Predicting and reducing warranty costs by considering customer expectation and product performance

This dissertation develops from quality loss function to warranty loss function in which customer expectation is also considered to be a variable. First, Taguchi\u27s quality loss function for the larger-the-better case, which is different from the smaller-the better and nominal-the-best cases, has been assimilated into the other two by introducing a term called the target-mean ratio. Further topics addressed include the implications of a finite target on the classification of LTB characteristics, a new concept of a Complementary Characteristic , operating window, complexity, and SN ratio based on complexity. A warranty is a buyer\u27s confidence owing to the seller\u27s assurance to the buyer that a product will perform as stated or implied. The quality loss function only accounts for immediate issues within manufacturing facilities, whereas the warranty cost occurs during customer use. Therefore, this dissertation develops a methodology that can predict warranty probability and warranty costs on the basis of customer expectation in addition to product performance for smaller-the-better, nominal-the-best, and larger-the-better cases. In robust engineering, the signal-to-noise ratio is used to improve the robustness of a system. Most products and processes have multiple quality characteristics or output responses. Therefore, this research has been conducted to propose a metric that can be used for multi-response experiments for minimizing quality loss and improving robustness at the same time. The methodology proposed incorporates all three types of characteristics smaller-the-better, nominal-the-best, and larger-the-better and is based on components of quality loss --Abstract, page iii

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

Embedded Options and the Case Against Compensation in Contract Law

Despite the fact that compensation is the governing principle in contract law remedies, it has tenuous historical, economic and empirical support. A promisor's right to breach and pay damages (which is subject to the compensation principle) is only a subset of a larger family of termination rights that do not purport to compensate the promisee for losses suffered when the promisor walks away from the contemplated exchange. These termination rights can be characterized as embedded options that serve important risk management functions. We show that sellers often sell insurance to their buyers in the form of these embedded options. We explain why compensation is of little relevance to the option price agreed to by the parties, which is a function of the value of the option to the buyer, its cost to the seller and the market in which they transact. We thus propose a novel justification for why penalty liquidated damages may be higher than seller's costs: they are option prices that reflect the value of the options to the buyer. The regulation of liquidated damages is thus tantamount to price regulation, which is outside the realm of contract law. Moreover, in light of the heterogeneity among optimal option prices, we also make the case against having an expectation damages default rule to begin with. In thick markets, we argue for enforcing the parties ex ante risk allocation with market damages. In thin markets, we propose that parties be induced to agree explicitly with respect to all termination rights, including breach damages, by the threat of specific performance of their contemplated exchange or, in the case of consumers, by a default rule that provides them a termination option at no cost.

A Surrogate Measure Of Customer Satisfaction In The Manufacture Of Printed Wiring Boards

The objective of this research is to determine and develop a model that is capable of accurately measuring customer satisfaction for different industries and in particularly for the Printed Wiring Boards (PWB) Manufacturers. The new model will incorporate data not being collected or utilized by the survey method of determining customer satisfaction. The method used is a weighted average of satisfaction among several researched categories with percentages that accurately represent the relative importance of multiple facets of the PWB manufacturers customer satisfaction. A very common term in quality assurance is that What is not measured accurately can not be evaluated or managed correctly, thus customer satisfaction is a very important aspect of any business, industry, or government. A satisfied customer will do more business and recommend it to other potential customers. Thus the business will grow and more revenues result. On the other hand, an unsatisfied customer will abandon the business and encourage more customers not to get involved with the same business so the business may decline and lose its market share and profitability. The categories that contribute to PWB customer satisfaction will be determined by conducting surveys among the leaders and best in the business of the PWB industry in addition to discovery of related articles that define the categories of the customer satisfaction for the PWB manufacturers. Once the categories are determined, the research concentrates on the weighting of the categories that most contribute to the PWB customer\u27s satisfaction and a measure of satisfaction is derived. The model is easily applied to any other kind of PWB business or service industry. The model is based on empirical methods that will give an accurate measurement for the PWB customer\u27s satisfaction. This in turn allows organizations the opportunity for improving customer satisfaction and increasing market share. The algorithm is based on characteristics deemed important by customers. Thus the customer satisfaction index can be computed and monitored on a regular basis without costly surveys. The major difference between this new model and the standard methods of determining customer satisfaction using the surveys is that this model will utilize data available with the proposals, sales, shipping, receiving, quality, engineering, manufacturing, and purchasing departments. The developed method to measure customer satisfaction utilizing internal data can be more cost effective, more accurate, can provide individual customer satisfaction scores, can measure whether or not these individual scores are statistically lower than the majority, and can provide satisfaction measures in real time none of which can be supplied by the survey method

