This paper compares the two policies which are unsed in Korean electronic appliance industry. Policy I is a general warranty policy under which all of failures during warrenty period (12 months) are repaired without charge. Policy II was proposed recently by a company. Under Policy II, when the product fails until a certain times(6 months), the failed product will be replaced by the new product and all other failures from the certain time to the warrenty period (24 months) will be repaired free. We obtain the expected total warranty costs per product and necessary conditions under which the Policy II has a meaning in economic point of view without or with discount rate. Some numericla examples are considered.
