Comparative studies of three types of product policies (remanufactured, refurbished and new products) on warranty cost and profitability
Jafar Raam, Bejandi
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Estimating cost and profitability of warranty are the most important factors in managers’ decision making. Today employing the remanufactured and refurbished strategies are the best choices to use the best equipment as well as manage the operational cost. It also helps to enhance the profitability and protect the environment from e-waste. Although used products give an opportunity to purchase latest technology, customers are doubtful about quality and reliability of these products. Because of limitation of buying used products, some countries set warranty requirement to ensure reliability. In this paper, we aim to have a comparative view between two upgrading strategies named refurbished, remanufactured and estimating the effect of selecting these strategies on warranty cost and company’s profitability, and on the other hand, we compare this result with new product outcome. For this purpose, the failure data of 60 medical devices of a leading company has analyzed from 2013 to 2014. For each strategy (performing remanufactured,performing refurbished and buying new products), 10 devices were selected and monitored over a year. The result shows that remanufactured strategy causes reasonable warranty costs and profitability. This help manager to have a deep understanding, and decide on the profitable strategies leads to improve their competitiveness.