing University of Science and Technology, China. He received his B.S. in Applied Mathematics from Huazhong Normal University, China, and his M.S. in Quality Engineering and Ph.D. in Control Science from Northwestern Polytechnical University, China. He is also assigned as the Director of Quality Society of China, and the Expert Member of Six Sigma Promotion Committee in China. His research interests include quality and reliability engineering.Abdul JabbarAbdul Jabbar is an Associate professor in Data Strategy and Analytics in the School of Business, University of Leicester, UK. His research is firmly embedded in the area of digital transformation including disruptive technologies such as Blockchain, CBDC, Smart contracts, Big Data and AI. Abdul is currently working on research with a focus on authenticity, privacy and accuracy through the implementation and use of Blockchain.