Optimising Age-Replacement and Extended Non-Renewing Warranty Policies in Lifecycle Costing

This paper analyses the life cycle cost of equipment protected by both base and extended warranty policies from a consumer's perspective. We assume that the equipment has two types of failure: minor and catastrophic. A minor failure can be corrected with minimal repair whereas a catastrophic failure can only be removed by a replacement. It is assumed that equipment is maintained at no charge to the consumer during the warranty period, whereas the consumer is fully charged for any maintenance on failures after the extended warranty expires. We formulate the expected life cycle cost of the equipment under a general failure time distribution, and then for special cases we prove that the optimal replacement and extended warranty policies exists where the expected life cycle cost per unit time is minimised. This is examined with numerical examples. © 2011 Elsevier B.V. All rights reserved

Optimization of replacement policy for a one-component system subject to Poisson shocks

In reliability engineering, system failures may occur due to intrinsic or extrinsic factors. For example, drinking water systems may fail due to ageing and deterioration (i.e., intrinsic factors) or flooding (i.e., extrinsic factors). An interesting question is: for such systems, how should preventive maintenance be scheduled? This paper investigates this question. The paper develops a maintenance policy for repairable systems subject to extrinsic shocks. It assumes that a system may fail due to either intrinsic factors or extrinsic factors. Reliability indexes and the expected long run cost rate are then derived. A numerical example is given to illustrate the theoretical results

Warranty return policies for products with unknown claim causes and their optimisation

In practical warranty services management, faults may not always be found in claimed items by warranty service agents, which is the well-known no-fault found phenomenon (for example, caused by a loose connection between parts, or simply human error). This phenomenon can contribute more than 40% of reported service faults in electronic products and it can be due to faults of manufacturers or product users. Little research, however, considers this phenomenon in warranty management since faults are normally assumed to be found in the claimed items. On the basis of different levels of testing, this paper proposes three warranty return policies, which decide whether new items should be sent to warranty claimants or not. It then derives and compares the expected costs of the policies, and obtains the optimal warranty periods under supply chain environments. The paper illustrates the results with artificially generated data

Why some countries thrive despite corruption : the role of trust on the corruption-efficiency relationship

Author's OriginalWhile it is widely accepted that corruption negatively affects economic growth, why some countries achieve rapid growth under rampant corruption remains a puzzle. We shed light on this issue by examining the role of trust in the corruption-efficiency relationship. We argue that in countries with a relatively high level of trust, corruption tends to be more "efficiency enhancing" than corruption in countries with a relatively low level of trust, which tends to be more "predatory" and thus, inefficient. To illustrate our arguments, we first conduct a qualitative comparative case study of China and the Philippines. We then further subject our ideas to a quantitative test using a pooled data set of 65 countries in two time periods. Both our case study and statistical test support our general hypothesis that trust mitigates the negative effect of corruption on economic growth.Li, S., & Wu, J. (2010). Why some countries thrive despite corruption: The role of trust in the corruption-efficiency relationship. Originally presented at the Academy of International Business U.S. Northeast Chapter Regional Meeting, Portsmouth, New Hampshire. Subsequently published in Review of International Political Economy, 17(1), 129-154. doi:10.1080/0969229080257744

Generalized integrated importance measure for system performance evaluation: application to a propeller plane system

The integrated importance measure (IIM) evaluates the rate of system performance change due to a component changing from one state to another. The IIM simply considers the scenarios where the transition rate of a component from one state to another is constant. This may contradict the assumption of the degradation, based on which system performance is degrading and therefore the transition rate may be increasing over time. The Weibull distribution describes the life of a component, which has been used in many different engineering applications to model complex data sets. This paper extends the IIM to a new importance measure that considers the scenarios where the transition rate of a component degrading from one state to another is a time-dependent function under the Weibull distribution. It considers the conditional probability distribution of a component sojourning at a state is the Weibull distribution, given the next state that component will jump to. The research on the new importance measure can identify the most important component during three different time periods of the system lifetime, which is corresponding to the characteristics of Weibull distributions. For illustration, the paper then derives some probabilistic properties and applies the extended importance measure to a real-world example (i.e., a propeller plane system)

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

Two methods to approximate the superposition of imperfect failure processes

Suppose a series system is composed of a number of repairable components. If a component fails, it is repaired immediately and the effectiveness of the repair may be imperfect. Then the failure process of the component can be modelled by an imperfect failure process and the failure process of the system is the superposition of the failure processes of all components. In the literature, there is a bulk of research on the superimposed renewal process (SRP) for the case where the repair on each component is assumed perfect. For the case that the component causing the system to fail is unknown and that repair on a failed component is imperfect, however, there is little research on modelling the failure process of the system. Typically, the likelihood functions for the superposition of imperfect failure processes cannot be given explicitly. Approximation-based models have to be sought. This paper proposes two methods to model the failure process of a series system in which the failure process of each component is assumed an arithmetic reduction of intensity and an arithmetic reduction of age model, respectively. The likelihood method of parameter estimation is given. Numerical examples and real-world data are used to illustrate the applicability of the proposed models

Corruption May Worsen in Democratizing Economies: But Don\u27t Let it Erode Our Faith in Democracy

This commentary is based on a recent study we conducted on the relationship between regime type, corruption, and economic development. We build a theory that links corruption and regime type to economic growth and test it on 158 countries, using multiple databases including Polity IV, transparency international, the World Bank, and others. We first distinguish three regime types, autocracy (dictatorship), anocracy (countries in early stage of democratization), and mature democracy. We found that when autocratic countries begin democratize, corruption usually gets worse. As the infant democracies mature, corruption decreases

A failure process model with the exponential smoothing of intensity functions

This paper proposes a new model and investigates its special case model, both of which model the failure process of a series system composed of multiple components. We make the following assumption: (1) once the system fails, the failed component can be immediately identified and replaced with a new identical one, and (2) once the system fails, only the time of the failure is recorded; but the component that causes the system to fail is not known. The paper derives a parameter estimation method and compares the performance of the proposed models with nine other models on artificially generated data and fifteen real-world datasets. The results show that the two new models outperform the nine models in terms of the three most commonly used penalised model selection criteria, the Akaike's information criterion (AIC), corrected Akaike's information criterion (AICc) and Bayesian information criterion (BIC), respectively

Three models for the failure process of a repairable system

Development of models for the failure process of a repairable system has been an interesting research topic for decades. There have been many models developed in the literature. However, more research is still needed to deal with various difficulties raised in the practical applications, which includes the cases that most real systems are composed of more than one component and that the failure process may not be stochastically monotone. For such cases, we have recently developed three models, which are briefly discussed in this paper