Optimizing two-dimensional renewable warranty policies for sensor embedded remanufactured products
Abstract: Remanufactured
products, in addition to being environment friendly, are popular with consumers
because they can offer the latest technology with lower prices in comparison to
brand new products. However, some consumers are hesitant to buy remanufactured
products because they are skeptical about the quality of the remanufactured
product and thus are unsure of the extent to which the product will render
services when compared to a new product. A strategy that remanufacturers may
employ to entice customers is to offer warranties on remanufactured products.
To that end, this paper studies and scrutinizes the impact of offering renewing
warranties on remanufactured products. Specifically, the paper suggests a
methodology which simultaneously minimizes the cost incurred by the
remanufacturers and maximizes the confidence of the consumers towards buying
remanufacturing products.
Design/methodology/approach: This study uses discrete-event simulation to
optimize the implementation of a two-dimensional renewing warranty policy for
remanufactured products. The implementation is illustrated using a specific
product recovery system called the Advanced Remanufacturing-To-Order (ARTO)
system. The experiments used in the study were designed using Taguchi’s
Orthogonal Arrays to represent the entire domain of the recovery system so as
to observe the system behavior under various experimental conditions. In order
to determine the optimum strategy offered by the remanufacturer, various
warranty and preventive maintenance scenarios were analyzed using pairwise
t-tests along with one-way analysis of variance (ANOVA) and Tukey pairwise
comparisons tests for every scenario.
Findings: The proposed methodology is able to simultaneously minimize the
cost incurred by the remanufacturer, optimize the warranty price and period,
and optimize the preventive maintenance strategy resulting in increased
consumer confidence.
Originality/value: This is the first study that evaluates in a
quantitative and comprehensive manner the potential benefits of offering
warranties with preventive maintenance on remanufactured products.
Keywords: Reverse Supply
Chain, Preventive Maintenance, Renewable Warranty Policies, Remanufacturing,
Sensor Embedded Products, Extending product life-cycle
Author: Ammar Alqahtani,
Surendra M. Gupta
Journal Code: jptindustrigg170014
