This thesis is concerned with the warranty cost models of a product subject to two types of failure ; type 1 failure corrected by minimal repair and type 2 failure removed only by replacement.
We consider two hybrid warranty policies which involve an initial free service period followed by a pro-rata period. The difference of the two is whether the warranty is renewed or not when type 1 failure occurs during its free service period.
The expected warranty costs under the two hybrid policies are obtained. When these failure distributions are Weibull and exponential respectively, the cost behavior is examined by changing the free service period, the pro-rata service period, or the values of parameters.
A profit maximization model is also studied under the above two policies with free service period only. The model is analyzed in the following three cases; determination of the optimal warranty period given price, the optimal price given warranty period, and both the optimal price and warranty period. A sufficient condition for uniqueness of the optimal solution in each case is obtained and sensitivity analysis for various factors is performed.