On reliability improvement of second-hand products

This paper presents a cost model to determine the optimal reliability improvement level for second-hand products sold with a free repair type of warranty (FRW). The second-hand product of age x is subjected to an upgrade action of a certain level u before it is sold. We look at determining the optimal upgrade level when not performing and when performing periodic preventive maintenance (PM) during the warranty period in order to reduce the risk of early failures. We investigate the effect of periodic PM along with the reliability improvement on the total expected cost incurred by the dealer. The developed model allows determining from the dealers perspective if PM actions carried out during the warranty period are worthwhile. A numerical example is presented to illustrate the consistency of the proposed approach.