Economic consequences of consumer repair strategies for electrical household devices

Abstract

PurposeThe purpose of this paper is to investigate to what extent a consumer’s repair strategy impacts the annual costs of ownership of a washing machine and two types of vacuum cleaner.Design/methodology/approachThe annual cost of ownership is determined by calculating the annual life cycle cost (LCC) for the respective devices. The annual LCCs of the different scenarios allow a comparison of the different repair strategy options. A Monte Carlo simulation is run to introduce parameter variability. The device’s failure rate is estimated by a combination of data sets on the devices’ performance.FindingsResults demonstrate that the repair of the devices considered is a more favourable option over replacement. A consumer who aims for the lowest annual LCC should allow for a high number of repairs per device, without putting a maximum on the cost per repair. However, the consumer should become more cautious when a device approaches the end of its expected lifetime. Finally, the purchase of warranty can be interesting when the warranty covers a sufficiently long proportion of the device’s (expected) lifetime and when its cost does not exceed a threshold proportion of the initial purchase price.Research limitations/implicationsThe costs for repair might be overestimated. Future research can focus on the reduction of repair costs following self-repair.Practical implicationsThe results provide strong arguments in favour of repair instead of replacement of broken devices.Originality/valueThis is the first research to quantify the influence of consumer behaviour in the context of repair of devices on the ownership costs of these devices.