Approximating Expected Warranty Costs

Edward W. Frees and Seong-Hyun Nam
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Edward W. Frees: Department of Statistics and School of Business, 1155 Observatory Drive, University of Wisconsin, Madison, Wisconsin 53706
Seong-Hyun Nam: Department of Statistics and School of Business, 1155 Observatory Drive, University of Wisconsin, Madison, Wisconsin 53706

Management Science, 1988, vol. 34, issue 12, 1441-1449

Abstract: In this paper, we survey a portion of the literature in the analysis of warranty costs. In order to compare the price of different warranty policies, we review a framework which leads to expressing the expected costs in terms of complex functions arising in renewal theory. These functions and several approximations are discussed. In particular, a straight line approximation performs well.

Keywords: free replacement warranty; pro rata warranty; product life cycle; renewal function (search for similar items in EconPapers)
Date: 1988
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:34:y:1988:i:12:p:1441-1449

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