Discounted and Per Unit Costs of Product Warranty

John W. Mamer
Additional contact information
John W. Mamer: Graduate School of Management, University of California, Los Angeles, Ca1ifornia 90024

Management Science, 1987, vol. 33, issue 7, 916-930

Abstract: This paper proposes a detailed model of the costs and benefits to producers and consumers of product warranty. Three common types of product warranty contract are considered. In addition, we explicitly allow for randomness in consumer repurchase behavior and for the possibility of an independent damage process acting on products sold under warranty. The cost criteria considered are discounted costs (profits) and per unit costs (and profits). The model is used to analyze the trade-off between warranty and quality control, and to illustrate the sensitivity of warranty costs to environmental variables.

Keywords: reliability: product warranty; costing: estimation; probability: stochastic model applications (search for similar items in EconPapers)
Date: 1987
References: Add references at CitEc
Citations: View citations in EconPapers (14)

Downloads: (external link)
http://dx.doi.org/10.1287/mnsc.33.7.916 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:33:y:1987:i:7:p:916-930

Access Statistics for this article

More articles in Management Science from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().