A warranty cost model with intermittent and heterogeneous usage

Estimation of warranty servicing costs during the product life cycle is of great importance to the manufacturers. Earlier research has usually assumed that the product is in continuous use and the usage intensity is the same for all buyers. This paper deals with the problem of estimating the expected warranty cost for the case where the item usage is intermittent and of heterogeneous usage intensity over the product life cycle when sales occur continuously. The failure of the item is dependent on the number of times, the duration the unit has been used and the usage intensity. Also, the product sales depend on product price and design quality. We consider repairable and nonrepairable items and obtain results for the free-replacement warranty (FRW) and Pro-rata Warranty (PRW) policy. Furthermore, the models consider the infl uences of price level, investment growth and warranty execution effects for the expected warranty costs. It also incorporates the cash fl ows of warranty reserve costs at any time intervals during the product life cycle. A numerical example is given to illustrate the application of the models