Warranty cost analysis using alternating quasi-renewal processes with a warranty option

Abstract

This article analyses a repairable deteriorating system with quasi-renewal operating and repair times during warranty. To establish the importance of non-negligible repair times modelled with quasi-renewal processes in warranty cost analysis, a fixed warranty model is developed and the results are compared with an existing model using expected warranty cost. Sensitivity analysis and graphical illustrations are provided to highlight the effect of various cost parameters on the expected warranty cost by means of three different distributions. In order to examine the cost implications to the customer and manufacturer, an extended warranty model in which a manufacturer offers a warranty option to the customer with two different policies, has been proposed. Based on the long-run average cost per unit time, profit analysis has been carried out for the manufacturer as it is an essential aspect of warranty management. This article emphasises the incorporation of non-negligible ‘improved’ repair times during warranty.