Warranty management for durable products has received increasing attention in recent years. In addition to conventionally keeping warranty in‐house, more manufacturers choose to outsource warranty service to agents. This paper explores outsourcing strategies for manufacturer warranty services in a dual‐channel supply chain by which the demand‐enhancing service can be undertaken by different supply chain parties. We show the results of three alternative outsourcing strategies for manufacturers whereby (a) the retailer undertakes the service, (b) a third party undertakes the service, and (c) both the retailer and a third party undertake the service simultaneously. According to Stackelberg game theory, we build a two‐echelon supply chain model and discuss the corresponding expressions for supply chain members' equilibrium decisions. Additionally, we compare the profits of each supply chain member and derive interesting managerial insights. When the base market size is relatively large, Scenario R helps the manufacturer and the retailer reach a “win‐win” situation.

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In recent years, some manufacturers outsource the warranty service for flexibility and cost efficiency. Therefore, the manufacturer has to face a problem of outsourcing warranty contract design to deal with the fraud of the agents in service. Considering a price‐and‐service‐sensitive demand, we studied two warranty‐outsourcing contracts (the fixed‐price contract and the cost‐based contract) in a supply chain setting comprising one risk‐neutral manufacturer and one risk‐averse service agent. The results show that, when the market is sensitive to warranty service, the cost‐based contract benefits the manufacturer in demand promotion. Interestingly, even if the cost‐based contract increases the amount of consumers for the service agent, the fixed‐price contract always benefits the agent with low risk‐aversion level.

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