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Determination of an appropriate warranty length for the lifetime of theproduct is an important issue to the manufacturer. In this article, optimalwarranty length of the product for the combined free replacement and thepro-rata warranty policy is computed based on the Type-II unified hybridcensored data. A non-linear pro-rata warranty policy is proposed in thiscontext. The optimal warranty length is obtained by maximizing an expectedutility function. The expectation is taken with respect to the posteriorpredictive model for the time-to-failure data. It is observed that thenon-linear pro-rata warranty policy gives a larger warranty length with maximumprofit as compared to linear warranty policy. Finally, a real-data set isanalyzed in order to illustrate the advantage of using non-linear pro-ratawarranty policy.

Determination of Bayesian optimal warranty length under Type-II unified hybrid censoring scheme