Some aspects in estimating warranty and post-warranty repair demands

Abstract

When customers buy a product, they are often eligible for free repairs for a certain warranty period. In this article, we study some important aspects, which are often overlooked in the literature but are of interest to the manufacturer, in estimating both warranty and post-warranty repair demands. We consider that the installed base of the product (i.e., the number of units of the product actually in use) varies with time due to both new sales and units being taken out of service. When estimating warranty and post-warranty repair demands, we explicitly address the fact that customers may not always request repairs for failed units. For the case where the product failure time distribution is exponential, we derive the closed-form expressions for both types of repair demands of a single unit and of the time-varying installed base. The insights into some risk-related quantities are also presented. Furthermore, the proposed model is extended by considering delayed warranty claims that are frequently seen in practice. Numerical examples illustrate that understanding both types of repair demands and the related decision variables is important for managing the obligatory and profitable repair services. © 2013 Wiley Periodicals, Inc. Naval Research Logistics 60: 499–511, 2013