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A Bayesian Approach to Replacement Policy with Extended Warranty  

Jung, Ki Mun (Department of Informational Statistics, Kyungsung University)
Publication Information
Journal of Applied Reliability / v.13, no.4, 2013 , pp. 229-239 More about this Journal
Abstract
This paper reports a manner to use a Bayesian approach to derive the optimal replacement policy. In order to produce a system with minimal repair warranty, a replacement model with the extended warranty is considered. Within the warranty period, the failed system is minimally repaired by the manufacturer at no cost to the end-user. The failure time is assumed to follow a Weibull distribution with unknown parameters. The expected cost rate per unit time, from the end-user's viewpoints, is induced by the Bayesian approach, and the optimal replacement policy to minimize the cost rate is proposed. Finally, a numerical example illustrating to derive the optimal replacement policy based on the Bayesian approach is described.
Keywords
Bayesian approach; expected cost rate per unit time; extended warranty; minimal repair; replacement model;
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