Pricing and warranty for hi-tech products considering failures due to unknown faults and human errors (A game theory approach)

Document Type: Research Paper

Authors

Department of Industrial Engineering, Alzahra University, Tehran, Iran

Abstract

Hi-tech warranty reports show that a considerable percent of product's failures are related to the unknown faults and human errors, respectively. In this paper, two joint price and warranty models in a supply chain are presented for Hi-tech products. The supply chain includes a retailer and a customer, regarding failures due to unknown faults and human errors, beside the production failures. In the first model, failures due to production defects and human errors are considered separable, and in the second model they are considered inseparable. For both models, the interaction between the retailer and the customer is considered by retailer-Stackelberg game. The optimal purchase time, price, and warranty length are determined by maximizing the profits of customer and the retailer. Finally, the numerical example and sensitivity analysis are presented to illustrate the working logic of the models.

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Main Subjects


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