A comprehensive analysis of warranty claims and optimal policies

Nowadays many products, such as 3C products (Computer, Communication and Consumer Electronics) and cars, consist of software and hardware. The causes of warranty claims of such products may be attributed to software specific failures, hardware specific failures, software-hardware interaction failures and human errors. Apparently, those causes may be dependent. For example, one may claim warranty due to the malfunction of the embedded software in a product item and then the entire item may be replaced. Nevertheless, the existing research on warranty management studies mainly concentrates on warranty analysis of hardware subsystems, assuming that the warranty claims are statistically independent of those caused by the failures of software subsystems or human factors, that is, the interactions between those causes are neglected.

This paper investigates warranty costs incurred due to those three subsystems with a focus on their interactions. It estimates the costs due to different cause, develops integrated warranty cost models and optimises warranty policies considering the above possible combinations. Numerical examples are given to illustrate the proposed models.