Abstract: To minimize the warranty cost of manufacturers, a two-dimensional basic warranty optimization model is established based on Copula function. The influence of usage time and usage rate on product failure rate is considered. Moreover, minimal repair and non-equal-strength periodic preventive maintenances are adopted, and the maintenance policies during the warranty period are optimized. By considering the influence of basic warranty period and sale price on product sales, a profit model is established. Considering that manufacturers provide two types of warranty policies, i.e. normative warranty policy and flexible warranty policy, for customers, the basic warranty period and its prices are optimized respectively. The result shows that minimizing warranty cost cannot ensure the maximization of manufacturers’ benefits. However, by increasing the flexibility of warranty policy, customer satisfaction can be promoted, which helps to gain more profits for manufacturers.

Key words: flexible basic warranty; Copula function; warranty cost; preventive maintenance; usage rate