Cost analysis of warranty policies. (English) Zbl 0552.90033

Nguyen, D. G.; Murthy, D. N. P.

Nav. Res. Logist. Q. 31, 525-541 (1984).

Expressions, bounds, and approximations for the expected costs to the consumer and the expected profits to the manufacturer or vendor from the sale of products under different warranty policies are derived. Using models and methods from renewal theory and reliability theory, especially so-called free replacement policies and pro rata policies are compared under the assumption that the failure distribution is NBU (new better than used).

Reviewer: W.-R.Heilmann

MSC:

90B25	Reliability, availability, maintenance, inspection in operations research
60K05	Renewal theory

Keywords:

bounds; approximations; expected costs; warranty policies; free replacement policies; failure distribution; NBU

References:

[1]	A-Hameed, Journal of Applied Probability 12 pp 18– (1975)
[2]	Amato, Management Science 22 pp 1391– (1976)
[3]	Amato, The Accounting Review pp 854– (1976)
[4]	Anderson, Operational Research Quarterly 28 pp 739– (1977)
[5]	Arnold, Journal of Applied Probability 18 pp 378– (1981)
[6]	Balachandran, The Accounting Review pp 115– (1981)
[7]	The Numerical Treatment of Integral Equations, Claredon Press, Oxford, 1977.
[8]	and , Statistical Theory of Reliability and Life Testing, Probability Models, Holt, Rinehart and Winston, New York, 1975.
[9]	Baxter, Technometrics 24 pp 151– (1982)
[10]	”Warranty Policies: Consumer Value vs. Manufacturer Costs,” unpublished Ph.D. thesis, Stanford University, 1981.
[11]	Blischke, Naval Research Logistics Quarterly 22 pp 681– (1975)
[12]	Blischke, Naval Research Logistics Quarterly 28 pp 193– (1981)
[13]	Introduction to Stochastic Processes, Prentice-Hall, Englewood Cliffs, NJ, 1975. · Zbl 0341.60019
[14]	Glickman, Management Science 22 pp 1381– (1976)
[15]	Heschel, Industrial Engineering 3 pp 14– (1971)
[16]	Karmarkar, AIIE Transactions 10 pp 380– (1978)
[17]	Lowerre, Journal of Industrial Engineering 19 pp 359– (1968)
[18]	Mamer, Naval Research Logistics Quarterly 29 pp 345– (1982)
[19]	Menke, Management Science 15 pp 542– (1969)
[20]	Patankar, Management Science 27 pp 237– (1981)
[21]	Pyke, Annals of Mathematical Statistics 29 pp 737– (1958)
[22]	Applied Probability Models with Optimization Applications, Holden-Day, San Francisco, 1970. · Zbl 0213.19101
[23]	Smith, Proceedings Cambridge Philosophical Society 53 pp 175– (1957)
[24]	”An Investigation Using Computer Simulation of a Model of Product Warranty Effect on Operating Income,” unpublished Ph.D. thesis, Syracuse University, 1975.
[25]	”Warranty Planning and Evaluation,” Proceedings 1981 Spring Annual Conference and World Productivity Congress AIIE, 478–483 (1981).