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Warranty Cost Analysis with an Alternating Geometric Process

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  • Richard Arnold
  • Stefanka Chukova
  • Yu Hayakawa
  • Sarah Marshall

Abstract

In this study we model the warranty claims process and evaluate the warranty servicing costs under non-renewing and renewing free repair warranties. We assume that the repair time for rectifying the claims is non-zero and the repair cost is a function of the length of the repair time. To accommodate the ageing of the product and repair equipment, we use a decreasing geometric process to model the consecutive operational times and an increasing geometric process to model the consecutive repair times. We identify and study the alternating geometric process (AGP), which is an alternating process with cycles consisting of the item's operational time followed by the corresponding repair time. We derive new results for the AGP in finite horizon and use them to evaluate the warranty costs over the warranty period and over the life cycle of the product under a non-renewing free repair warranty (NRFRW), a renewing free repair warranty (RFRW) and a restricted renewing free repair warranty (RRFRW(n)). Properties of the model are demonstrated using a simulation study.

Suggested Citation

  • Richard Arnold & Stefanka Chukova & Yu Hayakawa & Sarah Marshall, 2018. "Warranty Cost Analysis with an Alternating Geometric Process," Papers 1804.06707, arXiv.org.
    • Handle: RePEc:arx:papers:1804.06707
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    References listed on IDEAS

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    1. Kao, Edward P. C. & Smith, Marion Spokony, 1996. "Computational approximations of renewal process relating to a warranty problem: The case of phase-type lifetimes," European Journal of Operational Research, Elsevier, vol. 90(1), pages 156-170, April.
    2. Pham, Hoang & Wang, Hongzhou, 1996. "Imperfect maintenance," European Journal of Operational Research, Elsevier, vol. 94(3), pages 425-438, November.
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