Abstract
The expected warranty servicing cost is critically dependent on the reliability of the product. One way of improving product reliability is through redundancy but this is achieved at the expense of increased manufacturing cost. Redundancy is worthwhile if the reduction in expected warranty servicing cost exceeds the increase in the manufacturing cost. This paper examines optimal strategies with quality uncertainty where nonconforming items have inferior performance characteristics relative to conforming ones. It also examines the effect of life testing on the optimal strategies.
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