Warranty Cost Analysis with Preventive Maintenance Strategy for Remanufactured Products in Reverse Supply Chain
Ph.D. Defense by Ammar Y. Alqahtani
Thursday, February 23, 2017, 11:30 – 1:30 pm, West Village F 10
Currently, the number of studies that address the issues at the end-of-life (EOL) stage of a product, has been an increasingly popular area of research. This is due, on one hand, to environmental factors, government regulations and public demands, and on the other hand, to potential economical profits that could be determined by implementing reverse logistics and product recycling resolutions. Manufacturers try to cope with consumer awareness towards environmental issues and stricter environmental legislation by setting up facilities which involve the minimization of the amount of waste sent to landfills by recovering materials and components from returned or EOL products.
In product recovery, the disassembly process plays an important role since it allows for selective separation of desired parts and materials. EOL products containing missing and/or nonfunctional components increase the uncertainty associated with the disassembly yield. Sensor-embedded products (SEPs) eliminate a majority of uncertainties involved with EOL management by providing life-cycle information. This includes information about the content of each product and component conditions, and enables the estimation of remaining useful life of the components. Once the data about the product is captured, it is possible to make optimal EOL decisions without any preliminary disassembly or inspection operations. Once the components are retrieved, the products can be remanufactured and the proper warranty policy and period can be offered.
The fact that a consumer is frequently uncertain about the quality of a remanufactured product that is to be purchased, and is therefore unsure of the extent to which the product will render services, might lead to a decision to opt out of buying it. With such imperfect information held by consumers, manufacturers often search for market mechanisms, such as warranties, that might provide assurance about the durability of the products.
Product warranties have three primary functions. The first function is insurance and protection, allowing consumers to transfer the risk of product failure to sellers. Secondly, product warranties can also signal product reliability to customers. Finally, the sellers use warranties to extract additional profitability. There are a few articles and books that consider warranty policies for new products’ supply chain management. However, there are none that consider the warranty for the remanufactured products originating from reverse supply chains.
The remanufacturers may offer many different options from which the buyers can select one that suits their interests. As a result, the warranty policies for remanufactured products may vary considerably and may include features such as cost sharing, exclusions, cost limits and buyback options. Thus the range of warranty policies for remanufactured products is much wider than that for new products.
This dissertation presents 27 different policies. These include the well-known Free Replacement Warranty (FRW) and Pro-Rata Warranty (PRW) policies and Cost sharing warranty (CSW), Cost limit warranty (CLW), Buyback warranty (BBW), and Combinations of the above. All these policies are accompanied with preventive maintenance (PM) strategy. This dissertation is the formulation and presentation of 27 different warranty policies, including related maintenance actions, for sensor-embedded remanufactured products, in addition to mathematical and simulation modeling and analysis for the anticipated costs for these policies. It is found that anticipated warranty costs and maintenance are essential pieces of information upon which remanufacturers base pricing and maintenance action decisions.
Dissertation Committee Members
Professor Surendra M. Gupta (Advisor), Professor Sagar Kamarthi, Professor Seamus Mcgovern.