Cost Analysis of a Stepdown Warranty Policy

This paper proposes a stepdown warranty policy: the warranty period consists of subintervals where the manufacturer's compensation is constant for warranty failures and decreases with the subinterval's number. Manufacturer's unit warranty cost is analyzed for both irrepairable and repairable products. we assume that only minimal repairs are performed for repairable items. Comparison with the free replacement polity indicates that the proposed policy has a longer warranty period if tile warranty reserves are the same and that manufacturer`s unit warranty cost is smaller if the warranty periods are tile same. Some numerical examples are also given.