Research On Two-dimensional Non-renewing Extended Warranty Policies

In this paper, two-dimensional non-renewing extended warranty policy is researched form themanufacture’s perspective. According to the research status of product warranty and the problemsexist in formulating product warranty policies, simple and combination extended warranty modelsare proposed. The optimal extended warranty policy is obtained using the criterion of warranty costand expected profit.The first model is designed for extended warranty that using simple police. In the basicextended warranty model, minimal repair, imperfect repair, complete repair and preventivemaintenance are carried during the warranty period. The time limit and the usage limit are used todefine the warranty expiry time and the scope of products sold with two-dimensional warranty.Numerical analysis is given to calculate the warranty cost and get the optimal warranty region. Aftercomparison and analysis of the outcomes, the results indicate that most of the warranty costs are theextended warranty costs, and compare to only using minimal repair during warranty period, usingimperfect repair, complete repair and preventive maintenance and reduce the warranty costs.The second model is designed for extended warranty that using combination police. Thewarranty period is divided into basic warranty period and extended warranty period. Minimal repairand preventive maintenance are used in the basic warranty period, and then Minimal repair,imperfect minimal repair, complete minimal repair and preventive maintenance are used in theextended warranty period. After numerical analysis and comparison of the warranty costs andexpected profit of each extended warranty policies, it can be concluded that, while usingminimal repair in the basic warranty, minimal repair, imperfect minimal repair and completeminimal repair are suitable for short term warranty, medium and long term warranty and long termwarranty, respectively. While using preventive maintenance in the basic warranty, minimal repair,preventive maintenance and imperfect minimal repair are applicable for short term warranty,medium and long term warranty and long term warranty, respectively.With the globalization of economy and the improvement of related laws, competition in themarket has changed from products competition into a comprehensive competitive of products andafter services, and customers pay more and more attention to product warranty. Many enterpriseshave already taken product warranty as a powerful tool to attract more customers and improve theircompetition ability. Enterprises should make product warranty policies in science, to satisfyconsumers needs achieve the competitive advantage.