Determination of Bayesian optimal warranty length under Type-II unified hybrid censoring scheme

Tanmay Sen, Ritwik Bhattacharya, Biswabrata Pradhan and Yogesh Mani Tripathi

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Abstract: Determination of an appropriate warranty length for the lifetime of the product is an important issue to the manufacturer. In this article, optimal warranty length of the product for the combined free replacement and the pro-rata warranty policy is computed based on the Type-II unified hybrid censored data. A non-linear pro-rata warranty policy is proposed in this context. The optimal warranty length is obtained by maximizing an expected utility function. The expectation is taken with respect to the posterior predictive model for the time-to-failure data. It is observed that the non-linear pro-rata warranty policy gives a larger warranty length with maximum profit as compared to linear warranty policy. Finally, a real-data set is analyzed in order to illustrate the advantage of using non-linear pro-rata warranty policy.

Date: 2020-04
New Economics Papers: this item is included in nep-upt
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