A repair–replace strategy based on usage rate for items sold with a two-dimensional warranty

When a repairable item fails under warranty, the manufacturer has the option of either repairing the failed item or replacing it with a new one. In this paper, a repair–replace strategy is discussed for the manufacturer of a product sold with a two-dimensional warranty. The strategy is based on a specified region of the warranty defined in terms of age and usage with the first failure in the region rectified by replacement and all other failures being minimally repaired. An accelerated failure time (AFT) model is used to allow for the effect of usage rate on item degradation.