Optimal Costs of a Two-dimensional Warranty Servicing Strategy with an Imperfect Repair Option

A warranty policy for a product should balance the interests of both producer and consumer. Consumer protection is typically provided by a guarantee of replacement or some form of repair of the product failing within a promised warranty period, while an approach to provide a corresponding protection for the manufacturer is to limit the maximum usage allowed under warranty. Such warranty policies are two-dimensional, and the warranty expires at the end of the promised warranty period or upon reaching the maximum usage allowed, whichever occurs sooner. From a manufacturer’s point of view, reducing warranty costs is an issue of great interest. In this paper, we look at two different servicing strategies for a two-dimensional warranty scheme involving minimal and imperfect repairs. Our work demonstrates the modeling and analysis of costs under these servicing strategies and compare their performance to other strategies that have been investigated in the literature.