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    Design of Extended Warranties in Supply Chains under Additive Demand

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    2012 Li Mallik Chhajed POM.pdf (389.6Kb)
    Issue Date
    2012
    Author
    Li, Kumpeg
    Mallik, Suman
    Chhajed, Dilip
    Publisher
    Production and Operations Management Society
    Type
    Article
    Article Version
    Scholarly/refereed, author accepted manuscript
    Metadata
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    Abstract
    We study the design of extended warranties in a supply chain consisting of a manufacturer and an independent retailer. The manufacturer produces a single product and sells it exclusively through the retailer. The extended warranty can be offered either by the manufacturer or by the retailer. The party offering the extended warranty decides on the terms of the policy in its best interest and incurs the repair costs of product failures. We use game theoretic models to answer the following questions. Which scenario leads to a higher supply-chain profit, the retailer offering the extended warranty or the manufacturer? How do the optimum price and extended warranty length vary under different scenarios? We find that, depending on the parameters, either party may provide better extended warranty policies and generate more system profit. We also compare these two decentralized models with a centralized system where a single party manufactures the product, sells it to the consumer and offers the extended warranty. We also consider an extension of our basic model where either the manufacturer or the retailer resells the extended warranty policies of a third party (an independent insurance company, for example), instead of offering its own policy.
    Description
    This is the author's accepted manuscript. The original publication is available at http://dx.doi.org/10.1111/j.1937-5956.2011.01300.x.
    URI
    http://hdl.handle.net/1808/11250
    DOI
    https://doi.org/10.1111/j.1937-5956.2011.01300.x
    Collections
    • School of Business Scholarly Works [213]
    Citation
    Li, Kumpeg, Suman Mallik, and Dilip Chhajed. "Design of Extended Warranties in Supply Chains under Additive Demand." Production and Operations Management 21.4 (2012): 730-46. http://dx.doi.org/10.1111/j.1937-5956.2011.01300.x

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    KU Libraries
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    785-864-8983

    KU Libraries
    1425 Jayhawk Blvd
    Lawrence, KS 66045
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    Contact KU ScholarWorks
    785-864-8983
    KU Libraries
    1425 Jayhawk Blvd
    Lawrence, KS 66045
    785-864-8983

    KU Libraries
    1425 Jayhawk Blvd
    Lawrence, KS 66045
    Image Credits
     

     

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