A Cost Model for Warranty Period Determination on Serial Components

Customer care and warranty options have become one of critical components of marketing. However, the warranty is known as an indication of quality, but Warranty in its basic assumptions is a procedure to handle the product cost tradeoff on its life cycle between producer, retailer and customer. Time – cost trade off from customer point of view versus reliability-cost tradeoff, as a producer/retailer concern on single component has been the main subject of most researches in this field. We have elaborated this problem to sophisticated products with more than one component with serial design basis. The model suggested in this paper redefines the existing approach of cost management to a revenue-based model. However, the optimal warranty period for a general demand distribution is considered in our paper, we have shown the result on case studies with exponential reliability function.