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Warranty reserving

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  • Charles S. Tapiero
  • Morton J. Posner

Abstract

This paper considers a problem of warranty reserving, namely, the current practice of setting aside part of a product revenue to meet future claims arising from the warranty. We define a Compound Poisson stochastic model for warranty claims and reserve and obtain, using a sample paths technique, the long‐run probability distribution of a warranty reserves, managed under alternative warranties and reserve policies.

Suggested Citation

  • Charles S. Tapiero & Morton J. Posner, 1988. "Warranty reserving," Naval Research Logistics (NRL), John Wiley & Sons, vol. 35(4), pages 473-479, August.
    • Handle: RePEc:wly:navres:v:35:y:1988:i:4:p:473-479
    DOI: 10.1002/1520-6750(198808)35:43.0.CO;2-C
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    References listed on IDEAS

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    1. Michael Spence, 1977. "Consumer Misperceptions, Product Failure and Producer Liability," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 44(3), pages 561-572.
    2. Peter H. Ritchken & Charles S. Tapiero, 1986. "Warranty design under buyer and seller risk aversion," Naval Research Logistics Quarterly, John Wiley & Sons, vol. 33(4), pages 657-671, November.
    3. P. H. Brill & M. J. M. Posner, 1977. "Level Crossings in Point Processes Applied to Queues: Single-Server Case," Operations Research, INFORMS, vol. 25(4), pages 662-674, August.
    4. Walter Y. Oi, 1973. "The Economics of Product Safety," Bell Journal of Economics, The RAND Corporation, vol. 4(1), pages 3-28, Spring.
    5. P. H. Brill & M. J. M. Posner, 1981. "The System Point Method in Exponential Queues: A Level Crossing Approach," Mathematics of Operations Research, INFORMS, vol. 6(1), pages 31-49, February.
    6. Victor P. Goldberg, 1974. "The Economics of Product Safety and Imperfect Information," Bell Journal of Economics, The RAND Corporation, vol. 5(2), pages 683-688, Autumn.
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    Cited by:

    1. Marlin U. Thomas & Sridevi S. Rao, 1999. "Warranty Economic Decision Models: A Summary and Some Suggested Directions for Future Research," Operations Research, INFORMS, vol. 47(6), pages 807-820, December.

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