Costing a New Car Warranty

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Cerone, Pietro and Summit, Raymond (2003) Costing a New Car Warranty. Asia-Pacific Journal of Operational Research, 20 (1). pp. 89-101. ISSN 0217-5959


The reliability of a motor vehicle depends on the reliability of its numerous components. Failure data from an Australian automobile manufacturer have been analyzed in this paper and a distribution to represent the failure data has been sought. Cost models for honoring a two-year/50,000 km warranty have been developed. As failed components have been replaced with new ones, the process has been modeled as a renewal. Numerical methods have been used to solve the renewal equation. Both in-warranty and post-warranty claims have been considered and models have been developed for each case. The cost of maintaining a two-year warranty has then been compared with the cost of extended warranties of three and five years.

Item type Article
Subjects Historical > Faculty/School/Research Centre/Department > School of Engineering and Science
Historical > FOR Classification > 0199 Other Mathematical Sciences Information Systems
Keywords ResPubID5655, warranty, car manufacture, renewal process
Citations in Scopus 2 - View on Scopus
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