Production and Operations Management 1993
CONFORMANCE QUALITY AND REPLACEMENT COSTS UNDER WARRANTY
Abstract
In this paper, I investigate the impact of the conformance quality of a durable product on manufacturer's and user's replacement costs while the product is under warranty. I first relate conformance quality to reliability and then examine its effects on warranty costs to manufacturer and customer under both pro‐rata and free‐replacement warranties. In particular, I show that the reduction in customer's cost is generally contingent on more stringent quality improvement than the reduction in manufacturer's costs. I also discuss the value of inspection, and I present an application based on real data.
- DOI
- 10.1111/j.1937-5956.1993.tb00101.x
- Sources
- openalex