Optimal warranty policy with inspection for heterogeneous, stochastically degrading items

Ji Hwan Cha, Maxim Finkelstein, Gregory Levitin

Research output: Contribution to journalArticlepeer-review

28 Scopus citations


A new renewable warranty policy is suggested that increases probability of its success and can decrease warranty costs. An item from a heterogeneous population is inspected at some intermediate time during a warranty period and, if the observed level of degradation/wear exceeds some optimally predetermined value, it is screened out and replaced by the new one. Deterioration in homogeneous subpopulations of items is modeled by the inverse-Gaussian (IG) process, whereas heterogeneous populations are described by the mixed IG process. Probabilistic and cost analyses of the model are performed and the detailed illustrative example is presented and discussed.

Original languageEnglish
Pages (from-to)1142-1152
Number of pages11
JournalEuropean Journal of Operational Research
Issue number3
StatePublished - 16 Mar 2021

Bibliographical note

Funding Information:
The authors are grateful to the reviewers for helpful comments and advices. The work of the first author was supported by Basic Science Research Program through the National Research Foundation of Korea (NRF) funded by the Ministry of Education (Grant Number: 2019R1A6A1A11051177 ).

Publisher Copyright:
© 2020 Elsevier B.V.


  • Heterogeneous populations
  • Maintenance
  • Mixed inverse-Gaussian process
  • Optimal warranty policy
  • Renewable warranty


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