Two-dimensional failure-free warranty policies: Two-dimensional point process models

Two-dimensional failure-free warranty policies: Two-dimensional point process models

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Article ID: iaor19982193
Country: United States
Volume: 43
Issue: 2
Start Page Number: 356
End Page Number: 366
Publication Date: Mar 1995
Journal: Operations Research
Authors: , ,
Keywords: cost benefit analysis, probability
Abstract:

A two-dimensional warranty policy is characterized by a region in a two-dimensional plane with the horizontal axis representing time and the vertical axis the usage. In this paper, we study two-dimensional failure-free warranty policies for nonrepairable items that require the manufacturer to replace all items which fail under warranty by new ones at no cost to the buyer. We derive expressions for the expected warranty cost per item sold and for the expected life cycle cost for four different warranty regions. We illustrate these by numerical examples and discuss some resulting implications for the consumer and the manufacturer.

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