Modelling a renewing free repair warranty using an alternating geometric process
Richard Arnold1, Stefanka Chukova1, Yu Hayakawa2, and Sarah Marshall3
1. School of Mathematics and Statistics, Victoria University of Wellington
2. School of International Liberal Studies, Waseda University, Japan
3. Department of Mathematical Sciences, Auckland University of Technology
The cost of rectifying warranty claims can be significant and therefore accurate estimation of the warranty cost is important. We model the product life cycle using an alternating geometric process (AGP), in which there is an alternating sequence of operational and repair times. To accommodate the ageing of the product and repair equipment, we use a decreasing geometric process to model the consecutive operational times and an increasing geometric process to model the consecutive repair times. We model the warranty claims process and evaluate the warranty servicing costs under non-renewing, renewing, and restricted renewing free repair warranties. In this talk, theoretical results relating to the renewing and restricted renewing free repair warranties will be presented. Properties of the model will be demonstrated using a simulation study.