| Abstract: | Warranty is an important factor for consumer durable products in the marketplace. However, the warranty cost may drastically reduce profitability. Burn in is a common procedure to improve the quality of products after they have been produced, but it is also costly. By taking both the burn-in procedure and warranty policy into consideration, several cost functions can be formulated and optimized. Assuming that the failure-rate function of the product has a bathtub shape, it is shown that the optimal burn-in times that minimize the considered cost functions never exceed the first change point of the failure-rate function. The continuous dependence of the optimal burn-in times on the model parameters and the underlying distribution is also established. © 1997 John Wiley & Sons, Inc. Naval Research Logistics 44: 199–209, 1997 |
