Two-Dimensional Warranties for a System with Imperfect Preventive Maintenance Actions  
Author Minjae Park


Co-Author(s) Bermawi P. Iskandar; Dong Ho Park


Abstract This paper considers a two-dimensional warranty policy for a repairable product with increasing failure rate. The product is warranted by taking into account both age and usage and the warranty is expired when the product reaches a specified age or specified usage, whichever comes first. In this paper, we develop a cost model to evaluate the expected total warranty cost from the manufacturer’s perspective under a certain cost structure and determine the optimal warranty period under the two-dimensional warranty policy under study. As a practical application of the proposed optimal warranty policy, we present the optimal warranty strategy under a certain type of lemon law, by which the manufacturer is required to either refund or replace the purchased product if the product failures can’t meet certain conditions of repair thresholds set by the law. In addition, we discuss the optimal premium prices for the warranty policy from the manufacturer’s perspective.


Keywords Cost model, Expected cost rate, Lemon law, Refund, Repair time threshold
    Article #:  DSBFI23-49
Proceedings of 2nd ISSAT International Conference on Data Science in Business, Finance and Industry
January 8-10, 2023 - Da Nang, Vietnam