Warranty Cost Analysis with an Alternating Geometric Process

TL;DR

This paper models warranty costs using an alternating geometric process to account for product aging and repair times, providing new analytical results and simulations for different warranty types.

Contribution

It introduces the alternating geometric process (AGP) for warranty cost analysis, incorporating product aging and repair time dynamics, with new theoretical results and practical evaluation methods.

Findings

Derived new results for AGP in finite horizon

Evaluated warranty costs for various warranty types

Demonstrated properties through simulation

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.