Usage Intensity-Based Optimal Replace-Repair Strategy for Warranty Items

We herein propose a repair-replace strategy to minimize the expected warranty servicing costs for manufacturers when the items sold with a free repair-replacement warranty policy. Manufacturers usually rectify a failure either by repairing the failed item or by replacing it with a new one when a repairable product fails under warranty. In addition, the rectification action influences the repair and warranty servicing cost. Except for the time or age, the usage intensity is often another essential factor that accounts for the failure of the product, which varies the population of users. Our strategy classified the usage population into several groups and provided different repair actions for various groups.