Track: Reliability and Maintenance
Abstract
In the current consumer market, an equipment’s warranty is one of the important factors in the consumer’s decision-making process. Pro-rata Warranty is considered among the commonly-used warranty policies. Under this warranty, if an equipment fails before the end of the warranty period, it is replaced at a cost that depends on the age of the equipment at the time of failure. The replacement equipment is then covered by an identical new warranty. In this paper, based on the forecasting optimization problem, we develop a mathematical model to study the opportunity provided by the pro-rata warranty for the buyer as well as for the manufacturer, taking into account the influence of the production rates in the equipment degradation consequently on the total cost.