A Flexible Two-Dimensional Warranty in Optimizing the Dealer and Customer Satisfaction

Abstract

Nowadays, in competitive market, in order to increase confidence in the quality of products, dealers set a warranty for selling them. This issue seems to have a tremendous effect on attracting more customers, especially when it comes to purchasing second-hand products. In this regard, this paper tends to present a two-dimensional warranty policy for second-hand products containing age and usage in two cases, L-shaped and Rectangular. Since maximizing customer repurchase probability is directly linked with dealer’s profit as well as minimizing costs, dealers ought to consider customer satisfaction. In fact, customer satisfaction depends on warranty length and the expected numbers of failures in the post-warranty period. To demonstrate the characteristics of the model, two comparative studies are conducted to present the effect of bi-objective function on warranty models. Finally, in order to extend insights into the matter, a sensitivity analysis is carried out on the varying parameters.