Investigation of price, warranty length and production quantity on profit under free replacement warranty policy

Abstract

Product pricing, production quantity and warranty length play an important role in maximizing the expected profit of any manufacturing Industry. The profit maximization models reported in the literature have considered only product price and warranty length as decision variables. It is found from the literature that the development of profit maximization models with the decision variables, namely price of the product, warranty length and also the quantity of production is scarcely reported in the literature. Hence, in this study, a profit maximization model for Free Replacement Warranty policy (FRW) under static sales market for a single period with price, warranty length and production quantity as decision variables has been proposed. A numerical illustration is provided to show the theoretical prediction and applicability of the model.

Keywords:

• Free replacement warranty
• price
• warranty length
• production quantity
• expected profit

Disclosure statement

The authors report no conflicts of interest. The authors alone are responsible for the content and writing of this article.

Notes on contributors

K. Jeyakumar is a Professor and Principal at SCAD Engineering College, Cheranmahadevi, Tamil Nadu, India. He received his B.E. Degree in Mechanical Engineering and M.E. Degree in Industrial Engineering from the Thiagarajar College of Engineering, Madurai, India, in 1996 and 2000, respectively. He obtained his Ph.D. in the Department of Mechanical Engineering from Anna University, Chennai. In addition to this he had done his Post Graduate Diploma in Applied Operations Research in Annamalai University, India. He has 18 years of teaching and research experience. His research interests include industrial engineering and management, warranty analysis, quality engineering, and reliability analysis. He also published several papers in National and International Journals. He is a member of Indian Society for Technical Education (ISTE) and International Association of Engineers (IAENG).

A. Krishnaveni is currently a Senior Grade Assistant Professor in Mechanical Engineering, at Government College of Engineering, Tirunelveli, India. She had her Bachelor Degree in Mechanical Engineering and Master Degree in Industrial Engineering from Madurai Kamaraj University, India. She obtained her Ph.D. in Mechanical Engineering from Anna University Chennai, India. Her areas of specialization are operations research, reliability engineering, warranty management, applied probabilistic analysis and probabilistic fracture mechanics. She is a Member of Indian Society for Technical Education (ISTE). She has published four papers in International Journals and around 26 papers in National and International Conferences.

T. Paul Robert is a Professor and Head in the Department of Industrial Engineering, Anna University, Chennai, India. He has 28 years of experience in academics. His research interest includes Maintenance and Reliability Engineering, Quality Control, Operations Scheduling, Warranty Management. He also published many papers in National and International Journals. He is a member of Operations Research Society of India (ORSI), Indian Society for Technical Education (ISTE) and Indian Society of Mechanical Engineers (ISME).

D. Jebakani is currently a Senior Grade Assistant Professor in Mechanical Engineering, at Government College of Engineering, Tirunelveli, India. Her areas of specialization are Operations Research, Reliability Engineering, Quality control, and Computer Applications in Design. She had her Bachelor Degree in Mechanical Engineering and Master Degree in Industrial Engineering from Madurai Kamaraj University, India. She obtained her Ph.D. in Reliability Based Design Optimization from Anna University Chennai, India. She is a Member of Indian Society for Technical Education (ISTE).