Service Management: using a batch in a service contract

I recently came across an interest challenge in SAP.  A company has both serialized products and batch managed products.  The catch is that a service contract can cover batch managed products as well as serialized products.  This is something I have never tried before, but upon inspection, standard SAP does not appear to this account.  So, from my perspective, I see 2 clear paths to handle this.

1. Add a bunch of custom code and fields to the following objects
   1. Service Contracts
   2. Service Notifications
   3. Batch records (for enhanced warranty as well)
   4. Service Orders
   5. Repair Sales orders
2. Create an equipment record for each batch

Both of these have pro’s and con’s.

Option 1 involves a lot of development work, as well as some creativity to try to leverage the service contract/warranty functionality in the SD and SM transactional data.

Option 2 doubles the amount of master data, but allows you to leverage all the standard functionality in the service realm for batches.

Is there a better way that I’m missing?  has anyone else encountered this requirement?  I would love to hear your take.

Thanks for reading,