A Study On The Cost Of Two-dimensional Product Warranty Based On Imperfect Repair

With the development of society and economic, and the maturity of consumer consciousness, enterprises are faced with more critical consumers and the pressure of competitive market, so the modes of competition among enterprises are increasingly diversified. Product warranty, which used to be after-sale service promise, has been becoming a powerful tool for enterprises to improve their competition ability and expand market. A good product warranty strategy can not only establish brand image, but also reduce the product warranty cost, which is an important way for achieving low-cost and difference-making competition strategy.A two-dimensional (2D) product warranty is characterized by a region in two-dimensional plane, with one dimension representing age and the other one usage, and enterprises should repair or provide replacement for its failed items free of cost in the region. The implement of 2D product warranty can avoid the excessive use of products which will result in the accelerated degradation of product. Currently widely used in product warranty is minimal repair which brings the failure product from a"down"to an"up"state without affecting its performance. But, this strategy do not take the reliability of use into account , as a result, this make the failure intensity of product larger on the later stage of warranty period and increase the number of product failure , which increase the warranty cost directly. A good product warranty strategy should lower warranty cost by improving the reliability of use. In this paper, imperfect repair had been used once in the two-dimensional warranty region to improve the reliability of use and modeled the warranty cost, then optimized the quality and time horizon of the imperfect repair to minimize the warranty cost.This paper firstly started with product warranty theory and imperfect repair theory, gave a review of them and also made a comment. It also discussed the relationship between the quality and time horizon of the imperfect repair and the 2D product warranty cost. Then, this paper modeled the 2D product warranty cost by modeling the warranty cost of before imperfect repair, in the time horizon of the imperfect repair and after imperfect repair. In order to minimize the warranty cost, this paper optimized the warranty cost model. For the case that the proportional hazard rate reduction factor is a general constant, using a two-stage process to optimize the time horizon of the imperfect repair; for the case that the proportional hazard rate reduction factor will be optimized, the paper optimized the proportional hazard rate reduction factor firstly, and then using a two-stage process to optimize the time horizon of the imperfect repair. At last, the proposed 2D warranty strategy was applied to a case study and the corresponding warranty cost change was analyzed from related factors. This paper gave the conclusion that a 2D product warranty strategy which includes appropriate quality and time horizon of the imperfect repair can lower warranty cost by improving the reliability of use after imperfect repaired, is a win-win product warranty strategy.