The optimal extended warranty length of durable-goods-based preventive maintenance behaviour

Abstract

The extended warranty is an important strategy for the manufacturers to expand their market share. In this work, we studied the optimal extended warranty length considering preventive maintenance behaviour, which mainly avoids the producers and consumers' moral hazard. Based on the profit function maximization, the optimal extended warranty length under different situations can be achieved. We conducted a simulation analysis to see the influence on preventive maintenance behaviour during the warranty period to the optimal extended warranty length.

Cost Optimization of Two-Dimensional Warranty Products under Preventive Maintenance

“…Tao proposed preventive maintenance during the initial warranty period and extended warranty period, and the maintenance cost was borne by the manufacturer. Under the premise of controlling the total profit of the manufacturer, the impact of the number of preventive maintenance on the length of the extended warranty period was studied [9]. Alqahtani considered the optimization of warranty cost from the perspective of the manufacturer, adopts a warranty strategy for periodic preventive maintenance of recycled products, and establishes a warranty cost model [10].…”