Study on the final order decision and warranty strategy of the last generation product when upgrading

• 1、College of Management and Economics, Tianjin University, Tianjin 300072

Abstract：With the continuous innovation of technology, products, especially high-tech products, are constantly updated and consumers\' preferences change frequently. In order to attract consumers to buy the latest generation of products and relieve manufacturers\' pressure on the warranty of the old generation products, this paper proposes a new warranty strategy to consider trade-in strategy. From the perspective of consumer utility, this study deduces the mean quantity of LTB and the mean function of total cost to meet the warranty requirements of the discontinued products under two warranty strategies by taking the residual value of the old generation products and consumers\' willingness to trade in into account. Based on the deterministic results, the simulation method is adopted to obtain the optimal quantity of LTB and the corresponding total cost.The results show that the total cost of trade in warranty is lower than the traditional warranty strategy. The application of the trade-in strategy, the trade-in price of consumers and the quantity of the final order (LTB) when the trade-in strategy is adopted are further analyzed.

Keywords： industrial engineering trade in consumer utility rebates LTB quantity