Warranty cost models considering imperfect repair and preventive maintenance

Abstract

Today most products are sold with a warranty that offers financial protection to consumers due to failures during the warranty period. Depending on the type of product, its inherent quality/reliability, and a host of other variables including the warranty period, warranty cost could be a significant portion of the overall product cost. Therefore, it is important to predict warranty cost accurately. However, most existing warranty cost models are not realistic in the sense that perfect or minimal repair is assumed. This paper presents four new warranty cost models which all assume imperfect repair. Imperfect repair restores the system operating state to somewhere between “as good as new” (perfect repair) and “as bad as old” (minimal repair), and could include two extreme cases: minimal and perfect repair. Thus, the warranty cost model with imperfect repair is more general and realistic. Warranty of a k-out-of-n system with imperfect maintenance is also studied in this paper. To gain advantages in highly competitive markets, manufacturers may have to enhance their warranty offerings. In warranty cost models B and D, preventive maintenance of unfailed components is considered. Model D considers a k-out-of-n system with opportunistic maintenance where partial failure is allowed. Under this kind of warranty policy, consumers not only receive free repairs upon premature failures, but also free preventive maintenance. This paper models imperfect repair using quasi-renewal processes introduced by Wang and Pham (1996). Model developments in this paper show that quasi-renewal processes are a convenient tool for warranty modeling with imperfect repair.