Optimising Age-Replacement and Extended Non-Renewing Warranty Policies in Lifecycle Costing

This paper analyses the life cycle cost of equipment protected by both base and extended warranty policies from a consumer's perspective. We assume that the equipment has two types of failure: minor and catastrophic. A minor failure can be corrected with minimal repair whereas a catastrophic failure can only be removed by a replacement. It is assumed that equipment is maintained at no charge to the consumer during the warranty period, whereas the consumer is fully charged for any maintenance on failures after the extended warranty expires. We formulate the expected life cycle cost of the equipment under a general failure time distribution, and then for special cases we prove that the optimal replacement and extended warranty policies exists where the expected life cycle cost per unit time is minimised. This is examined with numerical examples. © 2011 Elsevier B.V. All rights reserved

Design of a second life product family from the perspective of the remanufacturing agent

This thesis presents a method of solving a newly posed Second Life Product Family Design problem. This is unique in that the architecture of the product is not speci ed to be identical to one of the recaptured products, rather it is determined through optimization. The problem is framed using Conjoint Analysis and the Multi Nomial Logit Model, formatted with respect to components available for inclusion in the nal products and then solved using an implementation of Genetic Algorithms. The solution method is also encapsulated in a software module which can be disseminated to industrial users without a background in optimization or familiarity with Genetic Algorithms. A case study is performed to determine the e ectiveness of the proposed solution method, and analyze the in uences di erent market conditions and component similarities can have on the optimal design. It is concluded that the proposed method converges to an optimal Second Life Product Family Design

Second-Hand Markets and Collusion byManufacturers of Semidurable Goods

The focus of the present work is to study the impact of the second-hand market the collusivebehavior. I analyze firms' preferences for having an active second-hand market and whetherpolicies (i.e. leasing policy, buy-back policy and warranty policy) that affect the functioningof the second-hand market strengthen collusion. I show how collective incentives to adoptstrategies that strengthen collusion often differ from monopoly incentives to achieve higherprofits.Bertrand competition, buy-back policies, collusion, leasing, semi-durability,second-hand market, warranty.

Warranty and Sustainable Improvement of Used Products through Remanufacturing

Currently, a large number of used/second-hand products are being sold with remanufacturing. Remanufacturing is a process of bringing used products to a better functional state and can be applied as a way for (1) controlling the deterioration process, (2) reducing the likelihood of a failure over the warranty period and (3) making the used item effectively younger. Remanufacturing is relatively a new concept and has received very limited attention. In this paper, we develop an important sustainable improvement approach for used items sold with failure free warranty to determine the optimal improvement level. Our model makes a useful contribution to the reliability growth literature, as it captures the uncertainty and suggests improvement in the remanufacturing process. By using this model, the dealers can decide whether and how much to invest in remanufacturing projects

Optimal Overhaul-Replacement Policies for Repairable Machine Sold with Warranty

This research deals with an overhaul-replacement policy for a repairable machine sold with Free Replacement Warranty (FRW). The machine will be used for a finite horizon, T (T <ï‚¥), and evaluated at a fixed interval, s (s< T). At each evaluation point, the buyer considers three alternative decisions i.e. Keep the machine, Overhaul it, or Replace it with a new identical one. An overhaul can reduce the machine age virtually, but not to a point that the machine is as good as new. If the machine fails during the warranty period, it is rectified at no cost to the buyer. Any failure occurring before and after the expiry of the warranty is restored by minimal repair. An overhaul-replacement policy is formulated for such machines by using dynamic programming approach to obtain the buyer's optimal policy. The results show that a significant rejuvenation effect due to overhaul may extend the length of machine life cycle and delay the replacement decision. In contrast, the warranty stimulates early machine replacement and by then increases the replacement frequencies for a certain range of replacement cost. This demonstrates that to minimize the total ownership cost over T the buyer needs to consider the minimal repair cost reduction due to rejuvenation effect of overhaul as well as the warranty benefit due to replacement. Numerical examples are presented for both illustrating the optimal policy and describing the behavior of the optimal solution

