Expected warranty cost of two-attribute free-replacement warranties based on a bivariate exponential distribution
Many warranty policies offered by manufacturers are limited by two factors, typically time since purchase, and usage of the product. Such policies are referred to as two-attribute (or two-dimensional) warranty policies and can be described in terms of regions in a plane with one axis representing time and the other axis the usage. In this paper, we consider two-attribute warranty policies for non-repairable items. The item failures are described in terms of a bivariate exponential distribution. Analytical expressions are derived for the resulting two-dimensional renewal function and the cost of warranty. An illustrative numerical example is presented to study the effect of correlation between the warranty variables on the cost of warranty. (C) 2000 Elsevier Science Ltd. All rights reserved.
warranty cost bivariate exponential distribution two-attribute warranty policy two-dimensional renewal function correlation