A company is providing Warranty Service against its product. How does it manage Store, Inventory and Accounts for Warranty Service?

Product which is received from a customer against warranty claim, it is not inventory item and its possession is not belong to Company..

This product will keep separately in Books and  Store under Warranty Management Policy

No accounting entry will conduct for this transaction but if any product is issued to customer as replacement then accounting entry will be made.

For every product we estimate its failure rate, then categories it with replace and repair required. The amount of replace inventory is allocated for the project or plan. This inventory on a quarterly basis issued to service department. 

for example: By statistics we knows that the failure rate of  product "A" is2% (replacement). So our1st MPS set to Qty102 against target  of100 Units. For next MPS this2% re-checked from the service inventory and planned accordingly.  

In our organisation warrenty claim are  not accounted in inventory. We conside its as FOC item or replacement item. 

We wont take it for any commercial calculation.