Two-dimensional Warranty Cost Analysis for Second-hand Products

In spite of the recent steady increase of the volume of the second-hand markets, often customers remain in doubt regarding the quality and durability of the secondhand products. Aiming to reduce and share this uncertainty, dealers offer warranty on their products. Offering warranty for second-hand products is a relatively new marketing strategy employed by dealers of used electronic equipment, furniture, automobiles, etc. Usually, for used products, the dealer’s expected warranty cost is a function of product reliability, past age and usage, servicing strategy and conditions and terms of the warranty policy/contract. Sometimes the offered policy is limited by two parameters, typically the product age and usage after the sale. This type of policies is referred to as two-dimensional warranty policies. In this article, we develop statistical models for estimating the dealer’s expected warranty cost for second-hand products sold with two-dimensional free repair/replacement warranty

Some contributions to modeling usage sensitive warranty servicing strategies and their analyses

Providing a warranty as a part of a product\u27s sale is a common practice in industry. Parameters of such warranties (e.g., its duration limits, intensity of use) must be carefully specified to ensure their financial viability. A great deal of effort has been accordingly devoted in attempts to reduce the costs of warranties via appropriately designed strategies to service them. many such strategies, that aim to reduce the total expected costs of the warrantor or / and are appealing in other ways such as being more pragmatic to implement - have been suggested in the literature. Design, analysis and optimization of such servicing strategies is thus a topic of great research interest in many fields. In this dissertation, several warranty servicing strategies in two-dimensional warranty regimes, typically defined by a rectangle in the age-usage plane, have been proposed, analyzed and numerically illustrated. Two different approaches of modeling such usage sensitive warranty strategies are considered in the spirit of Jack, Iskandar and Murthy (2009) and Iskandar (2005). An `Accelerated Failure Time\u27 (AFT) formulation is employed to model product degradation resulting due to excessive usage rate of consumers. The focus of this research is on the analysis of warranty costs borne by the manufacturer (or seller or third party warranty providers) subject to various factors such as product\u27s sale price, consumer\u27s usage rate, types and costs of repair actions. By taking into account the impact of the rate of use of an item on its lifetime, a central focus of our research is on warranty cost models that are sensitive to the usage rate. Specifically, except the model in Chapter 4 where the rate at which an item is used is considered to be a random variable; all other warranty servicing policies that we consider, have usage rate as a fixed parameter, and hence are policies conditional on the rate of use. Such an approach allows us to examine the impact of a consumer\u27s usage rate on the expected warranty costs. For the purpose of designing warranties, exploring such sensitivity analysis may in fact suggest putting an upper limit on the rate of use within the warranty contract, as for example in case of new or leased vehicle warranties. A Bayesian approach of modeling 2-D Pro-rated warranty (PRW) with preventive maintenance is considered and explored in the spirit of Huang and Fang (2008). A decision regarding the optimal PRW proportion (paid by the manufacturer to repair failed item) and optimal warranty period that maximizes the expected profit of the rm under different usage rates of the consumers is explored in this research. A Bayesian updating process used in this context combines expert opinions with market data to improve the accuracy of the parameter estimates. The expected profit model investigated here captures the impact of juggling decision variables of 2-D pro-rated warranty and investigates the sensitivity of the total expected profit to the extent of mis-specification in prior information

Optimal Warranty Period for Free-replacement Policy of Agm Batteries

The objective of this study is to analyze the suitability of the age-based warranty model and a millage based warranty model for absorbent glass mat batteries (AGM) for the automobile industry. The battery life expectancy can be assessed and described by a combination of different terms such as: state of health (SOH), deep of discharge (DOD), state of energy (SOE) and state of charge (SOC). However, using actual data from the field, the implementation of reliability engineering and statistical modeling we aim to calculate optimal limits for warranty policies that minimize warranty costs. The outcomes of this research will enable battery manufacturers, motor companies and warranty managers in decisions making strategies for cost savings in warranty projects without negatively affecting customer satisfaction

Warranty and Maintainability Analysis for Sensor Embedded Remanufactured Products in Reverse Supply Chain Environment

Remanufactured products are very popular with consumers due to their appeal to offer the latest technology with lower prices compared to brand new products. The quality of a remanufactured product induces hesitation for many consumers, in regards to its efficacy and reliability. One stratagem that remanufacturers could employ to encourage customer security are product warranties. This paper studies and scrutinizes the impact that would be had by offering renewing warranties on remanufactured products. This study was able to determine the optimal costs of warranty for two-dimensional non-renewable warranty offered on remanufactured products using the simulation model and design of experiments

Meeting the challenge of zero carbon homes : a multi-disciplinary review of the literature and assessment of key barriers and enablers

