Product Warranty Research Articles

The influence factors and strategies of reconstruction timing of pacing system

ObjectiveThis study aimed to investigate what factors affect reconstruction timing of pacing system, and to explore how to optimise reconstruction timing of pacing system. The study will provide a new...

Service Life Assessment of a Low-Slope 55 % Al–Zn Alloy-Coated Steel Standing Seam Roof System

Abstract Published surveys concerning roof service life incorporate estimates from roofing professionals based on their observations and opinions. In cases where roofing products have been in service long enough for the end of life to be observed, these data have some merit, but when end-of-life empirical data are not available, accurate projections are difficult to verify. Other attempts at defining the service life relate to product warranties or lab testing. In the case of standing seam metal roofing, the variability of the materials and installation methods strongly colors the survey opinions. In steel roofing, this variability includes that of the steel thickness, the metallic coating type and thickness, the presence or absence of paint films, the types of sealants, the seam-folding details, and other construction or installation details. Related accessories and flashings of different materials and designs further confuse survey criteria and results. In the case of 55 % Al–Zn alloy-coated steel roofing systems, the prediction of service life is complicated by the fact that the product has been commercially available for under 40 years, and end of life has rarely been observed. In this paper, we combine field inspection procedures with a novel technique for securing roof samples for subsequent laboratory analysis in order to enable the prediction of roof service life for a 55 % Al–Zn alloy-coated steel roof in Denver, CO. The performance of other roof components is also quantified. A methodology is then presented that utilizes the current best practices, together with the results of this roof analysis, to predict the total roof service life of similar constructions when built using today’s practices. This work confirms previously published work that used experimental corrosion specimens to establish the long-term durability of 55 % Al–Zn alloy-coated steel. It is suggested that this work can be replicated in order to develop meaningful corrosion and material performance data for any climate in which this type of roof is constructed.

Warranty servicing for discretely degrading items with non-zero repair time under renewing warranty

This paper considers a repair-replacement strategy for a special class of discretely degrading and repairable products under renewing free replacement warranty. Each product may experience N different working states with different exponential hazard functions, before the warranty contract expires. Once the item enters working state i (i=1,2,…,N), it can either fail or move to any of the subsequent working states with different probabilities, given that a transition has been made. In the former case, the best rectification action, replacement or minimal repair, regarding the failure status, i.e., the product degradation level at the failure time and the remaining warranty time, should be conducted to put the item into operation. It is assumed that replacement of the faulty item occurs instantly and the product warranty is renewed, but non-zero repair time has been included in the model. We derive the optimal replacement-repair policy to minimize the manufacturer’s expected warranty servicing cost per item sold. The Adomian decomposition method is used to find an analytic approximate solution for a special case with two working states. For N>2, a simulation based optimization method has been developed to analyze the expected warranty cost. Some numerical examples in each section are given to clearly demonstrate the application of this model.

Practical application of an Analytic Hierarchy Process for the improvement of the warranty management

PurposeThis paper will be focused in one of the stages included in a reference framework proposed for the improvement of the warranty management. Particularly, the Analytic Hierarchy Process (AHP) is a multi‐criteria decision‐making method that will be depicted throughout this document and applied to a particular case study.Design/methodology/approachOnce the warranty program objectives and strategy are defined, the referred stage here considered will be the Criticality Analysis. Those decisions and actions taken from the warranty program will involve the possibility of a certain deviation from business objectives in terms of profit losses, redirection of resources, possible delays etc., or the use of assembly pieces as spares, among others.FindingsThe application is required of a technique which helps systematically to decide which assets should have priority related to the management of the warranty program, in accordance of course with the existing program strategy.Practical implicationsThe paper will show how this method can help and improve the decision‐making related to some aspect of the warranty management, obtaining as a result a criticality matrix, which offers a prioritized view of warranty issues, which allow us to align after sales actions with the business targets.Originality/valueThis paper aims to explore different aspects related to the Analytic Hierarchy Process (AHP), which can influence in the management of warranty assistances. In the process of warranty management for a specific product, many decisions and actions appear presenting a great impact on the total cost of the product warranty service. The paper contains an example study where AHP concepts are applied in a simple way in order to provide a practical application view of the theoretical development, useful to after sales managers as a decision‐making tool.

