Warranty Claims Research Articles

Optimal (re)manufacturing strategies in the presence of spontaneous consumer returns

Abstract Remanufacturing is a sustainable development strategy for recovering product value and extending original item lifetimes through collection, inspection, testing, and restoration activities. Remanufacturing activities are typically carried out on products that have been returned by consumers, and the increasingly high flow of products spontaneously returned by customers through marketing initiatives such as Money-Back Guarantee policies, false warranty claims, or end of life returns, is a growing source of products that can be easily remanufactured. In this paper, we develop a novel pricing model for a firm that produces and sells Generation 1 new products in the first period with a promise of Money-Back Guarantee on returned products regardless of reasons. Products returned in the first period can be remanufactured and sold as remanufactured products during the second period, alongside Generation 2 new products. The firm needs to determine the optimal pricing for its two generations of new products and its remanufactured products, based on demand derived from its customers' utility of purchasing either the new or the remanufactured products. We identify the firm's optimal production strategy. Numerical experiments are conducted to illustrate the key managerial insights derived from the model. This paper makes two contributions to the literature: 1) it links customer returns and closed loop supply chain management. Most studies on customer returns do not link remanufacturing with product returns, while most studies on closed loop supply chains assume that the source for remanufactured products is unlimited. 2) It is shown that although remanufacturing returned products may cannibalize new sales, it enhances overall sales, as the firm can differentiate prices for Generation 2 new products and remanufactured products in the second period to attract customers with different valuations on the products.

Optimal remanufacturing and acquisition decisions in warranty service considering part obsolescence

When a product enters the end phase of its life cycle, certain parts become obsolete and their supply is discontinued permanently. However, the manufacturer must still maintain sufficient inventory to satisfy customer warranty claims in the future. We study the spare parts inventory control problem under such a setting, where remanufacturing parts from product returns is adopted as the main approach to ensure sufficient supply. One novel feature of our model is the interrelationships among the installed base, product returns, and demand for spare parts, which lead to the endogeneity of demand. Specifically, we formulate stochastic dynamic programs for two scenarios, in which a firm either utilizes phase-out returns or proactively collects products. For the former scenario, we establish the optimality of a modified-base stock policy, and find that the inventory control target increases with the installed base size and part failure rate. For the latter scenario, we discover that a return-dependent base stock policy is optimal and conduct comparative static analyses for the acquisition and remanufacturing decisions, where their one-sided limited sensitivities in state variables (initial parts inventory and installed base size) are identified in a stationary environment. These findings are largely attributed the novel model with endogenous spare parts demand. Through extensive numerical studies, we investigate the benefits introduced by acquiring returns under a range of parameter settings. It is found that when the mismatch between warranty demand and part supply is higher, firms can enjoy more significant cost savings. Finally, the potential monetary loss when the relationships among the installed base, demand, and product returns are ignored is examined computationally. The extra cost incurred is significant and becomes higher when proactive acquisition is adopted.

Development of a Modular Retrofitting System for Residential Buildings and Experience from Pilot Installation

In order to significantly reduce energy consumption of its building stock, Europe has to focus on energy retrofitting of existing buildings. A usual building retrofitting process is very labour intensive and time consuming. It usually takes several weeks or even months to replace old windows by new, install new thermal insulation layers on the external walls and roofs of buildings and renew the heat distribution systems or to attach renewable energy sources on the building’s envelope. To make refurbishment more efficient and allow its scaling up, a European project Development and Advanced Prefabrication of Innovative, Multifunctional Building Envelope Elements for Modular Retrofitting and Connections (MORE-CONNECT) has been initiated under H2020 program. This project developed a system of prefabricated retrofitting modules, that enable to cut primary energy consumption of a typical residential building by 80 %, reduce on-site installation time bellow two weeks and improve the indoor environmental quality. At the same moment, the project aimed on implementation of systemic quality control over the whole design, pre-production, production and installation process in order to significantly reduce the number of warranty claims by the clients. The paper describes the design process of the modular retrofitting system and a pilot installation made on a mock-up building to test the concept, and presents the experience made.

Warranty Cost Estimation using K-Means Cluster Analysis for Automobile Industry: Technical Note

When a vehicle under warranty comes for service, the technician identifies the potential fault and the corresponding service is done. From the raw information of customer complaint, the complaint codes are identified and allocation of qualified technician involves considerable man hours and cost per hour for the technician to do the service. Around 1059 vehicles under warranty were studied starting from customer complaint to the study of warranty cost to the manufacturer. In this paper, initially, we present the results of classifying the complaint code master into several classes using K-means cluster analysis and subsequently cluster analysis for a specific component say, water pump assembly was carried out. Then, analysis of cost to the automobile manufacturer on warranty claims are also presented here.

