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On optimal upgrade level for used products under given cost structures

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  • Shafiee, Mahmood
  • Finkelstein, Maxim
  • Chukova, Stefanka

Abstract

In spite of the growing share of the second-hand market, often customers of used products encounter the following three problems: (a) they are uncertain regarding the durability and performance of these products due to lack of information on the item’s past usage and maintenance history, (b) they are uncertain about the accurate pricing of warranties and the post-warranty repair costs, and (c) sometimes, right after the sale, used items may have high failure rate and could be harmful to their new owner. Due to these problems, the dealers are currently carrying out actions such as overhaul and upgrade of the used products before their release. Reliability improvement, which is closely related to the concept of warranty, for used products is a relatively new concept and has received very limited attention. This paper also develops a stochastic model which results in the derivation of the optimal expected upgrade level under given structures of the profit and failure rate functions. We provide a numerical study to illustrate our results.

Suggested Citation

  • Shafiee, Mahmood & Finkelstein, Maxim & Chukova, Stefanka, 2011. "On optimal upgrade level for used products under given cost structures," Reliability Engineering and System Safety, Elsevier, vol. 96(2), pages 286-291.
    • Handle: RePEc:eee:reensy:v:96:y:2011:i:2:p:286-291
    DOI: 10.1016/j.ress.2010.07.008
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    References listed on IDEAS

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    Cited by:

    1. Park, Minjae & Jung, Ki Mun & Park, Dong Ho, 2020. "Warranty cost analysis for second-hand products under a two-stage repair-or-full refund policy," Reliability Engineering and System Safety, Elsevier, vol. 193(C).
    2. Finkelstein, Maxim, 2015. "On the optimal degree of imperfect repair," Reliability Engineering and System Safety, Elsevier, vol. 138(C), pages 54-58.
    3. Wu, Shaomin, 2013. "A review on coarse warranty data and analysis," Reliability Engineering and System Safety, Elsevier, vol. 114(C), pages 1-11.
    4. Santos, Augusto César de Jesus & Cavalcante, Cristiano Alexandre Virgínio & Wu, Shaomin, 2023. "Maintenance policies and models: A bibliometric and literature review of strategies for reuse and remanufacturing," Reliability Engineering and System Safety, Elsevier, vol. 231(C).
    5. Lo, Hui-Chiung & Yu, Rouh-Yun, 2013. "A study of quality management strategy for reused products," Reliability Engineering and System Safety, Elsevier, vol. 119(C), pages 172-177.
    6. Shafiee, Mahmood & Chukova, Stefanka, 2013. "Maintenance models in warranty: A literature review," European Journal of Operational Research, Elsevier, vol. 229(3), pages 561-572.
    7. Santos, Augusto César de Jesus & Cavalcante, Cristiano Alexandre Virginio & Ren, Junru & Wu, Shaomin, 2023. "A novel delay time modelling method for incorporating reuse actions in three-state single-component systems," Reliability Engineering and System Safety, Elsevier, vol. 234(C).
    8. Wang, Yukun & Liu, Yiliu & Liu, Zixian & Li, Xiaopeng, 2017. "On reliability improvement program for second-hand products sold with a two-dimensional warranty," Reliability Engineering and System Safety, Elsevier, vol. 167(C), pages 452-463.
    9. Mahmood Shafiee & Maxim Finkelstein, 2015. "A proactive group maintenance policy for continuously monitored deteriorating systems: Application to offshore wind turbines," Journal of Risk and Reliability, , vol. 229(5), pages 373-384, October.
    10. M Shafiee & M Finkelstein & S Chukova, 2011. "Burn-in and imperfect preventive maintenance strategies for warranted products," Journal of Risk and Reliability, , vol. 225(2), pages 211-218, June.
    11. Seyed Ahmad Yazdian & Kamran Shahanaghi & Ahmad Makui, 2016. "Joint optimisation of price, warranty and recovery planning in remanufacturing of used products under linear and non-linear demand, return and cost functions," International Journal of Systems Science, Taylor & Francis Journals, vol. 47(5), pages 1155-1175, April.
    12. Ammar Y. Alqahtani & Surendra M. Gupta, 2017. "One-Dimensional Renewable Warranty Management within Sustainable Supply Chain," Resources, MDPI, vol. 6(2), pages 1-26, April.
    13. Mohamed Noomane Darghouth & Anis Chelbi & Daoud Ait-kadi, 2017. "Investigating reliability improvement of second-hand production equipment considering warranty and preventive maintenance strategies," International Journal of Production Research, Taylor & Francis Journals, vol. 55(16), pages 4643-4661, August.
    14. Dai, Anshu & Wei, Guanzhou & Wang, Dongfan & He, Zhen & He, Shuguang, 2021. "The opportunity study of PM strategy for second-hand products sold with a two-dimensional warranty," Reliability Engineering and System Safety, Elsevier, vol. 214(C).
    15. Maxim Finkelstein & Mahmood Shafiee, 2017. "Preventive maintenance for systems with repairable minor failures," Journal of Risk and Reliability, , vol. 231(2), pages 101-108, April.
    16. Esmat Baghdadi & Mahmood Shafiee & Babakalli Alkali, 2022. "Upgrading Strategy, Warranty Policy and Pricing Decisions for Remanufactured Products Sold with Two-Dimensional Warranty," Sustainability, MDPI, vol. 14(12), pages 1-15, June.
    17. Alqahtani, Ammar Y. & Gupta, Surendra M. & Nakashima, Kenichi, 2019. "Warranty and maintenance analysis of sensor embedded products using internet of things in industry 4.0," International Journal of Production Economics, Elsevier, vol. 208(C), pages 483-499.

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