Discounted Warranty Cost of Minimally Repaired Series Systems

Abstract

Many factors should be considered in modeling DWC (discounted warranty cost) of repairable systems or products including system structure, components' failure processes, methods of discounting as well as the warranty policy itself. In this paper, we present DWC models for repairable series systems. In particular, a free repair warranty policy and a pro-rata warranty policy are studied. The impact of repair actions on components' failure times is assumed to be minimal, hence NHPPs are used to describe the failure processes. Two types of discounting methods are considered in this paper: a continuous discount function and a discrete discount function. Expressions for both the expected value and variance of DWC are derived. The applications of our findings can be seen in warranty design, warranty reserve determination and risk analysis. Our approach incorporates the information of system structure, the value of time and the impact of repair actions, which are of great importance to warranty cost prediction and evaluation, but have not been sufficiently studied in the literature of warranty analysis.