Dynamic pricing and warranty policies for products with fixed lifetime

Zhou, Zhefang; Li, Yanjun; Tang, Kwei

doi:10.1016/j.ejor.2008.04.014

Cited by 46 publications

(18 citation statements)

References 26 publications

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“…The choice of product price and warranty policy has to be based on the manufacturer's market position and reputation. If the manufacturer is a market monopolist, the best strategy is to choose the highest product price and offer the longest warranty period which covers the entire product lifetime, but the competition in the market restricts the product price [16]. Also, high product warranty is favourable only to the manufacturer having high credibility [17].…”

Section: Discussionmentioning

confidence: 99%

Choosing the Right Warranty Policy – from the Customer’sto the Manufacturer’s Point of View

Popović¹,

Stamenković²,

Rakićević³

2012

IJAPM

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Product warranty is a powerful marketing tool, but it always involves additional costs to the manufacturer. This paper deals with the warranty cost analysis for one type of passenger car batteries. Costs were calculated for three variants of fully renewing combination free replacement and pro-rata policy and for different warranty parameters. After choosing the price range for the product, a market research was performed to determine which warranty policy customers recognize as most favourable to them. Obtained results are guideline for the manufacturer to choose the warranty that minimizes the costs and maximizes the profit.

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Section: Discussionmentioning

confidence: 99%

Choosing the Right Warranty Policy – from the Customer’sto the Manufacturer’s Point of View

Popović¹,

Stamenković²,

Rakićević³

2012

IJAPM

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“…Chun and Tang (1995) proposed a warranty model for the free-replacement, fixed-period warranty policy that determines the optimal warranty price for a fixed warranty period. Zhou et al (2009) proposed dynamic pricing and warranty models for products with fixed lifetime to determine a joint dynamic pricing and warranty policy which maximises the manufacturer's expected profit. Chen and Chang (2010) proposed models for determining the optimal warranty period and expected lifetime of product based on maximizing the total expected profit.…”

Section: Literature Reviewmentioning

confidence: 99%

Modelling optimal warranty price for lifetime policies taking into account the uncertainties in life measures

Rahman

Chattopadhyay

2017

International Journal of Management Science and Engineering Man

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Due to assurance of longer reliable service life and greater customer peace of mind, products with lifetime warranty are becoming more and more popular. Under such policies, both the manufacturer and the buyer are exposed to uncertainties and risks of warranty pricing and product performance since products lifetime are uncertain and are not defined well in these policies. Considering the uncertainties in the measure of lifetime (useful life), this paper extends the work of Rahman and Chattopadhyay (2010) to determine the optimal warranty price. Risk preference models are developed to find the optimal warranty price through the use of the manufacturer's utility function for profit and the buyer's utility function for repair costs. Sensitivity of the risk preferences models are analysed with numerical example with respect to the factors such as the buyer's and the manufacturer/dealer's risk preferences, buyer's anticipated and manufacturer's estimated product failure intensity, the buyer's loyalty to the original manufacturer/dealer in repairing failed product and the buyer's repair costs for unwarranted products. Analysis of the developed models reveals manufacturer's decisions on warranty price are directly related to useful life, failure intensity of the product, and manufacture's risk preference. On the other hand buyer's acceptance of a lifetime warranty offer depends on expected lifetime of the product, buyer's anticipated product failure intensity, anticipated repair costs and most importantly buyer's risk preference.

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“…A great deal of the after-sales work focuses on the marketing aspect of after-sales services, such as investigating the trade-off between the repair/replacement cost and the income without incorporating the SC supporting its operations (Chen et al, 2012;Chu and Chintagunta, 2009;Esmaeili et al, 2014;Jung et al, 2015;Kurata and Nam, 2010;Kurata and Nam, 2013;Li et al, 2014;Majid et al, 2012;Su and Shen, 2012;Wei et al, 2015;Zhou et al, 2009). For example, Zhou et al (2009) have developed a model to dynamically determine the best price and warranty for a product in its lifecycle by considering the purchase pattern of customers. Chen et al (2012) investigate pricing strategies for a company with two competing retailers servicing markets with warranty-dependent demands.…”

Section: Introductionmentioning

confidence: 99%

Reliable flow in forward and after-sales supply chains considering propagated uncertainty

Rezapour

Allen

Mistree

2016

Transportation Research Part E: Logistics and Transportation Re

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An integrated mathematical framework for production planning is presented for companies providing product-warranty packages through both their forward and after-sales supply chains. This model integrates manufacturers and merchandisers of the pre-and after-sales operations and incorporates the interactions between forward and after-sales chains. The demands and qualified output of facilities are stochastic. We demonstrate that service levels depend on the local reliability of facilities and that there are critical prices at which the order of profitability of the warranty options changes. This order becomes more fragile in price-sensitive markets and more stable in warranty-sensitive markets.

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Dynamic pricing and warranty policies for products with fixed lifetime

Cited by 46 publications

References 26 publications

Choosing the Right Warranty Policy – from the Customer’sto the Manufacturer’s Point of View

Choosing the Right Warranty Policy – from the Customer’sto the Manufacturer’s Point of View

Modelling optimal warranty price for lifetime policies taking into account the uncertainties in life measures

Reliable flow in forward and after-sales supply chains considering propagated uncertainty

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