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Article
Publication date: 1 June 2003

Surajit Pal and G.S.R. Murthy

In this article we present an application of Gumbel's bivariate exponential distribution model in the context of estimating warranty costs of motor cycles under a new…

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1253

Abstract

In this article we present an application of Gumbel's bivariate exponential distribution model in the context of estimating warranty costs of motor cycles under a new warranty policy. The problem in question is as follows: Under the present two‐dimensional warranty policy, repair costs (termed as warranty costs) of a motorcycle during the age of first six months or within the usage of 8,000 kilometers are borne by the company. To enhance customer satisfaction, the company wanted to bear the repair costs up to an age of one year or a usage of 12,000 kilometers. The problem is to estimate the expected hike in warranty costs if the warranty policy were revised as mentioned above. Using the past data, the problem is solved by studying the underlying renewal process. Gumbel's bivariate exponential distribution function is found to be useful in approximating the renewal function. Some practical difficulties posed by the past data in the analysis are highlighted and tackled in an interesting way.

Details

International Journal of Quality & Reliability Management, vol. 20 no. 4
Type: Research Article
ISSN: 0265-671X

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Article
Publication date: 1 January 2004

D.K. Manna, Surajit Pal and A. Kulandaiyan

This article deals with the problem of cost estimation for increased warranty time of a multi‐module product. The warranty policy of interest is two‐dimensional involving…

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1037

Abstract

This article deals with the problem of cost estimation for increased warranty time of a multi‐module product. The warranty policy of interest is two‐dimensional involving warranty limits on both age and usage of the product. Failure of the product is caused due to malfunctioning of its module(s). Warranty service is rendered through repair or replacement of the respective module(s). From the past data, it is observed that age and usage are highly correlated. Based on life (age) data, the joint life distribution of the modules is well described by multivariate exponential distribution of Marshall and Olkin. The same is utilized to estimate cost for desired warranty times by the method of simulation.

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International Journal of Quality & Reliability Management, vol. 21 no. 1
Type: Research Article
ISSN: 0265-671X

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Article
Publication date: 1 October 1997

Won Young Yun

Considers the estimation problem of the total warranty cost under two types of warranty. The product (e.g. car) is sold under two types of warranty (mileage and age). The…

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928

Abstract

Considers the estimation problem of the total warranty cost under two types of warranty. The product (e.g. car) is sold under two types of warranty (mileage and age). The failed product will be minimally repaired by the manufacturer during the preassigned warranty, the length of which is determined by mileage or age, whichever occurs first. Under general distributions, obtains the formula of the expected value and variance of total warranty cost. Analyses special cases of the failure and running behaviours. Includes a numerical example.

Details

International Journal of Quality & Reliability Management, vol. 14 no. 7
Type: Research Article
ISSN: 0265-671X

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Article
Publication date: 1 March 1973

R.S. Mason

The product warranty has become an increasingly important factor contributing to the consumer's assessment of overall product value in recent years and, in consequence…

Abstract

The product warranty has become an increasingly important factor contributing to the consumer's assessment of overall product value in recent years and, in consequence, can nowadays have a significant effect on demand levels for a particular product make or brand. The warranty is in effect an “added value” component by which the manufacturer commits himself to a given level of responsibility (usually over a specific time period) for the performance of the product he sells.

Details

Management Decision, vol. 11 no. 3
Type: Research Article
ISSN: 0025-1747

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Article
Publication date: 16 March 2010

Sarada Yedida and Mubashir Unnissa Munavar

The purpose of this paper is to investigate preventive‐repair warranty policies for repairable deteriorating systems using Zhang's geometric process repair model.

Abstract

Purpose

The purpose of this paper is to investigate preventive‐repair warranty policies for repairable deteriorating systems using Zhang's geometric process repair model.

Design/methodology/approach

The paper aims to establish the importance of preventive repair during warranty. Three cost models have been developed using the average cost rate for the system as the objective function, employing N‐policy for two models therein.

Findings

The models have practical applications in warranty cost analysis, as product warranty is an important factor in designing an optimal maintenance policy.

Originality/value

The paper observes that product warranty has not been considered in the study of maintenance policies for repairable deteriorating systems using monotone processes. The numerical example given illustrates that a preventive repair during warranty with N‐policy is preferable compared with a non‐warranted product or a warranted product without preventive repair.

Details

International Journal of Quality & Reliability Management, vol. 27 no. 3
Type: Research Article
ISSN: 0265-671X

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Article
Publication date: 13 August 2021

Sebastien Royal, Nadia Lehoux and Pierre Blanchet

Construction defects in residential buildings are causing significant impacts both on consumers and the industry. As a consequence, several countries have established new…

Abstract

Purpose

Construction defects in residential buildings are causing significant impacts both on consumers and the industry. As a consequence, several countries have established new home warranty schemes. However, designing a public policy for domestic building warranties can become a difficult task. In fact, many of these programs in the past have failed, collapsed or gone bankrupt. Therefore, the purpose of the current research is to provide a systematic comparative representation of various active programs internationally.

Design/methodology/approach

The methodology relied on a multiple-case study research design. The case selection covered a total of nine jurisdictions with compulsory home warranty programs. Those included Japan, France, United Kingdom, three provinces in Canada (Ontario, British Columbia and Alberta), and three states in Australia (New South Wales, Victoria and Queensland). The study applied a data collection protocol to gather all the evidence in a replicable manner for each individual case. Subsequently, a cross-case analysis was conducted to identify similarities and variations between programs.

