Warranty and optimal upgrade strategy for used systems: An electric drill case study
Journal article, 2012

Offering warranty for a second-hand item stimulates the sales of the item, but at the same time, it accumulates additional warranty servicing cost. This additional cost can be reduced through actions that improve the reliability of the item, such as overhaul and upgrade. An upgrade action brings the second-hand item to an improved functional state and it effectively reduces the age of the item. In this paper, we propose a model aiming to determine the optimal upgrade action strategies that achieve a sensible trade-off between the cost of an upgrade action and the reduction of the expected warranty cost due to this action. A practical application case on electric drills is used to illustrate our findings.

2nd-hand products





shock model

second-hand item

upgrade action


imperfect preventive maintenance


Mahmood Shafiee

University of Gothenburg

Chalmers, Mathematical Sciences, Mathematics

Stefanka Chukova

Victoria University of Wellington

M. Finkelstein

Max Planck Society

University of the Free State

Asia-Pacific Journal of Operational Research

0217-5959 (ISSN)

Vol. 29 4 Article Number: 1250023 -

Subject Categories

Other Mathematics



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