Optimal age-replacement policy for repairable products under renewing free-replacement warranty

Authors:
Yu-Hung Chien;Jih-An Chen
Affiliations:
Department of Applied Statistics, National Taichung Institute, Taichung City, Taichung, Taiwan;Department of Business Administration, Kao-Yuan University, Lu-Chu Hsiang, Kaohsiung Country, Taiwan
Venue:
International Journal of Systems Science
Year:
2007

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Abstract

This paper investigates the effects of a renewing free-replacement warranty (RFRW) on the age replacement policy for a repairable product with a general failure model. In the general model, there are two types of failure when the product fails. One is type I failure (minor failure), which can be removed by a minimal repair; and the other is type II failure (catastrophic failure), which can be removed only by a replacement. After a minimal repair, the product is operational but the failure rate of the product remains unchanged. For both warranted and nonwarranted products, cost models are developed, and the corresponding optimal replacement ages are derived such that the long-run expected cost rate is minimized. The impacts of the RFRW on the optimal replacement age are investigated analytically. Finally, numerical examples are given for illustration.