Optimising age-replacement and extended non-renewing warranty policies in lifecycle costing

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2011-04-01T00:00:00Z

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Elsevier Science B.V., Amsterdam.

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Article

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0925-5273

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Shaomin Wu, Philip J. Longhurst, Optimising age-replacement and extended non-renewing warranty policies in lifecycle costing, International Journal of Production Economics, Volume 130, Issue 2, April 2011, Pages 262-267.

Abstract

This paper analyses the life cycle cost of equipment protected by both base and extended warranty policies from a consumer's perspective. We assume that the equipment has two types of failure: minor and catastrophic. A minor failure can be corrected with minimal repair whereas a catastrophic failure can only be removed by a replacement. It is assumed that equipment is maintained at no charge to the consumer during the warranty period, whereas the consumer is fully charged for any maintenance on failures after the extended warranty expires. We formulate the expected life cycle cost of the equipment under a general failure time distribution, and then for special cases we prove that the optimal replacement and extended warranty policies exists where the expected life cycle cost per unit time is minimised. This is examined with numerical examples. & 2011 Elsevier B.V. All rights reserved.

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NOTICE: this is the author’s version of a work that was accepted for publication in International Journal of Production Economics. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in International Journal of Production Economics, VOL 130, ISSUE 2, (2011) DOI:doi:10.1016/j.ijpe.2011.01.007

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