Findings

The findings unveiled institutional practices that aimed to resolve, compensate, or rectify defects in residential constructions within these countries. The review mostly suggested that every home warranty program presents certain unique characteristics. At the end, this paper proposed an analytical illustration representing the diversification of components adopted by each jurisdiction.

Originality/value

Nowadays, there is still not a consensus within the academic community on what is an optimal solution when conceiving a new home warranty program. Hence, the current study aims to fill this knowledge gap by presenting the plurality of methods employed by several countries. This paper seeks to help policy makers and industry leaders to improve their home warranty scheme based on awareness derived from observations and analyses of what has been accomplished elsewhere in the world.

Details

International Journal of Building Pathology and Adaptation, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2398-4708

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Book part
Publication date: 26 October 2020

Lorens A. Helmchen

Public reports of provider-specific patient outcomes aim to help consumers select suppliers of medical services. Yet, in an environment of rapidly changing medical…

Abstract

Public reports of provider-specific patient outcomes aim to help consumers select suppliers of medical services. Yet, in an environment of rapidly changing medical technology and increasingly heterogeneous patient populations, and because they necessarily reflect the experience of other patients who received care in the past, such reports may be of limited value in helping patients forecast the probability of an adverse outcome for each provider they are considering. I propose that providers underwrite insurance policies that promptly pay patients a predetermined sum after an adverse outcome. Patients can use such outcome warranties to infer quality differences among providers easily and reliably. In addition, outcome warranties efficiently reward both providers and patients for reducing the risk of adverse outcomes and thereby improve the safety and affordability of health care. As such, outcome warranties help advance four important goals of health care management: reduction of financial risk, recruitment and retention of physicians, remediation of adverse outcomes, and raising the provider's reputation.

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Book part
Publication date: 14 November 2011

Amitava Mitra and Jayprakash G. Patankar

This chapter considers warranty policies involving two attributes, such as the time elapsed since sale of the product and product usage at a given point in time. Examples…

Abstract

This chapter considers warranty policies involving two attributes, such as the time elapsed since sale of the product and product usage at a given point in time. Examples of such policies are found for automobiles, where warranty may be invoked by the consumer if both time and usage are within specified warranty parameters when a product failure occurs. Here, we assume that usage and product age are related through a random variable, the usage rate, which may have a certain probabilistic distribution as influenced by consumer behavior patterns. Furthermore, product failure rate is influenced by the usage rate and product age as well as research and development expenditures per unit. It is assumed that, in production, there is a learning effect with time. The attained market share of a product will be influenced by the warranty policy parameters of warranty time and usage limit and also by the product price and product quality. An integrated model is developed to address multiobjective goals such as attainment of a specified level of market share and net profit per unit when manufacturing and warranty costs are taken into account. The impact of the goal priorities are investigated on the attained warranty policy parameters.

Details

Advances in Business and Management Forecasting
Type: Book
ISBN: 978-0-85724-959-3

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Book part
Publication date: 15 August 2006

Amitava Mitra and Jayprakash G. Patankar

A warranty policy involving two attributes, for example time and usage, is considered. Usage is assumed to be related to time through the usage rate, which is considered…

Abstract

A warranty policy involving two attributes, for example time and usage, is considered. Usage is assumed to be related to time through the usage rate, which is considered to be a random variable satisfying a specified probability distribution. The paper analyzes a policy where warranty is not renewed on product failure, within the specified time period and amount of usage, but is minimally repaired. Unit cost of minimal repair, conditional on the usage rate, is assumed to be a non-linear function of the two warranty parameters. Expressions for the expected warranty costs per unit sales are derived. Applications of the results are presented through sample computations. The results demonstrate the use of warranty cost information in selecting the parameters of the warranty policy.

Details

Applications of Management Science: In Productivity, Finance, and Operations
Type: Book
ISBN: 978-0-85724-999-9

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Book part
Publication date: 20 August 2018

Amit Mitra

Two-dimensional warranty policies exist for certain consumer products, such as automobiles. Here, warranty is specified in terms of the time since the sale of the product…

Abstract

Two-dimensional warranty policies exist for certain consumer products, such as automobiles. Here, warranty is specified in terms of the time since the sale of the product as well as mileage incurred during that period. Thus, at the time of purchasing the product, the manufacturer may offer a warranty of three years or 30,000 miles, whichever occurs first. Failures in the product within this specified period of time or mileage will be covered by the manufacturer.

In this chapter, we consider the scenario of enterprise warranty programs, where customers are given the option of extending the original warranty. Thus, the buyer could be given an option to purchase a five year—50,000 mile warranty, whichever occurs first. Of course, the buyer will be expected to pay a premium to purchase this extended warranty. Such enterprise warranty programs are also found in other consumer durables, such as refrigerators, washers, dryers, and cooking ranges.

This chapter explores determination of the decision variables, such as product price, warranty time, and usage limit under the original conditions and further, for the enterprise warranty, that is, the extended warranty time and extended usage limit, as well as the premium to be charged to the buyer who selects the extended warranty. Mathematical models are developed based on maximizing the expected unit profit by selecting an enterprise warranty program. Additionally, some other objectives are also considered based on the proportional increase in the expected unit profit due to the increased market share attained through the offering of an enterprise warranty program. Some results are obtained through consideration of various goal values of the chosen objectives.

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