Comparison of carbon fibre and aluminium materials in the construction of ultralight wheelchairs

Carbon fibre-reinforced polymers have been used in the sporting goods industry for decades, and wheelchairs have incorporated the material since the late 1980s. There is no independently collected data available on carbon fibre-reinforced polymer wheelchairs’ performance on the ANSI/RESNA testing standards, however. This study evaluated three full carbon fibre wheelchair specimens to determine their performance versus similar wheelchairs. Testing determined that while the frames survived more testing cycles than any other wheelchair, the casters and rear tires failed similarly to other devices. Overall, due to the purchase cost, the cost benefit of the tested wheelchair model was similar to aluminium wheelchairs. Implications for rehabilitation Carbon fibre wheelchair construction is a viable alternative to aluminium, titanium, or steel construction, and decreasing costs will continue to improve the benefits of carbon fibre over these models Carbon fibre wheelchair found to be more durable than aluminium models, but are also much more expensive. The additional cost may be justified for some users that need the increased durability, however Increased durability will reduce the number of repairs and warranty claims, potentially reducing the burden on a wheelchair user, and also improving their ability to travel and participate in their community The low weight of carbon fibre wheelchairs may increase the mobility of some users by allowing them to transfer more easily into and out of vehicles and manoeuvre throughout the environment

Warranty cost analysis with an alternating geometric process

In this study, we model the warranty claims process and evaluate the warranty servicing costs under non-renewing, renewing and restricted renewing free repair warranties. We assume that the repair time for rectifying the claims is non-zero and the repair cost is a function of the length of the repair time. To accommodate the ageing of the product and repair equipment, we use a decreasing geometric process to model the consecutive operational times and an increasing geometric process to model the consecutive repair times. We identify and study the alternating geometric process, which is an alternating process with cycles consisting of the item’s operational time followed by the corresponding repair time. We derive new results for the alternating geometric process in a finite horizon and use them to evaluate the warranty costs over the warranty period and over the life cycle of the product under a non-renewing free repair warranty, a renewing free repair warranty and a restricted renewing free repair warranty. Properties of the model are demonstrated using a simulation study and by fitting the models to real data from an automotive manufacturer.

A comprehensive analysis of warranty claims and optimal policies

Nowadays many products, such as 3C products (Computer, Communication and Consumer Electronics) and cars, consist of software and hardware. The causes of warranty claims of such products may be attributed to software specific failures, hardware specific failures, software-hardware interaction failures and human errors. Apparently, those causes may be dependent. For example, one may claim warranty due to the malfunction of the embedded software in a product item and then the entire item may be replaced. Nevertheless, the existing research on warranty management studies mainly concentrates on warranty analysis of hardware subsystems, assuming that the warranty claims are statistically independent of those caused by the failures of software subsystems or human factors, that is, the interactions between those causes are neglected.This paper investigates warranty costs incurred due to those three subsystems with a focus on their interactions. It estimates the costs due to different cause, develops integrated warranty cost models and optimises warranty policies considering the above possible combinations. Numerical examples are given to illustrate the proposed models.

Seasonal warranty prediction based on recurrent event data

Warranty return data from repairable systems, such as home appliances, lawn mowers, computers and automobiles, result in recurrent event data. The nonhomogeneous Poisson process (NHPP) model is used widely to describe such data. Seasonality in the repair frequencies and other variabilities, however, complicate the modeling of recurrent event data. Not much work has been done to address the seasonality, and this paper provides a general approach for the application of NHPP models with dynamic covariates to predict seasonal warranty returns. The methods presented here, however, can be applied to other applications that result in seasonal recurrent event data. A hierarchical clustering method is used to stratify the population into groups that are more homogeneous than the overall population. The stratification facilitates modeling the recurrent event data with both time-varying and time-constant covariates. We demonstrate and validate the models using warranty claims data for two different types of products. The results show that our approach provides important improvements in the predictive power of monthly events compared with models that do not take the seasonality and covariates into account.

ANALISIS SISTEM AKUNTANSI KLAIM JAMINAN KECELAKAAN KERJA (JKK) BAGI APARATUR SIPIL NEGARA PADA PT. DANA TABUNGAN DAN ASURANSI PEGAWAI NEGERI (PERSERO) KANTOR CABANG MANADO

The successful implementation of the tasks of government and national development depends on the working mechanism of state apparatus employees. State Civil Apparatus (ASN) as an element of state apparatus, state servants and public servants have a very important role in implementing national development. On the basis of these circumstances is required efforts to improve welfare, both in the period of active and in retirement. Work Accident Assurance (JKK) is protection against occupational injuries or illnesses in the form of care, compensation, and disability benefits. The purpose of this study is to know the accounting system of work accident assurance claim. The object of this research is the accounting system of claim work accident assurance at PT.Taspen (Persero) KC Manado. The method used is descriptive qualitative analysis. From the accounting system analysis of work accident assurance claim conducted by the author at PT. Taspen (Persero) KC Manado obtained the result that the accounting system of work accident assurance claim that has been implemented effectively and in accordance with existing procedures, seen with the clear separation of duties between the relevant functions and authorization of the authorized party for transactions of payment claim.Keywords: Accounting System, Work Accident Warranty Claim, ASN

