A Decision Optimization Model for Product Extended Warranty Based on the Life Cycle Cost Analysis

Abstract

Abstract:

With the increasing awareness of product life cycle cost (LCC), extended warranty has become the new focus of manufacturers. Extended warranty has significant influence on the product maintenance cost and market competition. In order to obtain the decision optimization project of the extended warranty with lower LCC, based on the consideration of preventive maintenance, the price decisionmaking strategy of extended warranty for manufacturer is analyzed, and then, the decision optimization model for product extended warranty is proposed to minimize the consumer maintenance cost of unit time during the product service life, and the optimization model is solved by grid search algorithm. With the method of grid search and simulation software Matlab, a numerical example is given to validate the rationality and effectiveness of the model and algorithm. It shows that the maintenance cost of unit time reduces and the life length increases on the basis of protecting the interests of the manufacturer, so the consumer′s optimal decision project is derived.

Key words: life cycle cost (LCC), extended warranty, preventive maintenance strategy, grid search

YANG Zhiyuan, CHENG Zhonghua, DENG Lijie, LI Zhiwei. A Decision Optimization Model for Product Extended Warranty Based on the Life Cycle Cost Analysis[J]. Industrial Engineering Journal .

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