Warranties: What are they? What do they really cost?

Based on their generality and/or current usage, two types of warranties were examined in detail. The first was the combination policy which has an initial free replacement period followed by a pro-rate period during which the replacement item´s cost is calculated on a sliding scale. The other was the fleet warranty which guarantees a purchaser of a large quantity of like items an average field performance. The combination policy and fleet warranty were evaluated for a nonrepairable module within a commercial product that was being sold directly to the marketplace and to a system integrator. In this particular example, the fleet warranty had significant advantages to the manufacturer over the combination policy. The fleet warranty concept merits additional study