Journal of Quality Engineering and Management

Introduce a New Simulation-Based Optimization Model to Integrate Decisions about Products under Warranty and Out of Warranty

Document Type : Original Article

Authors

Mohsen Afsahi 1
Ali Hosseinzadeh Kashan 2
Bakhtiar Ostadi 2

1 PhD Student in Industrial Engineering, Faculty of Industrial and Systems Engineering, Tarbiat Modares University, Tehran, Iran

2 Assistant Professor, Faculty of Industrial and Systems Engineering, Tarbiat Modares University, Tehran, Iran

Abstract
In today's competitive market, many products are sold under the basic warranty, and in order to increase profit margins and customer satisfaction after the end of the basic warranty, manufacturers offer warranty extensions to customers at a specific price and time. In this research, the aim is to maximize the producer profit by determining the optimal values of product price, length of basic warranty period, length of warranty renewal, repair level in incomplete repair and amount of spare parts (for demand of products under basic warranty, warranty extension and out of warranty). . In order to better model the real situation, it is assumed that the product can be repaired with three types of minimum, incomplete and complete repairs at the time of failure, and the percentage of products that are repaired each time is also considered as a decision variable. have became. The product reliability function is modeled at the time of incomplete repair with the Kijima virtual life model approach. The problem-solving approach is based on the simulation-based optimization approach in three stages. In the first stage, decision variables such as product price, basic warranty period, warranty renewal period, warranty renewal price, repair level and the probability of what kind of repair each product It is determined by a meta-heuristic algorithm. Then, using Monte Carlo simulation, the number of products that have purchased the warranty extension and the number of product failures is calculated, and finally, the production of spare parts is optimized using a dynamic programming algorithm. This model has also been analyzed for LG vacuum cleaner product and Goldiran after-sales service. 

Keywords

Basic warranty
warranty extension
pricing
simulation-based optimization
incomplete repair
products out of warranty. 
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Journal of Quality Engineering and Management
Volume 8, Issue 4
Winter 2019
Pages 310-326

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