Money-back guarantee warranty policy with preventive maintenance strategy for sensor-embedded remanufactured products

Journal of Industrial Engineering International https://doi.org/10.1007/s40092-018-0259-5 (0123456789().,-volV)(0123456789().,-volV) ORIGINAL RESEARCH Money-back guarantee warranty policy with preventive maintenance strategy for sensor-embedded remanufactured products Ammar Y. Alqahtani1 • Surendra M. Gupta2 Received: 17 March 2017 / Accepted: 15 January 2018  The Author(s) 2018. This article is an open access publication Abstract In today’s global environment, technology is constantly evolving. Being able to stay up-to-date with the very latest technological advances can be extremely hard to accomplish. As a result of these changes and developments in technology, which often come unexpectedly, consumers are frequently tempted to update their devices to the very latest model. The result is that the life cycle of a product is becoming shorter and shorter than before. Manufacturers attempt to respond to consumers’ concerns involving environmental issues as well as the more governmentally stringent environmental legislations by establishing facilities which include the minimization of the totality of waste relocated to landfills by recovering materials and components from returned, or End-Of-Life products and reuse them to build a remanufactured product, and/ or novel components. With the rapid growth of interest in remanufactured products’ market, offering warranty for remanufactured products and components is becoming a necessity for remanufacturer in order to meet customers’ requirement and as a marketing mechanism. During that process, maintenance policies are of great importance in order to reduce the warranty cost on the remanufacturer. In this paper, an optimization simulation model for remanufactured items sold with one-dimensional non-renewing money-back guarantee (MBG) warranty policy is proposed from the view of remanufacturer, in which, an End-Of-Life product is subjected to upgrade action at the end of its past life and during the warranty period, preventive maintenance actions are carried out when the remaining life of the product reaches a prespecified value so that the remanufacturer’s expected profit can be maximized. Finally, a numerical example and design of experiment analysis are provided to demonstrate the proposed approach. Keywords Reverse supply chain  Preventive maintenance  Non-renewable warranty policies  Remanufacturing  Sensor-embedded products Introduction With the recent surge of technological development and consumer preference to purchase newer device models and technological products, product life cycles have diminished & Ammar Y. Alqahtani Surendra M. Gupta 1 Department of Industrial Engineering, Faculty of Engineering, King Abdulaziz University, Jeddah 22254, Saudi Arabia 2 Department of Mechanical and Industrial Engineering, Northeastern University, 334 Snell Engineering Center, 360 Huntington Avenue, Boston, MA 02115, USA and disposal rates have spiked. As a result, landfills and the Earth’s natural resources have begun to reach a critical apex. In response to this apex, when a technological device reaches the end of its life cycle, and it becomes obsolete, manufacturing firms now reprocess the products they produced. This practice is conducted to remain compliant with new regulations. The new regulatory regime has helped to enlighten consumer awareness of the pertinent environmental issues regarding the matter. The manufacturers of these devices construct specialized facilities designed for the end-of-life (EOL) product recovery process. These facilities enable manufacturers to minimize the amount of mechanical waste sent to landfills by retrieving the mechanical materials from the EOL products by way of the recycling, refurbishing, and remanufacturing processes. The results of these facilities 123 Journal of Industrial Engineering International are significant economic benefits, which makes processing of product recovery more attractive. In product recovery, disassembly is the most vital component of operations. It allows for the extraction of the desired components, subassemblies and materials from EOL products. There are various ways to execute the process of disassembling EOL products: They can be effectuated at a single workstation, in a disassembly cell, or on a disassembly line. However, while utilizing single workstations and disassembly cells are more flexible in operation, the process that produces the highest yield is the disassembly line operation. This disassembly line operation is also the most efficient operation for automated disassembly (Sasikumar et al. 2010). The first fundamental step in the processes of remanufacturing, recycling, and disposing of EOL products is product disassembly. This pertinent operation is the method of deconstructing an EOL product down to its core mechanical components by utilizing either non-destructive, semi-destructive, or destructive techniques. The disassembly supports the recovery processes which are necessary to minimize dependency on processes that lead to natural resource depletion. The quandary of the product recovery process is the uncertainty it poses with regards to component quality. This dilemma is due to the lack of information on the condition of the components prior to disassembly. However, there is a simple solution: Test each individual component after disassembly (Kongar and Gupta 2006). Of course, that is not a practical solution because product disassembly puts a financial damper on manufacturer profits. In turn, the profit margins from the remanufacturing processes are diminished. That is due to the fact that these processes are based on two factors: The monetary cost of conducting the appropriate and necessary testing of all devices, and the magnitude of obligatory time required in the testing process. Furthermore, if the test reveals that a component is dysfunctional, it is an assault on the manufacturer because of the realization that the time spent attempting to process the EOL device(s) and all the resources required to do so were wasted. The quality of a remanufactured product induces hesitation for many people due to efficacy and reliability concerns. This causes consumers to become unsure if remanufactured products will have the capacity to render the same expected performance as new devices. This uncertainty regarding a remanufactured product could lead the consumer to make a determination against its purchase. With this level of consumer apprehension, remanufacturers often employ marketing strategies to provide affirmation about product durability. One common marketing strategy remanufacturers employ is to encourage customer security are product warranties (Murthy and Blischke 2006). 123 The use of sensor-embedded products (SEPs) is a promising approach in dealing with disassembly. This is because SEPs utilize sensors implanted during the production process by monitoring the critical components of a product and facilitating data col (...truncated)