How Does a Retailer's Service Plan Affect a Manufacturer's Warranty?

A service plan is a type of optional warranty beyond manufacturers' base warranties that retailers offer to consumers. In this paper, we examine how a service plan affects the role played by a manufacturer's base warranty. Analysis shows that when consumers can assess product quality (i.e., the probability of product failure), the manufacturer's warranty is negatively affected by the presence of a service plan. In the presence of such a plan, a base warranty is offered only when the manufacturer is very cost-efficient in providing a warranty relative to the retailer. In this case, although the double-marginalization problem is aggravated, offering a (limited) base warranty reduces the total warranty cost in the channel and provokes the retailer into enlarging the service plan coverage. When consumers cannot assess product quality, a high-quality manufacturer is motivated to offer a base warranty to signal its quality. In the presence of a service plan, however, a very cost-efficient manufacturer is discouraged from doing so. This paper was accepted by Preyas Desai, marketing.

Management Insights

Management Insights

Two-Dimensional Warranty Cost Analysis for Second-Hand Products

In spite of the recent steady increase of the volume of the second-hand markets, often customers remain in doubt regarding the quality and durability of the second-hand products. Aiming to reduce and share this uncertainty, dealers offer warranty on their products. Offering warranty for second-hand products is a relatively new marketing strategy employed by dealers of used electronic equipment, furniture, automobiles, etc. Usually, for used products, the dealer's expected warranty cost is a function of product reliability, past age and usage, servicing strategy and conditions and terms of the warranty policy/contract. Sometimes the offered policy is limited by two parameters, typically the product age and usage after the sale. This type of policies is referred to as two-dimensional warranty policies. In this article, we develop statistical models for estimating the dealer's expected warranty cost for second-hand products sold with two-dimensional free repair/replacement warranty.

On optimal replacement-repair policy for multi-state deteriorating products under renewing free replacement warranty

In this paper a replacement-repair model is developed to study a renewing free replacement warranty (RFRW) for a class of multi-state deteriorating repairable products. After a replacement, the product warranty is renewed. Two parameters affect the manufacturer’s decision to minimally repair or replace a failed item: the product deterioration level at the time of failure and the remaining warranty time. We derive an optimal replacement-repair policy to minimise the expected warranty servicing cost per item sold. In the case of a product with two different working states, we are able to explicitly find the optimal values of the replacement-repair parameters using the Adomian decomposition method. In general, for N > 2 , it is impossible to find the optimal parameter values analytically. Hence, a computational procedure for finding these optimal values is proposed. For more clarification, numerical examples are also presented.

Combination free replacement and pro-rata warranty policy optimization model

Product development risk increases more and more every day. One of the factors that affect this risk is product warranty. Warranty is a powerful marketing instrument for the manufacturer and a good protection for both the manufacturer and the customer, but it always involves additional costs to the manufacturer. These costs depend on the product reliability and the warranty parameters. This paper deals with the optimization of these parameters for known product failure distribution to reduce the warranty costs to the manufacturer while retaining the promotional function of the warranty. Combination free replacement and pro-rata warranty policy is chosen as a model and the length of free replacement and pro-rata policy periods are varied, as well as the coefficients that define the pro-rata cost function. Warranty costs are obtained by using analytical equations and by simulation. The obtained results are shown and discussed and some concluding remarks are given.

On the Risks and Costs Methodologies Applied for the Improvement of the Warranty Management

This paper deals with the problem of efficiency in warranty management programs, where efficiency is understood as provisioning an effective product warranty service to the lowest cost. For that purpose, this paper first defines the con-cept of warranty and its interaction with other disciplines. It introduces all the necessary stages that should be included within a framework for warranty management. This brief introduction will help the reader to place the work presented in this paper within a context of tools and methods already developed in the literature for similar areas management. Later on, an analysis on risk and cost is presented applying these methodologies to the development of a warranty pro-gram. We show how generic tools developed for project management can now be adapted, in a very useful way, to or-ganize and control the technical assistances to customers during the warranty period. Finally, conclusions of the work are presented, where the main concepts of the paper are summarized and further potential research is suggested.

Forecasting models for manufacturer warranty returns: a case study

In this paper, we consider the analysis of some failure data during the warranty period, with regard to some electrical products. Our goal is to define some innovative models for warranty forecasting, which are transferable to the company where this study has been carried out. We present two innovative procedures for warranty control: the former allows to determine the probability of failure, while the second model can be used to establish a general quality index. The performance of the proposed methods are illustrated by considering real data.

Assessing the effectiveness of a product warranty in a health-care setting

The product warranty plays an increasingly important role in today's highly competitive marketplace. The use of warranties is widespread, but its use has only relatively recently been applied in th...

Managing Opportunistic Supplier Product Adulteration: Deferred Payments, Inspection, and Combined Mechanisms. Extended Technical Report

Recent cases of product adulteration by foreign suppliers have compelled many manufacturers to re-think approaches to deterring suppliers from cutting corners, especially when manufacturers cannot fully monitor and control the suppliers’ actions. Recognizing that process certification programs, such as ISO9000, do not guarantee unadulterated products and that product liability and product warranty with foreign suppliers are rarely enforceable, manufacturers turn to mechanisms that make payments to the suppliers contingent on no defects discovery. In this paper we study: (a) the deferred payment mechanism - the buyer pays the supplier after the deferred payment period only if no adulteration has been discovered by the customers; (b) the inspection mechanism - the buyer pays the supplier is immediately, contingent on product passing the inspection; and (c) the combined mechanism - a combination of the deferred payment and inspection mechanisms. We find the optimal contracts for each mechanism, and describe the Nash equilibria of inspection sub-games for the inspection and the combined mechanisms. The inspection mechanism cannot completely deter the suppliers from product adulteration, while the deferred payment mechanism can. Surprisingly, the combined mechanism is redundant: either the inspection or the deferred payment mechanisms perform just as well. Finally, the four factors that determine the dominance of deferred payment mechanism over the inspection mechanism are: (a) the inspection cost relative to inspection accuracy, (b) the buyer’s liability for adulterated products, (c) the difference in financing rates for the buyer and the supplier relative to the defects discovery rate by customers, and (d) the difference in production costs for adulterated and unadulterated product.

Explicit and Implicit Contracts with Non-Financial Stakeholders and Corporate Capital Structure: The Case of Product Warranties

We use a unique dataset of product warranty offerings by firms to investigate the effect of a firm’s warranty reserve levels on its capital structure decisions. Our sample consists of firms that (i) offer explicit warranties, (ii) likely offer implicit product warranties, and (iii) are in non-warranty-offering industries. For the whole sample, we find that leverage relates negatively to the firm’s warranty level. Further, we find that firms that offer implicit warranties have lower debt levels than firms in non-warranty industries and that, conditional on operating in a warranty-offering industry, firms that issue explicit warranties tend to have even lower debt levels. We also investigate the determinants of the product warranty decision, and find that firms offer explicit warranties when products are more differentiated, when uncertainty about product quality is high, and when sellers have private information on product quality. We then show that the negative relation between firm’s debt and warranty levels continues to hold even after we control for self-selection by firms into offering explicit warranties. Our research contributes to the literature that examines how contracting with non-financial stakeholders such as customers affects the firm’s financing decision.

Cost analysis for a deteriorating system using monotone processes with warranty

PurposeThe purpose of this paper is to investigate preventive‐repair warranty policies for repairable deteriorating systems using Zhang's geometric process repair model.Design/methodology/approachThe 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.FindingsThe models have practical applications in warranty cost analysis, as product warranty is an important factor in designing an optimal maintenance policy.Originality/valueThe 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.

Study on Cost Minimization of Auto Engine Product Warranty Chain

Aiming at how to optimize auto engine warranty cost, some hot issues such as what kind of factors auto engine warranty cost includes was studied deeply from the standpoint of reverse supply chain in this paper. First, the definition of auto engine warranty supply chain (AEWSC) was explained; then, under two-dimensional renewable free warranty policy, the components of AEWSC cost were analyzed for repairable engines. AEWSC cost covers not only traditional product warranty cost, but also potential cost resulting from re-failed engines; thirdly, an AEWSC Cost model was built based on cost analysis; finally, numeral analysis was developed through using the proposed cost model. The analysis results help engine manufacturer reduce AEWSC cost.

Practical application of a RAMS analysis for the improvement of the warranty management

Abstract This paper will be focused in one of the stages included in a reference framework proposed for the improvement of the warranty management. Particularly, the referred stage will be the RAMS analysis, and how it can help the decision-making related to some aspect of the warranty management as the acquisition of a stategical spare parts stock or how to foresee possible complaints from the customer. For that purpose, the study starts with a brief introduction where the current notion of warranty will be defined, as well as concepts like Reliability, Availabilty, Maintenability and Safety. Later on, once defined very succinctly this framework, the general characteristics of a RAMS analysis will be presented in order to be finally applied in a specific study scenario. In general, this paper aims to explore different aspects related to RAMS analysis, which can influence in the management of warranty assistances. During the process of warranty management for a specific product, many decisions and actions appear affecting aspects as the design quality, used technology, technical complexity, frequency of failures, accessibility, etc. which are important influences on, for instance, the possible expectations to extend the product warranty under reasonable costs. Therefore, this kind of analysis can provide to aftersales managers a useful decision tool that improves the efficiency on the decision-making process related to the spares parts acquisition, the control of failures among others.

Why Do Consumers Buy Extended Service Contracts?

We examine purchases of extended service contracts, which are essentially insurance products, for electronic products in a retail setting. The primary insurance purchase determinants are perceived probability of loss, extent of loss, risk aversion, and amount of insurance premium. We examine how product characteristics (hedonic/utilitarian, manufacturer's warranty) and retailer actions (promotions, feature advertising) influence the purchase of extended service contracts. We also investigate the impact of consumer characteristics (income, gender, and prior usage) on these insurance purchase determinants. To test the predictions, we use revealed preferences from panel data of electronic purchases across several product categories.

ON TWO TYPES OF WARRANTIES: WARRANTY OF MALFUNCTIONING AND WARRANTY OF MISINFORMING

In this paper we focus on two types of risks, the risk of malfunctioning of a product quantified by its reliability, and the risk of misunderstanding the features and qualities of a product while deciding whether to buy it. The later risk is caused by the information asymmetry, which is a natural property of any communication process. We discuss the relationship between these risks and product warranty. We begin with an overview of warranties from the decision-makers' viewpoint. We elaborate on the purposes, legalities, and types of warranties and follow with a summary of mathematical models and concepts for quantifying the financial implications of warranties of malfunctioning. Further, we propose a model for quantifying the risk of misinforming and elaborate on the relationship between this risk and product warranty.

Revisiting feedback systems: Trust building in digital markets

Data from ebay.com online auctions were used to examine the impact of buyer feedback and other trust-evoking variables on the final auction prices realized by sellers. Direct counts of positive and negative feedback were found to influence ending auction price significantly. However, when difference measures between positive and negative feedback were used as buyer feedback measures, no significant price effects were found. Since much more positive, than negative, feedback is obtained by sellers, the marginal impact of negative feedback is much greater than that of positive feedback. Therefore, subtracting negative feedback counts from positive feedback counts may not be appropriate. Support was also found for other factors, such as product warranties, impacting final auction prices.