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 Burn-In under Complex Failure Processes: Some New Perspectives

Ph.DDOCTOR OF PHILOSOPH

Warranty cost analysis under imperfect repair

Cataloged from PDF version of article.Increasing market competition forces manufacturers to offer extensive warranties. Faced with the challenge of keeping the associated costs under control, most companies seek efficient rectification strategies. In this study, we focus on the repair strategies with the intent of minimizing the manufacturer’s expected warranty cost expressed as a function of various parameters such as product reliability, structure of the cost function and the type of the warranty contract. We consider both one- and two-dimensional warranties, and use quasi renewal processes to model the product failures along with the associated repair actions. We propose static, improved and dynamic repair policies, and develop representative cost functions to evaluate the effectiveness of these alternative policies. We consider products with different reliability structures under the most commonly observed types of warranty contracts. Experimental results indicate that the dynamic policy generally outperforms both static and improved policies on highly reliable products, whereas the improved policy is the best performer for products with low reliability. Although, the increasing number of factors arising in the analysis of two-dimensional policies renders generalizations difficult, several insights can be offered for the selection of the rectification action based on empirical evidence.Samatlı, GülayM.S