A warranty based bilateral multi-issue negotiation approach

Purpose – The purpose of this paper is to propose a warranty-based bilateral automated multi-issue negotiation approach. Design/methodology/approach – A methodology for bilateral automated negotiation process is developed considering the targets such as warranty attractiveness, warranty cost, mean time between failures, spare parts cost to the end user over the useful life of the life. The negotiation methodology is explained using different cases of negotiation. The optimization for each negotiation step is carried out using genetic algorithm with elitism strategy. Findings – The result after optimization indicates that the desired target values are achieved and manufacturer obtained desired profit margin. Practical implications – Application of automated negotiation model is illustrated using a real life case of an automobile engine manufacturer. The proposed approach helps the manufacturer of any product to develop a methodology for carrying out the negotiation process. The approach also results into taking warranty-related decisions at the design stage. Originality/value – This paper contributes in proposing a generalized methodology for warranty-based negotiation in which the negotiation is carried out between the manufacturer and the customer.