An Examination of Correlation Effects Among Warranty Claims

This paper models & examines the impact of correlation in a failure arrival process which generates a warranty claim with each occurring failure. We show that even slight positive correlation in the warranty claims arrival process can significantly impact the expected number of claims observed, and the length of the transient period. We are not suggesting that renewal processes are necessarily inappropriate or incorrect as models for the arriving warranty claims process. Rather, we emphasize the importance of considering correlation in the claims arrival process, and suggest that more research is needed to explore mathematical models which explicitly consider correlation in the warranty analysis framework.