Citation:
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.