Replacement costs under warranty: Cost moments and time variability
Operations Research
Discounted and per unit costs of product warranty
Management Science
The physics of the Mt/G/ ∞ symbol Queue
Operations Research
Calculating the reserve for a time and usage indexed warranty
Management Science
Computation of warranty reserves for non-stationary sales processes
Computation of warranty reserves for non-stationary sales processes
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We consider funding an interest-bearing warranty reserve with contributions after each sale. The problem for the manufacturer is to determine the initial level of the reserve fund and the amount to be put in after each sale, so as to ensure that the reserve fund covers all of the warranty liabilities with a prespecified probability over a fixed period of time. We assume a nonhomogeneous Poisson sales process, random warranty periods, and a constant failure rate for items under warranty. We derive the mean and variance of the reserve level as a function of time and provide a robust heuristic to aid the manufacturer in its decision.