Cost analysis of warranty policies

D. G. Nguyen and D. N. P. Murthy

Naval Research Logistics Quarterly, 1984, vol. 31, issue 4, 525-541

Abstract: This article analyzes two general warranty policies involving an initial free replacement period, followed by a pro rata period. We examine the short‐run total costs and longrun average costs under these policies. Formulas for both consumer costs and manufacturer profits under warranty are derived. We also study the expected number of purchases over the product life cycle under both policies. Bounds for the expected total costs and expected number of purchases are obtained for the case where the failure distribution of the item is new better than used.

Date: 1984
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Persistent link: https://EconPapers.repec.org/RePEc:wly:navlog:v:31:y:1984:i:4:p:525-541

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