Warranty cost analysis for second-hand products using bivariate approach

Abstract

This research aims to develop two stochastic models, based on the characterisation of the system failure and to compute the expected warranty cost for a second-hand product, when the products are sold with free replacement and/or pro rata warranties. A two-dimensional warranty, which focuses on both age and usage of the system, has been considered for the above warranty models. Further, a numerical example is provided to demonstrate the methodology of the developed model, using bivariate Weibull and exponential distributions. Also, the sensitivity analysis performed exhibits the effect of the parameters on the cost functions.