17. Satisfying Warranty Claims on an Obsolete Product

—Dwayne Cole, College of Business Administration, Florida A&M University

—Burak Kazaz, Martin J. Whitman School of Management, Syracuse University

—Scott Webster, W. P. Carey School of Business, Arizona State University

Abstract

We investigate a problem faced by a durable-goods manufacturer of a product that is no longer manufactured but still under warranty. A supplier announces that a component of the product will be phased out and specifies a deadline for the final order. A common response in traditional practice is to place a final order sufficient to cover future warranty claims. We analyze and compare this policy with a policy that uses a trade-in program to supplement the final order ...

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