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: | Mi Jie |
Keywords: | marketing |
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.