Poly Pelletizer: Recycled Pet Pellets From Water Bottles

Plastic water bottles comprise a large amount of waste worldwide. The goal of the Poly Pelletizer project is to create a system that will turn water bottles into polyethylene terephthalate (PET) pellets compatible with extruders to produce 3-D printer lament, along with other recycling applications.The system promotes a sustainable solution to plastic pollution by giving manufactures, particularly in developing nations, the means to produce their own bulk materials using waste plastic. Shrinking industrial recycling processes to a workbench scale gives individuals the ability to convert excess bottles into seemingly limitless products. The system works by using a dual heating and pressure system to both evenly mix and melt the plastic before pushing the resin through a die. The Poly Pelletizer successfully created pellets using various mixtures of virgin PET and shredded water bottles

Optimizing the integrated economic production quantity for a stochastically deteriorating production system under condition-based maintenance

This paper proposes a new integrated economic production quantity (EPQ) and condition-based maintenance (CBM) model for a stochastically deteriorating production system. Inspections are performed periodically to measure the real time degradation. The system fails (out-of-control) whenever its degradation is beyond a critical threshold level. In the out-of-control state, a proportion of nonconforming items are produced. To assess the degradation of the system and to increase the production of conforming items, preventive maintenance (PM) actions are carried out. An integrated EPQ and CBM optimization model that minimizes the total expected cost rate over an infinite time horizon is developed. The objective is to determine a joint optimal EPQ and PM strategy minimizing the sum of inspection/maintenance and setup costs, cost of nonconforming items in addition to inventory holding cost. Numerical experiments are provided to illustrate the proposed approach

Spare part demand forecasting for consumer goods using installed base information

When stopping production, the manufacturer has to decide on the lot size in the final production run to cover spare part demand during the end-of-life phase. This decision can be supported by forecasting how much demand is expected in the future. Forecasts can be obtained from the installed base of the product, that is, the number of products still in use. This type of information is relatively easily available in case of B2B maintenance contracts, but it is more complicated in B2C spare parts supply management. Consumer decisions on whether or not to repair a malfunctioning product depend on the specific product and spare part. Further, consumers may differ in their decisions, for example, for products with fast innovations and changing social trends. Consumer behavior can be accounted for by using appropriate types of installed base, for example, lifetime installed base for essential spare parts of expensive products with long lifecycle, and warranty installed base for products with short lifecycle. This paper proposes a set of installed base concepts with associated simple empirical forecasting methodologies that can be applied in practice for B2C spare parts supply management during the end-of-life phase of consumer products. The methodology is illustrated by case studies for eighteen spare parts of six products from a consumer electronics company. The research hypotheses on which installed base type performs best under which conditions are supported in the majority of cases, and forecasts obtained from installed base are substantially better than simple black box forecasts. Incorporating past sales via installed base therefore supports final production decisions to cover future consumer demand for spare parts

Design of Extended Warranties in Supply Chains under Additive Demand

This is the author's accepted manuscript. The original publication is available at http://dx.doi.org/10.1111/j.1937-5956.2011.01300.x.We study the design of extended warranties in a supply chain consisting of a manufacturer and an independent retailer. The manufacturer produces a single product and sells it exclusively through the retailer. The extended warranty can be offered either by the manufacturer or by the retailer. The party offering the extended warranty decides on the terms of the policy in its best interest and incurs the repair costs of product failures. We use game theoretic models to answer the following questions. Which scenario leads to a higher supply-chain profit, the retailer offering the extended warranty or the manufacturer? How do the optimum price and extended warranty length vary under different scenarios? We find that, depending on the parameters, either party may provide better extended warranty policies and generate more system profit. We also compare these two decentralized models with a centralized system where a single party manufactures the product, sells it to the consumer and offers the extended warranty. We also consider an extension of our basic model where either the manufacturer or the retailer resells the extended warranty policies of a third party (an independent insurance company, for example), instead of offering its own policy