Optimal Price and Protection Period Decisions for a Product Under Warranty

Theodore S. Glickman and Paul D. Berger
Additional contact information
Theodore S. Glickman: Boston University
Paul D. Berger: Boston University

Management Science, 1976, vol. 22, issue 12, 1381-1390

Abstract: This paper proposes and analyzes a model for maximizing the profit of a product sold under warranty. The decision variables assumed in the model are the price of the product and the length of the period throughout which the manufacturer is responsible for service. The paper focuses on the dependence of optimal profit on price and protection period for a realistic and general description of a warrantied product. Failures are stochastic and repairs are of constant cost. Demand depends exponentially on price and warranty duration. After an introduction and literature review, the basic model is presented and assumptions are made about the particular probability law governing product failures. The optimization procedure is then illustrated for certain values of input parameters. Finally, an extensive economic analysis of the sensitivity of the optimal solution to variations in input parameters is provided.

Date: 1976
References: Add references at CitEc
Citations: View citations in EconPapers (48)

Downloads: (external link)
http://dx.doi.org/10.1287/mnsc.22.12.1381 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:22:y:1976:i:12:p:1381-1390

Access Statistics for this article

More articles in Management Science from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().