Consideration of the relevance of standard quality techniques in Mass Customisation

The business philosophy of Mass Customisation (MC) implies rapid response to customer requests, high efficiency and limited cost overheads of customisation. Furthermore, it also implies the quality benefits of the mass production paradigm are guaranteed. However, traditional quality science in manufacturing is premised on volume production of uniform products rather than of differentiated products associated with MC. This creates quality challenges and raises questions over the suitability of standard quality engineering techniques. From an analysis of relevant MC and quality literature it is argued the aims of MC are aligned with contemporary thinking on quality and that quality concepts provide insights into MC. Quality issues are considered along three dimensions - product development, order fulfilment and customer interaction. The applicability and effectiveness of conventional quality engineering techniques are discussed and a framework is presented which identifies key issues with respect to quality for a spectrum of MC strategies

HEAT PUMP AND AIR CONDITIONING GRADING SYSTEMS AND METHODS

An expectation module determines an expected average power consumption of a heat pump for a predetermined period as a function of indoor and outdoor temperatures of the building during the predetermined period. A difference module determines a power difference between an average power consumption of the heat pump during the predeter mined period and the expected average power consumption of the heat pump for the predetermined period. A grade determination module determines a grade of the heat pump for the predetermined period based on the power difference of the predetermined period. A reporting module generates a displayable report including the grade of the heat pump for the predetermined period

Battery Second Use: A Framework for Evaluating the Combination of Two Value Chains

A Battery Second Use (B2U) strategy is the design and development of a battery system with the intention of having it serve two purposes: (1) the initial use in the vehicle and (2) another mobile or stationary application. An optimal battery second use strategy requires the design and use of the battery to maximize the value of the system over its entire extended life cycle. Within this thesis a framework is developed which allows the evaluation of tradeoffs along the operational second use value chain

Cost analysis for pricing and distribution policies : staff study; Management Services technical study, no. 2

https://egrove.olemiss.edu/aicpa_guides/1166/thumbnail.jp

Statistical Study of Supply Chain Developmental Training on Original Equipment Manufacturer’s Defect Rates

Learning is an amalgam of a student’s desire to understand, the willingness of an instructor to educate, the subject taught, its quality, and the delivery environment. Most importantly, a learning goal, both actionable and investment worthy, must exist for effective learning to take place. The ability to learn and then implement new concepts and ideas is the significant difference separating our species from other life on this planet. It has led to diverse discoveries such as disease vaccines, nuclear energy, the automobile, electronics, and rocket planes to name just a few.Science advances in small steps and big leaps. Inventions increase daily to improve the quality of life for this planet’s population. At the center of all these ideas are researchers looking to tease out the next piece of information for our world’s knowledge base. This body of knowledge (BOK) grows at an ever-expanding rate, doubling every few years. This doubling period is shrinking rapidly as more knowledge is accumulated.In the manufacturing world of products, this BOK is brought to bear on products that, hopefully, stand above their competition. If a product is excellent, consumers and producers are satisfied. The consumer gets the best quality for the price while the producer gets the best price for the quality offered. If product quality and price are right, there is someone willing to buy it.However, what happens when the opposite is experienced and the product, at its asking price, is of poor quality? Buyers are less willing to spend and quick to mention the lack of quality or defects found. Defects can impact the maker’s selling price and translate into extensive efforts to make the customer whole through warranty. The producer also risks the loss of their customer (brand loyalty) if the product is deficient in quality.Within this dissertation, training methods, useful practices, experiences, and the body of training knowledge will be presented in defense of developmental training and will conclude with a case study exploration into the connections between supply chain developmental training and defect reductions at an Original Equipment Manufacturer (OEM) using multiple statistical techniques