This volume presents concepts policies and cost models for various long-term warranty and
maintenance contracts. It offers several numerical examples for estimating costs to both the
manufacturer and consumer. Long-term warranties and maintenance contracts are becoming
increasingly popular as these types of aftersales services provide assurance to consumers that
they can enjoy long reliable service and protect them from defects and the potentially high
costs of repairs. Studying long-term warranty and service contracts is important to
manufacturers and consumers alike as offering long-term warranty and maintenance contracts
produce additional costs for manufacturers service providers over the product's service life.
These costs must be factored into the price or the manufacturer dealer will incur losses
instead of making a profit. On the other hand the buyer consumer needs to weigh the cost of
maintaining it over its service life and to decide whether or not these policies are worth
purchasing. There are a number of complexities involved in developing failure and cost models
for these policies due to uncertainties concerning the service life usage pattern maintenance
work and long-term costs of rectifications. Mathematical models for predicting failures and
expected costs for various one-dimensional long-term warranty policies are developed at the
system level and analyzed by taking into account the uncertainties in connection with longer
coverage periods and the rectification costs over the warranty period. Failures and costs are
modeled using stochastic techniques and illustrated by means of numerical examples for
estimating costs to the manufacturer and consumer. Various rectification policies are proposed
and analyzed. The models developed here can be used to aid in managerial decisions on
purchasing products with long-term warranty policies and maintenance contracts or outsourcing
maintenance.
