1. Long Term Warranty and After Sales Service

Reliability of products is becoming more and more important due to tough competition in the product market. The effective ways to ensure reliability are to consider design, manufacturing, and after sales services. One way to signal the reliability through after sales service of the product is by offering better warranty terms. The warranty period offered by the manufacturer/dealer has been progressively increasing since the beginning of the 20th century. Currently, a large number of products are being sold with long term warranty policies in the form of lifetime warranty, extended warranty, warranty for used products, and service contracts and performance based maintenance contracts policies. These types of warranties are becoming more and more popular as these provide assurance for a longer reliable service life, protection of customers against poor quality and the potential high cost of failure occurring in products life cycle. Formulation of attractive policies and cost models for these warranties is important to the manufacturer/service agents for estimating future costs to build it into the sales/contract price. This chapter recollects warranty basics in the beginning and then introduces the a number of currently available long term warranty policies to develop foundation for further studies on long term warranty and service contract policies and cost models in the subsequent chapters.