On the investment in a reliability improvement program for warranted second-hand items

Mahmood Shafiee, Stefanka Chukova, Won Yun and Seyed Niaki

IISE Transactions, 2011, vol. 43, issue 7, 525-534

Abstract: A reliability improvement program (such as an upgrade action) can be seen as an investment by a dealer to restore a second-hand product to a better operational state. Due to the nature of the actions performed, the item's reliability at the end of this program is usually uncertain. This article develops a stochastic cost–benefit model for investment made in reliability improvement programs for second-hand items sold with failure-free warranty. Depending on the product's lifetime modeling approach, two modifications of the model are considered and are solved for the optimal improvement level. A real case application of the model is presented to validate the proposed approach.

Date: 2011
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Citations: View citations in EconPapers (13)

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DOI: 10.1080/0740817X.2010.540638

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