The authors discuss the two-attribute warranty policy in which two types of warranty characteristics, such as product age and mileage in the y-year-m-mile protection plan in the automobile industry, are employed simultaneously as criteria in determining the warranty eligibility of a failed product. Based on the Poisson regression model and von Neumann-Morgenstern expected utility theory, they develop two kinds of two-attribute warranty policies: a fixed two-attribute warranty policy in which all customers are offered the same warranty plan, and a flexible two-attribute warranty policy in which customers are permitted to choose any warranty plan among the numerous plans furnished by the producer. A numerical example is presented to illustrate the procedure for determining the optimal warranty price in the fixed two-attribute warranty model and for generating a set of warranty plans for the same warranty price in the flexible warranty model. It appears desirable from both the producers’ and consumers’ viewpoints to convert the classical single-attribute warranty policy into a fixed two-attribute policy or, even further, into a flexible two-attribute policy.
