Cost analysis on renewable full-service warranties for multi-component systems

Jun Bai, Hoang Pham

Research output: Contribution to journalArticle

35 Scopus citations

Abstract

This paper presents a novel warranty policy named 'full-service warranty' (FSW) for repairable multi-component systems under which the failed component(s) or subsystem(s) will be replaced, in addition, a (perfect) maintenance action will be performed to reduce the chance of future system failure, both free of charge to consumers. Such a policy is desirable for both consumers and manufacturers since consumers receive better warranty service compared to the traditional free repair policy, at the same time, manufacturers may enjoy increase in sale as well as cost-saving due to improved product reliability by the maintenance action. Under the renewable FSW policy, from manufacturers' point of view, cost models for complex systems with series, parallel, series-parallel (s-p) and parallel-series (p-s) structure are developed. Exact expressions for the first and second centered moments of warranty cost per product sold are obtained. Sensitivity analysis is performed based on a numerical example.

Original languageEnglish (US)
Pages (from-to)492-508
Number of pages17
JournalEuropean Journal of Operational Research
Volume168
Issue number2 SPEC. ISS.
DOIs
StatePublished - Jan 16 2006

All Science Journal Classification (ASJC) codes

  • Computer Science(all)
  • Modeling and Simulation
  • Management Science and Operations Research
  • Information Systems and Management

Keywords

  • Full service
  • Maintenance
  • Renewable warranty
  • System reliability
  • Warranty cost

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