Replacement Costs Under Warranty: Cost Moments and Time Variability

Yves Balcer and Izzet Sahin
Additional contact information
Yves Balcer: University of Wisconsin, Madison, Wisconsin
Izzet Sahin: University of Wisconsin, Milwaukee, Wisconsin

Operations Research, 1986, vol. 34, issue 4, 554-559

Abstract: We consider a product that is sold under one of the two common warranty policies. Under the “pro rata” warranty policy, a failed item is replaced by a new one or is repaired at a cost prorated to the age of the failed item. Under the “free replacement” warranty policy, replacements or repairs during the warranty period are provided by the supplier free of charge to the buyer. Assuming that successive failure times form a renewal process, we derive moments of the total replacement cost for both policies during the product life cycle (0, t ]. We also provide an extension to time-varying failure time distributions in the case of the pro rata warranty policy.

Keywords: 659 renewal theoretical models in warranty analysis; 730 replacement costs under warranty (search for similar items in EconPapers)
Date: 1986
References: Add references at CitEc
Citations: View citations in EconPapers (18)

Downloads: (external link)
http://dx.doi.org/10.1287/opre.34.4.554 (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:oropre:v:34:y:1986:i:4:p:554-559

Access Statistics for this article

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