Warranty cost analysis: Increasing warranty repair times

Sarah Marshall, Richard Arnold, Stefanka Chukova and Yu Hayakawa

Applied Stochastic Models in Business and Industry, 2018, vol. 34, issue 4, 544-561

Abstract: In this study, we model the warranty servicing costs under nonrenewing and renewing free repair warranties. We assume nonzero increasing repair times with the warranty cost depending on the length of the repair time. An increasing geometric process is used to model the consecutive repair times. We introduce the generalised alternating renewal process, which is an alternating process with cycles consisting of an item's operational time followed by the corresponding repair time. We derive analytical results for a generalised alternating renewal process with a finite time horizon and use them to evaluate the warranty costs over the warranty period and over the life cycle of the product under the nonrenewing free repair warranty and renewing free repair warranty. Properties of the model are demonstrated through a simulation study and through the application to warranty claims data from an automotive manufacturer.

Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:wly:apsmbi:v:34:y:2018:i:4:p:544-561

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