Optimal warranty policy with inspection for heterogeneous, stochastically degrading items

Ji Hwan Cha; Maxim Finkelstein; Gregory Levitin

doi:10.1016/j.ejor.2020.07.045

Optimal warranty policy with inspection for heterogeneous, stochastically degrading items

Ji Hwan Cha, Maxim Finkelstein, Gregory Levitin

Department of Statistics

Research output: Contribution to journal › Article › peer-review

29 Scopus citations

Abstract

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 language	English
Pages (from-to)	1142-1152
Number of pages	11
Journal	European Journal of Operational Research
Volume	289
Issue number	3
DOIs	https://doi.org/10.1016/j.ejor.2020.07.045
State	Published - 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.

Keywords

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

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10.1016/j.ejor.2020.07.045

Cite this

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title = "Optimal warranty policy with inspection for heterogeneous, stochastically degrading items",

abstract = "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.",

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doi = "10.1016/j.ejor.2020.07.045",

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AB - 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.

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Optimal warranty policy with inspection for heterogeneous, stochastically degrading items

Abstract

Bibliographical note

Keywords

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