Warranty cost analysis for nonrepairable services products

Many services products are installed in a complex system that is operated only when the entire system is completed. The time from their installation to commissioning, called a dormant state in this paper, may take several years for systems such as complete buildings or aircraft. Warranties for the products may cover the time starting from their installation to a certain time. Warranty cost on replacements for such products is different from normal products without any dormant state. This paper analyses the replacement cost for nonrepairable services products from a manufacturer perspective. We consider four warranty policies which include two types of warranty terms (i.e., non-renewing or renewing) and two types of replacements (i.e., with preventive replacement or replacement only upon failures). Relationships between the failure patterns at the dormant state and at the operating state are also discussed. Numerical examples and sensitivity analysis are presented to demonstrate the applicability of the methodology described in the paper.