Post-Warranty Replacement Models for the Product under a Hybrid Warranty

Abstract

In this article, by considering both a limited number of failure replacements and a limited number of random working cycles as warranty terms, a hybrid warranty (HW) is designed from the manufacturer’s point of view to warrant the product that does successive projects at random working cycles. The warranty cost produced by HW is derived and analyzed. By defining that HW warrants the product, two types of post-warranty replacement models are investigated from the consumer’s point of view to ensure the reliability of the product through HW, i.e., customized post-warranty replacement and uniform post-warranty replacement. Depreciation expense is integrated into each post-warranty replacement. The expected cost rate model is presented for each post-warranty replacement and some special cases are obtained by setting parameters in the expected cost rate. Finally, sensitivities on both HW and post-warranty replacements are analyzed in numerical experiments. It is shown that when a limited number of failure replacements or/and a limited number of random working cycles are introduced to a warranty, the warranty cost can be reduced; and the performance of the uniform post-warranty replacement is superior to the customized post-warranty replacement.

Keywords

• hybrid warranty
• random working cycle
• post-warranty replacement
• depreciation expense
• cost rate