Repair-limit risk-free warranty policies with imperfect repair

摘要

The current competitive market environment requires manufacturers to continuously provide better service and support. As a result, warranty considerations emerge as a significant instrument for increasing product marketability. In this paper, we propose a new warranty policy, the repair-limit risk-free warranty with a threshold point on the number of repairs, where replacement is deemed to be more cost effective thereafter. Consumers are better off with this than with a traditional free-repair policy since they could be compensated with a new product in case of premature failures. As for the manufacturers, it not only offers extra marketing incentives, but also reduces the possibility of high-cost lawsuits due to the products with "proven" bad quality. Some useful results of the warranty cost of imperfectly repaired products are derived through a censored quasi-renewal process.