Warranty return policies for products with unknown claim causes and their optimisation

In practical warranty services management, faults may not always be found in claimed items by warranty service agents, which is the well-known no-fault found phenomenon (for example, caused by a loose connection between parts, or simply human error). This phenomenon can contribute more than 40% of reported service faults in electronic products and it can be due to faults of manufacturers or product users. Little research, however, considers this phenomenon in warranty management since faults are normally assumed to be found in the claimed items. On the basis of different levels of testing, this paper proposes three warranty return policies, which decide whether new items should be sent to warranty claimants or not. It then derives and compares the expected costs of the policies, and obtains the optimal warranty periods under supply chain environments. The paper illustrates the results with artificially generated data.