Optimal Single Replacement Policy for Products with Free-Repair Warranty Under a Finite Planning Horizon

Abstract

This paper investigates the optimal single replacement policy for products with free-repair warranty (FRW) under a finite planning horizon (FPH) from the consumer’s perspective. Within the planning horizon, the product is replaced once by a new product. During FRW, when the product fails, the failed product is rectified using minimal repair without any cost to the consumer. After FRW, any failure of the product incurs a fixed repair cost to the consumer. However, each failure incurs a fixed downtime cost to the consumer over the planning horizon. Under this maintenance scheme, the replacement of the product is investigated for two separate cases: before FRW and after FRW. Then, two cost models from the consumer’s perspective are derived and the optimal replacement policy is obtained such that the expected total disbursement cost is minimized. Finally, numerical examples are given to illustrate the features of the optimal replacement policy under various warranties and planning horizons.

Key Words:

• Finite planning horizon
• free-repair warranty
• minimal repair
• single replacement.

Additional information

Notes on contributors

Ruey-Huei Yeh

Ruey-Huei Yehis a Distinguished Professor at the Industrial Management Department, National Taiwan University of Science and Technology (Taiwan Tech.), Taiwan. He received his B.S. degree in industrial engineering and engineering management from the National Tsing Hua University, Taiwan, in 1984, and M.S. & Ph.D. degrees in industrial and operations engineering from the University of Michigan, Ann Arbor, U.S.A. in 1989 and 1993, respectively. After receiving his Ph.D. degree, he joined the National Taiwan University of Science and Technology as an Associate Professor and became a full professor in 1999. He has received several teaching and research awards from the University, and awarded as a Distinguished Professor in 2012. His research interests cover reliability analysis, decision analysis, quality control, and warranty policies. He is currently an associate editor of the IEEE Transactions on Reliability.

Nani Kurniati

Nani Kurniati is currently a Ph.D. student in the Department of Industrial Management, National Taiwan University of Science and Technology (NTUST), Taiwan. She earned B.S in Industrial Engineering from Institut Teknologi Sepuluh Nopember (ITS), Indonesia, and Masters in Industrial Engineering and Management from Institut Teknologi Bandung (ITB), Indonesia. Previously, she is a fulltime lecturer in the Industrial Engineering Department at Institut Teknologi Sepuluh Nopember (ITS), Indonesia. Her research interests include maintenance management, warranty analysis, quality engineering, statistical process control, and reliability analysis.

Wen-Liang Chang

Wen-Liang Chang is currently an Associate Professor in the Department of Information Management at Cardinal Tien Junior College of Healthcare & Management in Taiwan. He received his Ph.D. in the Department of Industrial Management from National Taiwan University of Science and Technology. His research interests include reliability theory, warranty cost analysis, applied probability and maintenance policy of leased equipment.