The Integrated Supply Chain of After-sales Services Model: A Multi-objective Scatter Search Optimization Approach

Abstract

Abstract: In recent decades, high profits of extended warranty have caused that third-party firms consider it as a lucrative after-sales service. However, customers division in terms of risk aversion and effect of offering extended warranty on manufacturers' basic warranty should be investigated through adjusting such services. Since risk-averse customers welcome extended warranty, while the customers without taking on risk may remain at the level of basic warranty. In this paper, a multi-objective integer nonlinear programming model is presented for integrating the supply chain of after-sales services. In the suggested model, firstly strategies used by the manufacturers in the basic warranty period and the third party's policy during the extended warranty period, including the development of a new imperfect maintenance approach, are regulated. Then, the effects of these strategies on the desirability of customers with different levels of risk-taking are analyzed. To optimize the model, the scatter search based approach was introduced for extracting set of non-dominated solutions. The results indicated that increasing level of customers' risk-taking convinces manufacturers to diminish the basic warranty period and the third party can apply less costly preventive maintenance. Key Words: Warranty, Extended warranty, After-sales services, Customers' risk-taking, Pareto-set solutions, Multi-objective scatter search