An integrated maintenance planning, warranty policy, technology level and pricing model considering time value of money in a three-level servicing contract

Abstract

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. For this purpose, the warranty policy is presented as a three-level servicing contract with the objectives of maximizing the manufacturer's profit, agent's profit, and customer satisfaction. The model considers two approaches to control the number of product failures: (1) 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. 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 approach, three comparative studies are provided. The first one shows the impact of the presence of the agent and the provision of an extended warranty period, while the second one proves the importance of preventive maintenance to reduce costs and increase the interests of each side. The results of the last one shows the effect of considering time value of money in calculating cash flows.

An integrated bi-objective model under warranty, technology level, and pricing by considering pre-sale and post-sale costs

“…Accordingly, Darghouth et al [11] jointly optimized the design, warranty, and price of products sold under maintenance service contracts. Salmasnia and Hatami [12] developed an integrated model and considered FMRrW, maintenance planning, and the LMT for reducing product failure (see also [13][14][15][16]).…”

“…Among those, the genetic algorithm [23], and the particle swarm optimization (PSO) algorithm [33] have typically been used to solve similar models. We provide a solution procedure using PSO due to its unique search mechanism, simplicity of concepts, computational efficiency, and ease of implementation [9,12,34].…”