Calculation of the Cost of Warranty Policies as a Function of Estimated Life Distributions.
Technical progress rept.,
UNIVERSITY OF SOUTHERN CALIFORNIA LOS ANGELES DEPT OF QUANTITATIVE BUSINESS ANALYSIS
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Two types of warranties are analyzed. These are the free-replacement warranty, under which failed items are replaced free of charge until a specified total operating time has been achieved, and the pro-rata warranty, under which items which fail prior to a specified time are replaced at pro-rata cost to the buyer. Both the buyers and sellers points of view are considered. The basis of the analysis is a comparison of warrantied and unwarrantied otherwise identical items with regard to long-run cost to the buyer and long-run profit to the seller.
- Economics and Cost Analysis