Optimal production run length for products sold with warranty

Optimal production run length for products sold with warranty

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Article ID: iaor2001131
Country: Netherlands
Volume: 120
Issue: 3
Start Page Number: 575
End Page Number: 582
Publication Date: Feb 2000
Journal: European Journal of Operational Research
Authors: , ,
Keywords: markov processes
Abstract:

This article studies the optimal production run length for a deteriorating production system in which the products are sold with free minimal repair warranty. The deterioration process of the system is characterized by a two-state continuous-time Markov chain. For products sold with free minimal repair warranty, we show that there exists a unique optimal production run length such that the expected total cost per item is minimized. Since there is no closed form expression for the optimal production run length, an approximate solution is derived. In addition, three special cases which provide bounds for searching the optimal production run length are investigated and some sensitivity analysis is carried out to study the effects of the model parameters on the optimal production run length. Finally, a numerical example is given to evaluate the performance of the optimal production run length.

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