Optimal burn-in strategy for two-dimensional warranted products considering preventive maintenance

Burn-in and preventive maintenance (PM) are effective approaches to reduce the number of warranty claims and warranty cost during post-sale support. With harsher burn-in settings, early product defects can be removed, but at the same time product degradation is accelerated and more wear-out failures may be introduced. PM actions within warranty alleviate these negative effects. This paper proposes an optimal burn-in strategy for repairable products sold with a two-dimensional base warranty (BW) and an optional extended warranty (EW). Both performance-based and cost-based models incorporating PMs are developed to obtain optimal burn-in settings, including the burn-in duration and the burn-in usage rate, so as to minimise the expected number of warranty claims and total cost respectively. The impacts of different accelerated coefficients and PM degrees on the optimal burn-in strategy are analysed. In view of the performance and cost structures, we conduct numerical examples to illustrate the applicability of the proposed models. Practical implications from a sensitivity analysis for key parameters are also elaborated.

Investigating the effects of operators on warranty cost under sales delay conditions

PurposeDue to the fact that the non-standard products, being used by customers, may cause failures in products with sales delays, which naturally affect the warranty policy. Thus, it seems to be necessary to study these two concepts simultaneously. The paper aims to discuss these issues.Design/methodology/approachIn this paper, a model is developed for estimating the expected warranty costs under sales delay conditions when two operator costs (failing but not reported and non-failing but reported) are included.FindingsThe proposed model is validated using a numerical example for a two types of intermittent and fatal failures occur under a non-renewing warranty policy.Originality/valueSales delay is the time interval between the date of production and the date of sale. Most reported literature on warranty claims data analysis related to sales delay have mainly focussed on estimating the probability distribution of the sales delay.

Utilizing experimental degradation data for warranty cost optimization under imperfect repair

Manufacturers usually want to predict the warranty cost for new products under affordable maintenance policies. With insufficient reliability information, experimental degradation tests are commonly conducted to predict the field reliability before the products are put on the market. In this paper, we propose a novel warranty cost optimization framework based on degradation data within a finite warranty period under the assumption of imperfect repairs. The expected number of warranty claims is given in the analytical form. Two sources of uncertainty are considered to estimate the field reliability for more realistic warranty cost prediction: the uncertainty in experimental data and the variation in field conditions. Effects of imperfect repairs are assumed to be random. The warranty cost for a single repair is assumed to be associated with the improvement factor of imperfect repairs. Optimal imperfect repair policy is obtained by minimizing the expected warranty cost for each sold product. Further, the proposed framework can facilitate the interval prediction for warranty cost. Numerical results show that the proposed analytical method to evaluate warranty claims significantly outperforms simulation methods from the perspective of computational efforts. Finally, an application example of degradation tests along with sensitivity analysis is presented to illustrate the proposed framework.

A decision support system based on ontology and data mining to improve design using warranty data

Analysis of warranty based big data has gained considerable attention due to its potential for improving the quality of products whilst minimizing warranty costs. Similarly, customer feedback information and warranty claims, which are commonly stored in warranty databases might be analyzed to improve quality and reliability and reduce costs in areas, including product development processes, advanced product design, and manufacturing. However, three challenges exist, firstly to accurately identify manufacturing faults from these multiple sources of heterogeneous textual data. Secondly, accurately mapping the identified manufacturing faults with the appropriate design information and thirdly, using these mappings to simultaneously optimize costs, design parameters and tolerances. This paper proposes a Decision Support System (DSS) based on novel integrated stepwise methodologies including ontology-based text mining, self-organizing maps, reliability and cost optimization for identifying manufacturing faults, mapping them to design information and finally optimizing design parameters for maximum reliability and minimum cost respectively. The DSS analyses warranty databases which collect the warranty failure information from the customers in a textual format. To extract the hidden knowledge from this, an ontology-based text mining based approach is adopted. A data mining based approach using Self Organizing Maps (SOM) has been proposed to draw information from the warranty database and to relate it to the manufacturing data. The clusters obtained using SOM are analyzed to identify the critical regions, i.e., sections of the map where maximum defects occur. Finally, to facilitate the correct implementation of design parameter changes, the frequency and type of defects analyzed from warranty data are used to identify areas where improvements have resulted in the greatest reliability for the lowest cost.

