Two-dimensional extended warranty menu design and pricing with usage rate heterogeneity and transferability
本文提出一个菜单式延长保修设计框架，整合可转让和不可转让保修选项，基于使用率定价和差异化服务水平，通过多项Logit模型优化价格与服务以最大化利润。
Extended warranty (EW) is an option to customers to pay for extending the basic warranty of purchased products. Recently, EW is critical for improving after-sales profitability as well as customer loyalty. Nevertheless, conventional EWs are constrained on first owner of the product, which means the EW expires when the product ownership transferred. Furthermore, the EWs are often offered to customers with uniform issues and same price. However, the utility of an EW offer differs to customers of products with different usage rates and usage patterns. To address these issues, this paper proposes a menu-based design framework that integrates both transferable EW (T-EW) and non-transferable EW (NT-EW) options, incorporating usage-based pricing and differentiated service levels. The expected costs for both T-EW and NT-EW are first derived on the basis of actual usage rates. Customer choice behaviour is then modelled using a multinomial logit (MNL) model, capturing how customers trade off between price, service coverage, and transferability when making purchase decisions. The prices and service levels of each EW option are jointly optimised to maximise the expected profit. Numerical experiments are provided to illustrate the consideration of transferability and usage rate heterogeneity.