The effect of lifetime buys on warranty repair operations

K Sahyouni, R C Savaskan and M S Daskin
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K Sahyouni: Northwestern University
R C Savaskan: Kellogg School of Management, Northwestern University
M S Daskin: Northwestern University

Journal of the Operational Research Society, 2010, vol. 61, issue 5, 790-803

Abstract: Abstract Lifetime buys are a common practice in the electronics and telecommunication industries. Under this practice, manufacturers procure their repair parts inventory in one order to support the spare part needs of a product for the duration of its warranty repair period. In this paper, we consider a repair operation in which defective items under warranty are returned to a manufacturer who either repairs these items using its spare parts inventory or replaces each defective unit with a new product. We show how fixed repair capability costs, variable repair costs, inventory holding costs, and replacement costs affect a firm's optimal repair and replacement decisions. The model is used to gain insights for products from a major mobile device manufacturer in the United States.

Keywords: logistics; inventory; repair (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (8)

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DOI: 10.1057/jors.2008.143

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