Abstract

This paper deals with estimating the warranty cost of a product sold under Korean Lemon Law. Based on age and usage under Korean Lemon Law, a two dimensional warranty policy is applied and we consider repair (minimal repair) service and refund based on usage rate. We estimate the expected total warranty cost of a product for the two dimensional warranty. Numerical examples are also studied to investigate the effects of the model parameters on the expected total warranty cost using simulation approach.

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