A static allocation model for the outsourcing of warranty repairs

Abstract

There has been a strong recent trend among original equipment manufacturers toward the outsourcing of work relating to the repair of items under warranty. In the typical cases where a large manufacturer uses several vendors to perform such work, we develop and analyse models to support decisions concerning how the work should be distributed among them. We depart from previous work in arguing the importance of an approach to the modelling of goodwill costs which takes explicit account of the delays experienced by customers. Theoretical considerations and numerical work both lend strong support to the contention that simple greedy approaches to workload allocation work well.

Keywords:

• dynamic programming
• greedy heuristic
• finite-source queueing system
• resource allocation
• warranty repairs

Acknowledgements

The first author acknowledges support received from the University of Edinburgh through a research studentship.