An integrated mathematical framework for production planning is presented for companies providing product-warranty packages through both their forward and after-sales supply chains. This model integrates manufacturers and merchandisers of the pre- and after-sales operations and incorporates the interactions between forward and after-sales chains. The demands and qualified output of facilities are stochastic. We demonstrate that service levels depend on the local reliability of facilities and that there are critical prices at which the order of profitability of the warranty options changes. This order becomes more fragile in price-sensitive markets and more stable in warranty-sensitive markets.
