The optimal extended warranty length of durable-goods-based preventive maintenance behaviour

The extended warranty is an important strategy for the manufacturers to expand their market share. In this work, we studied the optimal extended warranty length considering preventive maintenance behaviour, which mainly avoids the producers and consumers’ moral hazard. Based on the profit function maximization, the optimal extended warranty length under different situations can be achieved. We conducted a simulation analysis to see the influence on preventive maintenance behaviour during the warranty period to the optimal extended warranty length.