Optimizing the warranty period by cuckoo meta-heuristic algorithm in heterogeneous customers’ population

Subject Areas : Mathematical Optimization

Ali Roozitalab ¹ , Ezzatollah Asgharizadeh ²

1 - Kish International campus, University of Tehran, Kish Island, 71778-5777, Iran
2 - Tehran University, Gisha bridge, Jalale ale ahmad blvd, Tehran, 6311-14155, Iran

Received: 2020-10-01 Accepted : 2020-10-01 Published : 2013-12-01

Keywords: Free replacement warranty policy, Cuckoo optimization, Heterogeneous population, Warranty period,

Abstract :

Warranty is now an integral part of each product. Since its length is directly related to the cost of production, it should be set in such a way that it would maximize revenue generation and customers’ satisfaction. Furthermore, based on the behavior of customers, it is assumed that increasing the warranty period to earn the trust of more customers leads to more sales until the market is saturated. We should bear in mind that different groups of consumers have different consumption behaviors and that performance of the product has a direct impact on the failure rate over the life of the product. Therefore, the optimum duration for every group is different. In fact, we cannot present different warranty periods for various customer groups. In conclusion, using cuckoo meta-heuristic optimization algorithm, we try to find a common period for the entire population. Results with high convergence offer a term length that will maximize the aforementioned goals simultaneously. The study was tested using real data from Appliance Company. The results indicate a significant increase in sales when the optimization approach was applied; it provides a longer warranty through increased revenue from selling, not only reducing profit margins but also increasing it.