The Decision Models And Game Theory Analysis Of Maintenance Strategy And Warranty Policy

In this paper, we drive two sections focusing on the decisions models of warranty policy and maintenance strategy. Section one investigates the optimal strategies for items sold with periodic inspections under a two-dimensional warranty policy with both basic warranty (BW) and extended warranty (EW), along with minimal repairs. At each inspection, the item is upgraded by reducing its failure rate. Under the BW, a new combined policy is proposed based on the optimal number of inspections during the warranty period. Under the EW, a consumer is assumed to have an option of either accepting the inspection service or rejecting the service based on his utility value. By considering the probability of accepting the service, we develop a new failure rate model in EW. Profit maximization and cost minimization of the manufacturer and the consumers are analyzed from a game theoretic perspective. The cooperative and non-cooperative interactions between the manufacturer and consumers are studied for both BW and EW cases, and we obtain the condition under which they will choose to cooperate. The equilibrium number of inspections and upgrade level are derived in BW period with both static and dynamic scenarios. As for EW, the equilibrium number of inspections and the optimal probability of accepting the service are also obtained in both cases.Section two deals with maintenance service contracts for product among three parts:manufacture, agents and customers. The interaction between the aforementioned participants will be modeled using the game theory. We build two models to describe two decision problems. In both of the two models, the main goal for customers is to define the period between planned actions for preventive maintenance and the time to replace product. In model one, we assume the relationship between agents and manufacturer is competing. They provide the same maintenance service for the product. We obtain the Nash-equilibrium warranty price structure from the customer’s perspective. Under the Nash-equilibrium warranty price, we analysis the number of customers to service from the manufacturer’s viewpoint. In model two, we assume that the manufacturer and agents cooperate together and act as an integrated service provider. We analysis this model in two cases. Case 1 assumes that consumers do not know they cooperate, and in case 2 consumers know that. We use a Nash game based formulation to negotiate pricing in service contracts such that both parties share expected profits in a bargining way. Under the equilibrium price, we drive the optimal decision for the period between preventive maintenance, the period between product replacement and the number of customers to service. We also compare the two models’results to give a complete characterization of the result.