Optimal production, maintenance, and warranty strategies for item sold with rebate combination warranty

In this paper, a decision model is developed for an imperfect production system in which the demand for a product is assumed to be influenced by the warranty period offered to the customer. The production process may shift from an ‘in-control’ state to an ‘out-of-control’ state at any random time at which point non-conforming items are produced. To assess the state of the production process, periodic inspections are carried out during each production run. At the time of inspection, if the process is found to be in the ‘out-of-control’ state then restoration is done; otherwise, preventive maintenance is performed. The proposed model is formulated under a general process shift distribution and a rebate combination warranty. The expected cost per unit item is taken as the criterion for optimality. Some analytical results of the model are derived with restrictions. The optimal decisions (i.e. the optimal number of inspections, the optimal production time, and the optimal warranty period offered to the customer) are obtained numerically and the sensitivity of some model parameters is examined in a numerical example.

[1]  Chih-Hsiung Wang,et al.  Optimal production and maintenance policy for imperfect production systems , 2006 .

[2]  Meir J. Rosenblatt,et al.  Economic Production Cycles with Imperfect Production Processes , 1986 .

[3]  Meir J. Rosenblatt,et al.  A Production and Maintenance Planning Model with Restoration Cost Dependent on Detection Delay , 1989 .

[4]  Morton Klein,et al.  Surveillance Schedules for Medical Examinations , 1974 .

[5]  J. Keller.  Optimum Checking Schedules for Systems Subject to Random Failure , 1974 .

[6]  Evan E. Anderson.  Product Price and Warranty Terms: An Optimization Model , 1977 .

[7]  Imran S. Currim,et al.  An approach for determination of warranty length , 1992 .

[8]  Stephen Wolfram,et al.  The Mathematica Book , 1996 .

[9]  Theodore S. Glickman,et al.  Optimal Price and Protection Period Decisions for a Product Under Warranty , 1976 .

[10]  Chih-Hsiung Wang.  The impact of a free-repair warranty policy on EMQ model for imperfect production systems , 2004, Comput. Oper. Res..

[11]  Meir J. Rosenblatt,et al.  Simultaneous determination of production cycle and inspection schedules in a production system , 1987 .

[12]  Mohamed Ben-Daya,et al.  Note: The economic manufacturing lot-sizing problem with imperfect production processes: Bounds and optimal solutions , 1998 .

[13]  I. Djamaludin,et al.  Quality control through lot sizing for items sold with warranty , 1994 .

[14]  Vineet Padmanabhan,et al.  Warranty Policy and Extended Service Contracts: Theory and an Application to Automobiles , 1993 .

[15]  Sheng-Tsaing Tseng,et al.  Optimal Preventive Maintenance Policy for Deteriorating Production Systems , 1996 .

[16]  Soo Y. Chang,et al.  Optimal production run length and inspection schedules in a deteriorating production process , 2001 .

[17]  Evan L. Porteus.  Optimal Lot Sizing, Process Quality Improvement and Setup Cost Reduction , 1986, Oper. Res..

[18]  Richard E. Barlow,et al.  Optimum Checking Procedures , 1963 .

[19]  Meir J. Rosenblatt,et al.  A Comparative Study of Continuous and Periodic Inspection Policies in Deteriorating Production Systems , 1986 .

[20]  William Boulding,et al.  A consumer-side experimental examination of signaling theory: Do , 1993 .

[21]  Li-Yen Shue,et al.  Application of optimal control theory to product pricing and warranty with free replacement under the influence of basic lifetime distributions , 2005, Comput. Ind. Eng..