Two-dimensional Product Combination Warranty Policy And Manufacturer’s Revenue Model Based On Minimal Repair Strategy

In recent years, product warranty plays an increasingly important role in the market competition. Naturally product warranty arouses widespread concern in academic aspect. Many scholars at home and abroad made a lot of research regarding warranty policies based on one-dimensional product and these researches are already quite perfect, but for the product with two-dimensional characteristics, such as a car, currently existing warranty policies cannot meet this kind of request any longer. Especially once the manufacturers provide consumers with a full warranty service, the consumers will reduce their effort for protecting product because they do not have to bear the consequences of any failure of the product. This behavior will cause a huge loss for manufacturers. Based on one-dimensional product warranty, many scholars have developed a proportionate warranty strategy to solve this problem. But for the product with two-dimensional characteristics, this strategy is not appropriate to solve the problem. Therefore developing a combination warranty policies based on two-dimensional product is particularly important.The manufacturer’s warranty cost is the fundamental starting point for the warranty policy research. How to work out an appropriate warranty policy that can cause the lowest warranty cost for manufacturers is the focus of scholars. When it comes to bear a certain proportion of warranty costs for consumers, meaning the implementation of the pro-rata warranty policies, the manufacturer’s warranty costs cannot fully reflect the pros and cons of the warranty strategy established by the manufacturers.Based on the analysis of products warranty policies at home and abroad and the research of revenue model, this paper researches a combination warranty policy and manufacturer’s revenue based on two-dimensional products. The purpose and significance of the research are as follows:In the theory aspect, to enrich the studies of a combination warranty policy based on two-dimensional products; To fill the gaps in the past research that manufacturer can develop warranty strategies on the bases of the total income of the manufacturers; In the implementation aspect, this paper proposed a combination warranty policies and manufacturer’s revenue model based on two-dimensional product. Then this paper gives a specific example simulation analysis, and provides guidance to the model application in practice.This paper meets the special warranty claim for two-dimensional products. This paper also perfect the pro-rata warranty policies of a combination warranty policies based on two-dimensional products, and establishes a model of two-dimensional product combination warranty policies based on minimal repair strategy. And then this paper provides relevant warranty policies and corresponding warranty cost expectation of each interval classified under the principle of use rate intensity. Based on this model, this paper takes the response from consumer according to price changes into consideration, and then establishes a manufacturer’s revenue model and gives a concrete algorithm to solve this model.Finally, this paper summarizes the main findings and conclusions, and explains the limitations of the study. At the same time gives an outlook of the research for further study.