Warranty policies and burn-in

Warranty policies and burn-in

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Article ID: iaor19971831
Country: United States
Volume: 44
Issue: 2
Start Page Number: 199
End Page Number: 210
Publication Date: Mar 1997
Journal: Naval Research Logistics
Authors:
Keywords: marketing
Abstract:

Warranty is an important factor for consumer durable products in the market-place. However, the warranty cost may drastically reduce profitability. Burn in is a common procedure to improve the quality of products after they have been produced, but it is also costly. By taking both the burn-in procedure and warranty policy into consideration, several cost functions can be formulated and optimized. Assuming that the failure-rate function of the product has a bathtub shape, it is shown that the optimal burn-in times that minimize the considered cost functions never exceed the first change point of the failure-rate function. The continuous dependence of the optimal burn-in times on the model parameters and the underlying distribution is also established.

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