Warranty Data Analysis: A Review

Warranty claims and supplementary data contain useful information about product quality and reliability. Analysing such data can therefore be of benefit to manufacturers in identifying early warnings of abnormalities in their products, providing useful information about failure modes to aid design modification, estimating product reliability for deciding on warranty policy and forecasting future warranty claims needed for preparing fiscal plans. In the last two decades, considerable research has been conducted in warranty data analysis (WDA) from several different perspectives. This article attempts to summarise and review the research and developments in WDA with emphasis on models, methods and applications. It concludes with a brief discussion on current practices and possible future trends in WDA

Monopoly Provision of Product Warranties

This article considers the problem of monopoly provision of product warranties when consumers are heterogeneous and when the probability of product malfunction depends on both the quality of the product and on the consumers' care. The optimal warranty contract is characterized to maximize the expected profit for the monopolistic seller. The properties of the optimal contract depend on the nature of the product. If the quality of the product is more important as a determinant of reliability than consumer care then standard results are obtained; that is, a positive correlation between warranties and reliability and between price and reliability are observed, and higher type buyers buy more expensive versions of the product with higher warranties. On the other hand, if consumer care is more important in increasing reliability, the results are exactly opposite; for example, there is a negative correlation between warranty coverage and reliability. Also, when consumer care is important, higher type buyers buy versions of the product with lower warranty and lower quality. Other features of the optimal warranty contract are also characterized in this paper

Effects of Warranty on Purchase Decision of Electronic Products: An Empirical Research from the Perspective of Bangladesh

Warranty can be defined as a part of the common law system that states and assures the consumers that a product or service is fit for the purpose for which it is sold. This study focuses on effects of warranty in the purchase decision of electronic products in Bangladesh. After conducting an effective exploratory research to gain initial idea and knowledge, the study proceeded further to draw a conclusion about the research topic. Through the convenience sample selection process, 100 samples were selected from the target population. The literature review elaborated and explained about the past and recent research works on the product warranty in different countries on different samples. The questionnaire consisted of 33 questions under eight key variables including Service Provider's Accountability, Reliability of Product, Long Term Warranty, Short Term Warranty, Branded Product, Non-branded Product, Country of Origin and Risk Reliever. The regression analysis was used here for the analysis of the data. Finally it is concluded that six factors out of eight have an impact over purchase decision of the consumers of electronic products. Keywords: Warranty, Short Term Warranty, Long Term Warranty, Reliability of the Product, Branded Product, Non Branded Product, Purchase Decision

Reliability vs. Total Quality Cost: part selection criteria based on field data, combined optimal customer and business solution

Most privately owned businesses are formed to generate profits. Every year, manufacturers loose a portion of potential profits on covering warranty claims. To minimize warranty costs companies focus on product quality improvements. In this project real historical warranty data of three electronic sensors have been analyzed. Two-parameter Weibull distribution to measure sensors’ reliability have been used. Monte Carlo simulations have been implemented to calculate Total Quality Costs (TQC). The results show that cost of improved products may have an adverse impact on business profit – the main business objective. It has been demonstrated how reliability and TQC interact with each other and specified optimum business solutions. A new ratio representing combined business and customer objectives was introduced – Quality Cost Ratio (QCR). A new term has been proposed – Excessive Quality Cost (EQC). Improved process of selection parts and materials were proposed

Determination of optimal pricing and warranty policies

An important problem facing manufacturers in today\u27s competitive market is the determination of the selling price of a product and its warranty period. A longer warranty may serve as a signal of product reliability; however, it may also lead to an increase in cost and hence reduce the profit if the product reliability is low. A burn-in test may be used to improve the reliability of products prior to their shipment.;This research presented integrated models for maximizing the expected profit for products that are subjected to a burn-in test and sold with warranty. The burn-in time, warranty period, and price were chosen as three decision variables in these models. The price and warranty period were treated as marketing variables and a simple multiplicative form was used to model their effect on sales. Solution procedures were developed for several warranty policies. These procedures are applicable for any failure time distribution. Three failure time distributions were further investigated and formulas for optimal solutions were derived. Finally, two sets of data were used to illustrate the application of the models. Two computer programs were developed to solve the models both parametrically and nonparametically

Warranty Period and Product Price Optimization for Remanufactured Products

This study considers a remanufactured electrical product under a tiered warranty policy. Warranty is key in ensuring a good manufacturer—consumer relationship. Manufacturers hope to minimize warranty costs while consumers believe that good warranty promises better product quality and reliability. This Thesis presents an optimal warranty period from the perspective of a manufacturer to maximize the total expected profits, while ensuring sustained consumer relation. We use real data from a local company with a global supply chain to provide a numerical example

Non-Price Determinants of Automotive Demand: Restyling Matters Most

This paper analyzes market share changes in automobile and light truck submarkets. We find that new product, as measured by restyling, represents the most consistent, dominant determinant of demand. On average a ten percent reduction in relative price would yield only one-tenth the market share impact of a restyling. Alternatively, one would have to double one’s relative advertising expenditures to match the impact of a restyling. Several demand determinants not previously modeled, including rebranding and warranty curtailments, were detrimental to domestic manufacturer market shares. Safety appliance adoptions and changes in vehicle reliability had minimal impact on demand.automobile pricing, warranty, safety appliances, rebranding, reliability

On assumptions in optimisation of warranty policies

Optimisation of warranty policy has been a hot research topic in both operations research and statistics communities since warranty providers hope to balance cost-benefit analysis in the nowadays competitive market. Some assumptions are inevitably needed for such research. Most of the existing publications, however, make assumptions that may not be true in practice, based on which biased decision may be made. This paper discusses pitfalls in the assumptions, which include causes of warranty claims, pattern of warranty claims, warranty claim models, field reliability vs product reliability, the relationship between usage and age in 2-dimensional warranty. A real-world example is used to elaborate the arguments

Reliability-Informed Life-Cycle Warranty Cost Analysis: A Case Study on a Transmission in Agricultural Equipment

In agricultural and industrial equipment, both new and remanufactured systems are often available for warranty coverage. In such cases, it may be challenging for equipment manufacturers to properly trade-off between the system reliability and the cost associated with a replacement option (e.g., replace with a new or remanufactured system). To address this problem, we present a reliability-informed life-cycle warranty cost (LCWC) analysis framework that enables equipment manufacturers to evaluate different warranty policies. These warranty policies differ in whether a new or remanufactured system is used for replacement in the case of product failure. The novelty of this LCWC analysis framework lies in its ability to incorporate real-world field reliability data into warranty policy assessment using probabilistic warranty cost models that consider multiple life cycles. First, the reliability functions for the new and remanufactured systems are built as the time-to-failure distributions that provide the best-fit to the field reliability data. Then, these reliability functions and their corresponding warranty policies are used to build the LCWC models according to the specific warranty terms. Finally, Monte Carlo simulation is used to propagate the time-to-failure uncertainty of each system, modeled by its reliability function, through each LCWC model to produce a probability distribution of the LCWC. The effectiveness of the proposed reliability-informed LCWC analysis framework is demonstrated with a real-world case study on a transmission used in some agricultural equipment