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What does "at its discretion" mean in the following sentence?

Dual Gadgets undertakes, at its discretion and cost, to repair or replace defective equipment covered by warranty in 3.b., provided that Buyer has notified in writing of the defects promptly...

Normally, I'd think it means "they can choose to", but they cannot choose to not repair or replace the parts, that's the whole point of the warranty, they have to do it. What do you think they mean by that?

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I believe the distinction here is between choices, as you pointed out. The choices appear in the next phrase: "[...] to repair or replace defective equipment [...]".

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