This paper analyses the life cycle cost of equipment protected by both base andextended warranty policies from a consumer's perspective. We assume that theequipment has two types of failure: minor and catastrophic. A minor failure canbe corrected with minimal repair whereas a catastrophic failure can only beremoved by a replacement. It is assumed that equipment is maintained at nocharge to the consumer during the warranty period, whereas the consumer is fullycharged for any maintenance on failures after the extended warranty expires. Weformulate the expected life cycle cost of the equipment under a general failuretime distribution, and then for special cases we prove that the optimalreplacement and extended warranty policies exists where the expected life cyclecost per unit time is minimised. This is examined with numerical examples. &2011 Elsevier B.V. All rights reserved.
展开▼
