Renewing warranty and preventive maintenance for products with failure penalty post‐warranty

Abstract

For products sold with a warranty, preventive maintenance (PM) by either the manufacturer and/or the buyer has an effect on the total cost for both parties. In this investigation, we use a model to study the effect of PM carried out by the buyer on items sold under a free-replacement renewing warranty. For the manufacturer, if the product fails during the warranty period, it shall either be repaired (minor failure) or replaced completely (catastrophic failure) by a new one with a new warranty and at no cost to the buyer. When the product is out-of-warranty and if the product fails due to a catastrophic failure before its useful life limit, the buyer will incur a penalty cost, the amount of which depends on the failure time. Under such a framework, the cost model is derived and the effects of three PM options on the cost are examined both from the manufacturer's and buyer's perspectives. The results show that a significant cost saving can be obtained by taking the optimal PM action route.

A survey of maintenance and service logistics management: Classification and research agenda from a maritime sector perspective

“…From the asset owner's perspective, PM actions over the warranty period can have a significant impact on the maintenance costs after the expiration of warranty. The literature dealing with warranty and PM issues simultaneously is significant (see, e.g., [33,34,35,36]). We refer to [34] for a comprehensive literature review on maintenance and warranty.…”

Optimal age-replacement policy for repairable products under renewing free-replacement warranty

“…Sheu and Chien (2005) also incorporate the product warranties with burn-in procedure and general repair actions, developed the expected total cost that incurred by the manufacturer, and determined the optimal burn-in time to minimize that cost. Other authors who dealt with the related topic of PM under warranties are Yeh and Lo (2001), Jung and Park (2003), and Chen and Chien (2007).…”

A general age-replacement model with minimal repair under renewing free-replacement warranty

“…Mi [18] and Ritchken and Fuh [21] combined a product warranty with various maintenance actions to evaluate expected warranty costs. Chen and Chien [10] also developed a framework to study continuous PM actions for products sold with a renewing warranty, and determined the optimal PM strategies from buyer's and the manufacturer's perspective, respectively. Sheu and Chien [26] further incorporated product warranties with burn-in procedure and general repair actions, developed the expected total costs incurred by the manufacturer, and determined the optimal burn-in time to minimize those costs.…”