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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.

Various types of warranty programs are offered for consumer products. The two most common are a linear pro-rata warranty or a lump-sum warranty, if product failure occurs prior to the specified warranty time. In this chapter we consider additional types of warranty programs that allow the consumer to purchase a one-time extended warranty in the event of no failure within the initial warranty period. For the extended period, warranty may be linearly pro-rated, starting at an amount that is lower than the initial purchase price. Alternatively, for the extended period, warranty may be a lump-sum amount, that is less than the initial warranty amount. Expressions for the expected costs under each of the programs are derived. Guidelines are provided for determining the parameters of each warranty program under relevant constraints. Sensitivity analysis is also conducted to determine the effect of the problem parameters on the expected warranty costs.

The purpose of this paper is to review and develop stochastic models for the evaluation of the expected warranty cost, from dealer's viewpoint, for second hand items sold under different warranty policies.

This study makes a useful contribution to the warranty literature by developing a framework to study one dimensional warranty policies for second‐hand products from dealer's viewpoint. Also, numerical examples are provided to illustrate the application of these models.

Despite the fact that warranties for second‐hand products are commonly used, the accurate pricing of warranties in many situations remains an unsolved problem, for both the dealer and customer. The proposed framework allows the dealer to analyze the cost of alternative warranty policies before deciding on the policy to be offered with the sale of a second‐hand item.

The policies and models developed in this paper can be useful in managerial decisions making related to second‐hand products such as automobiles, home appliances, helicopters, electronic equipment and electronics.

This paper proposes optimisation models to evaluate and examine the selling of extended warranty policies in terms of improved profits in producing/marketing remanufactured products. These models are numerically solved using a quadratic programming solution approach and implemented in the decision support system (DSS).

The purpose of this paper is to develop the optimisation models for a DSS and evaluate different warranty policies for buyers.

This study has demonstrated the flexibility and usefulness of a model-driven DSS for the quality and warranty management, which is applied to examine and evaluate different configurations (i.e. component reuse, rebuild and recycle) for remanufactured products and propose the selling of extended warranty policies for buyers.

The developed model-driven DSS can assist manufacturers to select and increase the number of components, e.g. to be reused, rebuilt, and recycled for producing a remanufactured product and propose suitable warranty policies for buyers. However, this study focusses only on the evaluation of warranty policies for specific remanufactured products in a DSS, i.e. types of air compressors for production operations in manufacturing industry.

This study developed optimisation models to be used in a DSS for proposing the selling of extended warranty of a remanufactured product to improve customer satisfaction and maximise the gained profits for manufacturers.

The purpose of this paper is to develop an attractiveness index-based warranty cost model considering decision variables as design alternatives, warranty duration and support level.

A warranty optimization approach is illustrated using a real life example of an automobile engine with Mean Time Between Failures and Warranty Attractiveness Index as constraints.

It will help to improve the customer satisfaction by giving a more attractive warranty compared to that being offered by the competitors.

Approaches that consider the effect of decision variables on attractiveness of a warranty policy in a quantitative manner have received relatively less attention. The paper attempts to capture the attractiveness of warranty from the manufacturer as well as customer point of view.

The proposed approach will help manufacturers to take appropriate decisions related to warranty parameters and component selection at the design stage.

This case study aims to develop and empirically test a general framework for the implementation and evaluation of a warranty policy (i.e. implementation, support structure, and evaluation stages) within the context of a high‐tech global firm.

The sample consisted of the employees of an anonymous US‐based global high tech firm.

The findings for the implementation stage report that the cost and profit centers should have their costs allocated on the basis of activity. For the support structure, there is a negative response to outsourcing as an option for implementing the warranty policy. For the evaluation, findings report that US firms should reevaluate their pricing, quality, and warranty strategy for domestic and international markets.

This case study can be expanded by examining how companies balance the cost/quality/warranty ability of the product, the techniques used to allocate warranty costs, and to evaluate multiple companies/industries, perhaps with a longitudinal focus.

Findings report that the budgeted costs should be allocated depending on the type of incident. The majority of outsourcing opponents consisted of service personnel while those in favor were from product marketing departments. Also, the US firms need to provide written warranty information to their customers.

The proposed framework will satisfy a current, critical need to provide guidelines for the steps needed to implement and evaluate a warranty policy within a context of a high tech global company. Additionally, this case research study's key contribution lies in its attempt to address warranty management processes within a multitude of a firm's departments. Furthermore, the anonymous high tech company used in this study was chosen as a sample because the company offered a wide range of products, warranties, and service options. The company also utilized a vast reseller base to sell and service its products. This method offered the potential to gain better insight with regards to the role of resellers in a warranty program. It also marketed products and services to six specific industries: financial, retail, transportation, manufacturing, communications, and the public. This broad industrial perspective gave the study added cross‐industries' insight in reference to implementation and evaluation of a good warranty policy since the anonymous high tech company considers these industries to be sustainable industries in the USA and abroad.

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.

Two-attribute warranty policies are considered that incorporate, for example, the time elapsed since sale of the product and product usage at a given point in time. Such policies occur in consumer products, such as automobiles, where warranty may be exercised if both time and usage are within specified warranty parameters when a product failure occurs. In this chapter, it is assumed 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. Product quality is modeled through the product failure rate, which is influenced by unit research and development expenditures as well as the usage rate and product age. The attained market share of the product is modeled as a function of the warranty policy parameters of price, warranty time, and usage limit, with product quality also having an influence. Attainment of single and multiple objectives are explored. Such objectives encompass expected total unit costs as a proportion of unit product price and market share.

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

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.

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

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.

Warranty policies for certain products, such as automobiles, often involve consideration of two attributes, for example, time and usage. Since consumers are not necessarily homogeneous in their use of the product, such policies provide protection to users of various categories. In this chapter, product usage at a certain time is linked to the product age through a variable defined as usage rate. This variable, usage rate, is assumed to be a random variable with a specified probability distribution, which permits modeling of a variety of customer categories. Another feature of the chapter is to model the propensity to execute the warranty, in the event of a failure within specified parameter values (say time or usage). In a competitive market, alternative product/warranty offerings may reduce the chances of exercising the warranty. This chapter investigates the impact of warranty policy parameters with the goal of maximizing market share, subject to certain constraints associated with expected warranty costs per unit not exceeding a desirable level.