Warranty inventory optimization for Hitachi Global Storage Technologies, Inc

Warranty inventory management is a challenge that many companies must confront. Customers return allegedly defective units to a company for replacement or credit. The company can then economically recover the unit through either a testing or remanufacturing process; it can use recovered units to fulfill future warranty requests. The company also has the option of purchasing a new product from the production line. In high–volume situations, warranty inventory management involves many complexities such as stochastic demand rates, probabilistic requests for credit instead of replacement, probabilistic repairs, multiple sources of supply, and tight customer–service constraints. Companies may also have to consider the complexities that a batch remanufacturing process causes.