Joint optimization of new production, warranty servicing strategy and secondary market supply under consumer returns

Marc Reimann*, Weihua Zhang

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

5 Citations (Scopus)
5 Downloads (Pure)

Abstract

In this paper, we consider an OEM selling new products to the market offering (i) a warranty period during which defective units are dealt with at no cost for the customer, and (ii) a full refund to customers who return products that do not meet their expectations (consumer returns). The manufacturer has different options for satisfying the warranty cases aswell as for utilizing the consumer returns. Warranty cases could be dealt with by repairing the defective units, replacing them with new products, or replacing them with refurbished consumer returns. Alternatively leftover new products or consumer returns can also be sold on a secondarymarket. We develop a model and derive the OEMs optimal decisions with respect to these options under demand uncertainty on the primary market.

Original languageEnglish
Pages (from-to)325-342
Number of pages18
JournalPesquisa Operacional
Volume33
Issue number3
DOIs
Publication statusPublished - Dec 2013
Externally publishedYes

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