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Chinese Journal of Management Science ›› 2025, Vol. 33 ›› Issue (3): 186-195.doi: 10.16381/j.cnki.issn1003-207x.2022.1350

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Design and Optimization of a Performance-based Warranty Policy-Considering Limited Maintenance Number

Anshu Dai1, Zhi Luo1, Guilian Sun1, Xin Wang2,3()   

  1. 1.School of Management Science and Engineering,Tianjin University of Finance and Economics,Tianjin 300222,China
    2.Data-Driven Management Decision Making Lab,Shanghai Jiao Tong University,Shanghai 200030,China
    3.Antai College of Economics and Management,Shanghai Jiao Tong University,Shanghai 200030,China
  • Received:2022-06-21 Revised:2022-12-31 Online:2025-03-25 Published:2025-04-07
  • Contact: Xin Wang E-mail:wang.xin@sjtu.edu.cn

Abstract:

In recent years, performance-based warranty has become a new business model in the field of after-sales market for complex products. Under a performance-based warranty, manufacturers guarantee the product performance to enhance customer satisfaction. Therefore, the pursuit of high performance has become the common goal of manufacturers and users. At the same time, the rapid development of the new generation of information and communication technology has created conditions for real-time monitoring of product performance. In order to further optimize the user experience and reduce the downtime loss caused by frequent maintenance, a performance-based warranty policy design and optimization method is proposed with repair number limit. Under the proposed performance-based warranty policy, if the actual performance level hits the performance guarantee level, the manufacturer will implement replacement or imperfect repair according to the failure time of the product. Additionally, if the number of repairs exceeds the specified limit, the manufacturer is also required to compensate the user. Based on that, the critical performance degradation process is established with a replacement-maintenance strategy and the expected warranty cost is derived. Then, a performance-based warranty policy optimization model is constructed with the goal of maximizing the manufacturer’s profit. The Nelder-Mead method is used to obtain the optimal product price, warranty period length and performance guarantee level. The results show that the performance-based warranty policy can help the manufacturer to obtain higher profits compared with the traditional warranty policy. In addition, the analysis of the key parameters revealed that for manufacturers, slowing down the rate of product degradation, reducing the cost per repair and choosing a reasonable replacement interval play a key role in increasing profits.

Key words: warranty policy design, performance deterioration, maintenance strategy, warranty cost

CLC Number: