Customized warranty offering for configurable products

Abstract

Although configurable products have been common in the market, buyers often receive standard warranty offerings rather than customized ones from manufacturers. In this study, a reliability based method is proposed to specify warranties for certain product configuration schemes. A continuous time Markov model is adopted to measure the vulnerabilities of components involved in configuration. Then the warranty claim probability of a product with multiple components is calculated, and the warranty costs in varied warranty periods are estimated. Under a minimal repair warranty in which only failed components are replaced free of charge, warranty plans can be customized for different configuration schemes on the basis of warranty costs. Next, an example of laptop computer is introduced to illustrate the procedure and effectiveness of the proposed method. Impacts of operating frequency and operating time of products on warranty costs are also measured. In addition, some recommendations are provided in order to deal with issues of replacement policy, pro-rata rebate warranty (PRW) and compatibility between components.