Decision Models for Second-hand Products Profit Maximization considering Reliability Improvement, Past age, Warranty, and Maintenance

The research presented in the proposed project comes in the context of a global vision that integrates the current concerns of manufacturers/dealers toward the recovery for resale of second-hand products, considering operating conditions and commitment with their customers. We will focus on the development of decision models to maximize the total expected profit generated by the sale of second-hand products considering technical, commercial and operational features. Four key variables will be investigated from the decision-maker point of view. The first one is the reliability improvement program which consists in setup and upgrade actions. The second is the past age of the product which represents the period of time from the market release to the time where the product shifts from the first user to the dealer. The third variable is the warranty period provided by the dealer. The final key variable is the commitment between the buyer and the seller in terms of maintenance support during the warranty period. We consider in this project the opportunity to perform preventive maintenance actions to reduce warranty extra costs by reducing the probability of failure. We consider also the realistic situation wherein the total expected profit generated by the dealer is influenced by the demand function. We suppose that an increase in the warranty period or/and a decrease in the sale price induces an increase in the demand. The main objective is to build a decision tool able to help dealers to optimally set technical and economical features before releasing second-hand products on the market in order to maximize their expected profits. The proposed models should help determining from the dealer perspective, the optimal improvement level, the frequency and the effort of preventive maintenance actions, the length of the warranty period and the past age of the product, which maximize the dealers total expected profit. Numerical examples using experimental data will be considered to illustrate the effects of the key parameters on the total expected profit and to prove the consistency and the robustness of the proposed approach.