Within the built environment sector, there is an increasing pressure on professionals to consider the impact of development upon the environment. These pressures are rooted in sustainability, and particularly climate change. But what is meant by sustainability? It is a term whose meaning is often discussed, the most common definition taken from the Bruntland report as “sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs” (World Commission on Environment and Development, 1987). In the built environment, the sustainability issues within the environment, social and economic spheres are often expressed through design considerations of energy, water and waste. Given the Stern Report’s economic and political case for action with respect to climate change (Stern, 2006) and the IPCC’s Fourth Assessment Report’s confirmation of the urgency of the climate change issue and it’s root causes (IPCC, 2007), the need for action to mitigate the effects of climate change is currently high on the political agenda. Excess in carbon dioxide concentrations over the natural level have been attributed to anthropogenic sources, most particularly the burning of carbon-based fossil fuels. Over 40% of Europe’s energy and 40% of Europe’s carbon dioxide emissions arise from use of energy in buildings. Energy use in buildings is primarily for space heating, water heating, lighting and appliance use. Professionals in the built environment can therefore play a significant role in meeting targets for mitigating the effects of climate change. The UK Government recently published the Code for Sustainable Homes (DCLG, 2006). Within this is the objective of development of zero carbon domestic new build dwellings by 2016. It is the domestic zero carbon homes agenda which is the focus of this report. The report is the culmination of a research project, funded by Northumbria University, and conducted from February 2008 to July 2008, involving researchers from the Sustainable Cities Research Institute (within the School of the Built Environment) and academics, also from within the School. The aim of the project was to examine, in a systematic and holistic way, the critical issues, drivers and barriers to building and adapting houses to meet zero carbon targets. The project involved a wide range of subject specialisms within the built environment and took a multi-disciplinary approach. Practitioner contribution was enabled through a workshop. The focus of this work was to review the academic literature on the built environment sector and its capabilities to meet zero carbon housing targets. It was not possible to undertake a detailed review of energy efficiency or micro-generation technologies, the focus of the research was instead in four focussed areas: policy, behaviour, supply chain and technology.What follows is the key findings of the review work undertaken. Chapter One presents the findings of the policy and regulation review. In Chapter Two the review of behavioural aspects of energy use in buildings is presented. Chapter Three presents the findings of the review of supply chain issues. Chapter Four presents the findings of the technology review, which focuses on phase change materials. A summary of the key barriers and enablers, and areas for future research work, concludes this report in Chapter Five. Research is always a work in progress, and therefore comments on this document are most welcome, as are offers of collaboration towards solutions. The School of the Built Environment at Northumbria University strives to embed its research in practical applications and solutions to the need for a low carbon economy

Simple heuristics for push and pull remanufacturing policies

Inventory policies for joint remanufacturing and manufacturing have recently received much attention. Most efforts, though, were related to (optimal) policy structures and numerical optimization, rather than closed form expressions for calculating near optimal policy parameters. The focus of this paper is on the latter. We analyze an inventory system with unit product returns and demands where remanufacturing is the cheaper alternative for manufacturing. Manufacturing is also needed, however, since there are less returns than demands. The cost structure consists of setup costs, holding costs, and backorder costs. Manufacturing and remanufacturing orders have non-zero lead times. To control the system we use certain extensions of the familiar (s,Q) policy, called push and pull remanufacturing policies. For all policies we present simple, closed form formulae for approximating the optimal policy parameters under a cost minimization objective. In an extensive numerical study we show that the proposed formulae lead to near-optimal policy parameters.inventory control;remanufacturing;heuristics

Insurance: an R-Program to Model Insurance Data

Data sets from car insurance companies often have a high-dimensional complex dependency structure. The use of classical statistical methods such as generalized linear models or Tweedie?s compound Poisson model can yield problems in this case. Christmann (2004) proposed a general approach to model the pure premium by exploiting characteristic features of such data sets. In this paper we describe a program to use this approach based on a combination of multinomial logistic regression and [epsilon]-support vector regression from modern statistical machine learning. --Claim size,insurance tariff,logistic regression,statistical machine learning,support vector regression

Data analysis and simulation for warranties and golf handicaps

In this dissertation, we discuss the application of data analysis and numerical simulation in order to gain insight into problems related to warranty cost management and the effectiveness of the golf handicap system. Despite the commonalities of the approaches, we will discuss these problems in turn. For many moderately high value items with a substantial sales volume (such as automobiles), a warranty is used as an important element of marketing products as a better warranty typically signals higher product quality to customers. Much recent research on modeling and optimization of servicing costs for Non-Renewing Free Replacement Warranties (NR-FRW) assumes that the consumers’ usage profile is known. Such an assumption is unrealistic for many consumer durables. In such cases, it would be pragmatic to assume that the usage rate should be modeled by a probability distribution. This research seeks to model and minimize the expected costs of servicing strategies for NR-FRW; this is accomplished using a numerical technique known as simulated annealing while considering a variety of usage rate distributions. The relationship between the usage rate distribution and product life-length is modeled using the Accelerated Failure Time (AFT) formulation. We use a copula based approach to capture the adverse impact of increasing product usage rate on its time-to-failure. We obtain a unique copula based on the marginal distributions of both the usage rate and the product life-length, which we call the AFT Copula. The underlying dependency of our copula is evaluated using non-parametric measures of association. The Mean Time to First Failure (MTTF) indicates which usage rate distributions most likely correspond to highly reliable products. We found that certain warranty servicing strategies were more cost efficient than other commonly used approaches. We use data analysis techniques on a traction motor data set to study the practicality of our approach. The results obtained from this data are in qualitative agreement with our previous results. The ability of a golfer is measured by a player’s handicap which is an estimate of his/her potential based on previously played games. The handicap system is administered by the United States Golf Association (USGA); it is designed to enable players of differing abilities to compete against each other on an equitable basis. Most previous studies in golf have focused on analyzing golf scores. The goal of this research is to study the effectiveness of the current handicapping system. We use the AT&T Golf Tournament League data set for our study; this data set contains scores and handicaps of golfers from almost 100 different tournaments. In this study, we use data analysis methods including filtering to remove outliers and goodness of fit tests to determine the most appropriate distribution for the golf scores. Because each handicap requires a separate fit, we develop a technique of minimizing the average ranks of the candidate distributions in order to obtain the single best distribution for all handicaps. For this data set, the generalized extreme value distribution is the most appropriate. In order to investigate the effectiveness of the handicap system, we conduct simulations of competitions between golfers with varying handicaps based on the empirical and fitted data for golf scores. These simulations indicate that a player with a lower handicap has an advantage over a player with a higher handicap