Aviation Warranties: The Costs and Risks.
NAVAL POSTGRADUATE SCHOOL MONTEREY CA
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The purpose of this thesis is to determine the types and characteristics of warranties used in commercial and military aircraft procurements. The research also includes a brief history of warranty development and Congressional legislation. The costs and risks associated with the use of warranties is discussed in generic form from the viewpoint of the Government and the contractor. Several warranty pricing models are presented, including the free-replacement warranty and the pro-rata warranty as viewed by the buyer and the seller, the rebate model, the prorated rebate model, and a look at using learning curves as a warranty support predictor. The study concludes that 1 across-the-board application of commercial aviation warranties to military aircraft procurements may not be proper, 2 no one warranty type is cost effective for every aircraft procurement, and 3 there is no standard pricing model that will work for every warranty situation.
- Economics and Cost Analysis