Abstract

Price of product or after sales service is always one of the top considerations for customer to buy the product or service. IT OEM/ODM industry is a very competitive environment that the net profit is extremely marginal. It is, therefore, crucial for OEM/ODM to offer a competitive price, including bill of material (BOM) price and average warranty cost per product, when customer wants to buy warranty from OEM/ODM. Efficient cost management on not only BOM price, but also average warranty cost per product is a main task for OEM/ODM. There are four purposes of the paper as follows: 1) to realize common warranty policies between OEMs/ODMs of LCD monitor and their buyers, 2) to compare the common warranty policies with customers’ interests whether they meet customers’ needs or expectations, 3) to find out a trend of change regarding to warranty policy from buyers’ perspective, 4) to build prediction models for warranty servicing costs per region, and their applications. Three prediction models are demonstrated for warranty service costs on LCD monitors based on analysis of warranty claim (repair) data over more than four years collected by an ODM company, said T-company. Polynomial regression on 54 months’ cumulative percentages of warranty returns, three prediction models are generated. These models can be applied for volume prediction of warranty returns. Total warranty costs are highly correlative to volume of warranty returns. Time period of warranty return is counted by the difference of returning and manufacturing month of product due to time usage data of product is difficult to collect. Warranty claim data of LCD monitors are analyzed to find return patterns for Europe, Asia Pacific, and United States of America when return patterns are different per different customer account and consumer behaviors in each region. Warranty related problems that T-company encountered are described with resolutions in a case study.

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