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Product warranty in the market has a significant role in both protection and promotion. The manufacturer faces a problem of optimizing the warranty period considering a trade-off between the warranty cost and marketing competition. Meanwhile, for a two-dimensional (2D) warranty, customers with different usage rates have various perceptions on warranty period. Based on the relationships between nominal usage rate and customer’s usage rates, three different cases of designed 2D warranty period are discussed. Considering the variations in customers perceptions, a demand function based on attractiveness index is proposed to describe the boosted sales volume. Meanwhile, the expected warranty cost of 2D warranty based on a bivariate approach is derived when the product failures are minimally repaired. A profit model is developed to estimate the manufacturer’s expected profit of providing a longer warranty period. The optimal extension of 2D base warranty period is obtained by maximizing the manufacturer’s expected profit. Numerical examples in the automobile market are also conducted to validate the proposed model.

For products with a two-dimensional (2D) warranty policy, customers are heterogeneous on usage rates. In this study, we propose a systematic warranty-reliability-price combination decision model for repairable products with a 2D Free Replacement-Repair Warranty (FRW). The effects of customers’ heterogeneous usage rate on both reliability design and the demand function of 2D warranted products are considered in the model. The optimal warranty-reliability-price combination is obtained by maximizing total expected profits over products’ life cycle. Two marketing scenarios are discussed, i.e., a stable market and a dynamic market. The optimality conditions for the two scenarios are investigated. The applicability of the model is demonstrated via a case study of an industrial 3D printer manufacturer, and it shows the consistency of the model.