Optimal periodic replacement policy for repairable products under free-repair warranty

Abstract

This paper investigates the effects of a free-repair warranty on the periodic replacement policy for a repairable product. Cost models are developed for both a warranted and a non-warranted product, and the corresponding optimal periodic replacement policies are derived such that the long-run expected cost rate is minimized. For a product with an increasing failure rate function, structural properties of these optimal policies are obtained. By comparing these optimal policies, we show that the optimal replacement period for a warranted product should be adjusted toward the end of the warranty period. Finally, examples are given to numerically illustrate the impact of a product warranty on the optimal periodic replacement policy.