Karta kontrolna do wieloetapowego monitorowania produktów sprzedawanych z gwarancją dwuwymiarową, z korektą ryzyka i wczesne ostrzeganie o wadach produkcyjnych na podstawie danych z reklamacji

Warranty claims data contain valuable information about the quality and reliability of products. The monitoring and early-warning of warranty claims data are of great significance to the manufacturer by identifying and solving the emerging quality or reliability problem as soon as possible. However, though it has been used widely in the automobile industry, there are no studies that have been carried out on the monitoring and early-warning of claims data for products sold with two-dimensional warranty. In order to fill this gap, fitting the two-dimensional warranty claims data with accelerated failure model (AFT), a multi-stage riskadjusted control chart is proposed by this paper, for which a reasonable product sales tracking time and a monitoring time are suggested to reduce the influence of sales delay and fluctuating claim rates. Comparing with traditional Cumulative Sum Control Chart (CUSUM), the applicability and availability of the proposed model are demonstrated in the final.

Warranty cost analysis: Increasing warranty repair times

In this study, we model the warranty servicing costs under nonrenewing and renewing free repair warranties. We assume nonzero increasing repair times with the warranty cost depending on the length of the repair time. An increasing geometric process is used to model the consecutive repair times. We introduce the generalised alternating renewal process, which is an alternating process with cycles consisting of an item's operational time followed by the corresponding repair time. We derive analytical results for a generalised alternating renewal process with a finite time horizon and use them to evaluate the warranty costs over the warranty period and over the life cycle of the product under the nonrenewing free repair warranty and renewing free repair warranty. Properties of the model are demonstrated through a simulation study and through the application to warranty claims data from an automotive manufacturer.

Doubly geometric processes and applications

The geometric process has attracted extensive research attention from authors in reliability mathematics since its introduction. However, it possesses some limitations, which include that: (1) it can merely model stochastically increasing or decreasing inter-arrival times of recurrent event processes and (2) it cannot model recurrent event processes where the inter-arrival time distributions have varying shape parameters. Those limitations may prevent it from a wider application in the real world. In this paper, we extend the geometric process to a new process, the doubly geometric process, which overcomes the above two limitations. Probability properties are derived, and two methods of parameter estimation are given. Application of the proposed model is presented: one is on fitting warranty claim data, and the other is to compare the performance of the doubly geometric process with the performance of other widely used models in fitting real-world datasets, based on the corrected Akaike information criterion.

A value-at-risk approach to optimisation of warranty policy

In the real world, a manufacturer may produce many products, which may have common components installed. Consequently, the frequencies of the warranty claims of those products are statistically dependent. Warranty policy optimisation in the existing research, however, has not considered such statistical dependence, which may increase bias in decision making. This paper is the first attempt to collectively optimises warranty policy for a set of different products, produced by one manufacturer, whose failures are statistically dependent, using tools borrowed from financial mathematics (i.e., value-at-risk theory and copula). We prove the existence of the optimal solutions for different scenarios. Numerical examples are used to validate the applicability of the proposed methods.

A mean-variance optimisation approach to collectively pricing warranty policies

Warranty policy can influence the profit and cost of a product. In practice, a manufacturer commonly produces more than one product, or a portfolio of products, and provides warranty servicing for them. Many authors have attempted to optimise warranty policy to maximise the profit or minimise the cost of each individual product. Warranty claims of the products produced by the same manufacturer, however, may be due to common causes, since the products may be designed by the same engineer team or using the same type of components. This implies that the numbers of warranty claims of different products may be related, and optimisation of warranty policies for each individual product may therefore cause biased decisions. To overcome this disadvantage, this paper aims to collectively optimise a manufacturer's total profit for a portfolio of different products by using a mean-variance optimisation approach. A tool from the probability theory, copulas, is used to depict the dependence among the warranty claims of different products. Numerical examples are provided to illustrate the application of the proposed methods.

Game theoretic modelling of service agent warranty fraud

When a warranty provider outsources warranty servicing to an external service agent this agent may act in a fraudulent manner. In this paper we consider a special case of service agent fraud—with the service agent overbilling the warranty provider for some of the warranty claims. A detailed inspection of a claim may be made to identify whether or not the service agent has committed fraud, but this inspection involves an additional cost to the warranty provider. This cost may be recovered by imposing a penalty on the service agent whenever a fraud is committed and it is detected. This penalty is specified in the maintenance service contract. A game theoretic approach is used to find the optimal overbilling strategy for the service agent and the optimal inspection strategy for the warranty provider. The optimal solution is the mixed strategy Nash equilibrium of a static game between the two parties.

Consumer Behaviour and Warranty Claim: A Study on Czech Consumers

Consumer Behaviour and Warranty Claim: A Study on Czech Consumers