Cost analysis on renewable full-service warranties for multi-component systems

This paper presents a novel warranty policy named ‘full-service warranty’ FSW) for repairable multi-component systems under which the failed component(s) or subsystem(s) will be replaced; in addition, a (perfect) maintenance action will be performed to reduce the chance of future system failure, both free of charge to consumers. Such a policy is desirable for both consumers and manufacturers since consumers receive better warranty service compared to the traditional free repair policy; at the same time, manufacturers may enjoy increase in sale as well as cost-saving due to improved product reliability by the maintenance action. Under the renewable FSW policy, from manufacturers' point of view, cost models for complex systems with series, parallel, series–parallel (s–p) and parallel–series (p–s) structure are developed. Exact expressions for the first and second centered moments of warranty cost per product sold are obtained. Sensitivity analysis is performed based on a numerical example.