Reliability Distributions, Warranties, and Cost


O'Leary, Daniel J.   (1997, ASQ)   Picker International, Inc., Cleveland, OH

Annual Quality Congress, Orlando, FL    Vol. 51    No. 0
QICID: 10632    May 1997    pp. 854-860
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Article Abstract

The cost of a warranty may be accounted for as factory overhead, product overhead, or applied individually to each unit sold. The method of cost accounting affects warranty policy, as do warranty types and product reliability. Modeling the cost is best done using the escrow method, in which every warranty transaction affects the account. Modeling the reliability may employ E[N], the expected number of returns. E[N] = F(W)/S(W), where W is the length of the free warranty period; F(W) is cumulative distribution function; and S(W) a survivor function. Either an exponential or Weibull method may be used to produce the distribution and survivor functions. For example, the exponential cumulative distribution is 1 - exp(-t/(), where t is time or some other life parameter and ( is the mean time to failure or mean time between failures. Legal factors also are important. The Uniform Commercial Code covers both types of warranties: explicit and implied. This paper provides a warranty taxonomy for: legal aspects, bearing the cost, ending the warranty, units covered, and warranty after action.


Warranties,Reliability,Cost management

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