Please use this identifier to cite or link to this item: http://hdl.handle.net/10397/88881
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dc.contributorDepartment of Logistics and Maritime Studiesen_US
dc.creatorWang, Xen_US
dc.creatorLiu, Ben_US
dc.creatorZhao, Xen_US
dc.date.accessioned2021-01-07T04:58:41Z-
dc.date.available2021-01-07T04:58:41Z-
dc.identifier.issn0925-5273en_US
dc.identifier.urihttp://hdl.handle.net/10397/88881-
dc.language.isoenen_US
dc.publisherElsevieren_US
dc.rights© 2020 Elsevier B.V. All rights reserved.en_US
dc.subjectWarrantyen_US
dc.subjectPerformance deteriorationen_US
dc.subjectCompeting risksen_US
dc.subjectWarranty policy designen_US
dc.titleA performance-based warranty for products subject to competing hard and soft failuresen_US
dc.typeJournal/Magazine Articleen_US
dc.identifier.doi10.1016/j.ijpe.2020.107974en_US
dcterms.abstractThis article studies a performance-based warranty for products subject to competing hard and soft failures. The two failure modes are competing in the sense that either one, on a “whichever-comes-first” basis, can cause the product to fail. A performance-based warranty not only covers the repair or replacement of any defect, but also guarantees the minimum performance level throughout the warranty period. In this article, we propose three compensation policies—that is, free replacement, penalty, and full refund, when a product’s performance fails to meet the guaranteed level. The expected warranty servicing costs for the three policies are derived, based on the competing risks concept. A warranty design problem is further formulated to simultaneously determine the optimal product price, warranty length, and performance guarantee level so as to maximize the manufacturer’s total profit. Numerical studies are conducted to demonstrate and compare the three performance-based compensation policies. It is shown that the full refund policy always leads to the lowest total profit, whereas neither of the other two policies can dominate each other in all scenarios. In particular, the free replacement policy results in a higher total profit than the penalty policy when the replacement cost is low, the penalty cost coefficient is high, and/or the product reliability is high.en_US
dcterms.accessRightsopen accessen_US
dcterms.bibliographicCitationInternational journal of production economics, Available online 3 November 2020, 107974en_US
dcterms.isPartOfInternational journal of production economicsen_US
dcterms.issued2020-11-03-
dc.description.validate202101 bcrcen_US
dc.description.oaAuthor’s Originalen_US
dc.identifier.FolderNumbera0534-n01-
dc.description.fundingSourceOthersen_US
dc.description.fundingTextP0034462en_US
dc.description.pubStatusPublisheden_US
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