The Impact of Extended Warranty on Base Warranty: A Game Approach Extended warranty is a type of optional service beyond the base warranty. It encourages the demands of riskaverse customers. However, it remains unclear to us that how the extended warranty affects the base warranty, as well as the profits of the manufacturers and the retailers. This paper focuses on two scenarios: the manufacturer offers only the base warranty, or an extended service plan (base warranty plus an optional extended warranty), and explores the impacts of extended warranty on base warranty. Analyses show that the extended service plan could definitely benefit the manufacturer. However, counterintuitively, it reduces the retaileru0027s profits. A critical reason is that compared with base warranty, the extended service plan provides less profit margin for the retailer. Furthermore, it is interesting that base warranty faces downward pressure in the presence of an extended warranty.

Twodimensional extended warranty strategy including maintenance level and purchase time: a winwin perspective Abstract   In practice, consumers need to decide whether and when to purchase extended warranty (EW), and there are many factors that influence this decision, such as product reliability and preventive maintenance (PM) conditions, etc. Under the consideration of consumer PM options, purchase time of EW and consumer usage rate diversity, this research first determines the product failure processes based on Generalised Polya Process (GPP) failure mode. Moreover, considering the impact of consumersixc2xaf purchasing decision of EW on warranty costs, we establish warranty cost models based on the product failure processes. Finally, given the warranty cost model, winwin EW price decision models are proposed in the product life cycle. A real case from a leading automobile manufacturer of China is presented to illustrate the application of the proposed model. The isoline of winwin regions and winwin EW intervals are obtained. Also, two management recommendations are given to help manufacturers make relevant decisions.