Faculty Research A Mixture Model for Automobile Warranty Data

This paper proposes a general mixture model framework for automobile warranty data that includes parameters for product field performance, the manufacturing and assembly process, and dealer preparation process. The model fits warranty claims as a mixture of manufacturing or assembly defects (quality problems) and usage related failures (reliability problems). The model also estimates the fraction of vehicles containing a manufacturing or assembly defect when leaving the assembly plant. This parameter measures the quality of the entire vehicle production process, i.e., component manufacturing and final assembly. The model also measures the proportion of manufacturing or assembly defects repaired by the automobile dealer prior to customer delivery. This conditional probability quantifies the ability of the vehicle preparation process to identify and repair defects prior to customer delivery. To apply the model to field failure or warranty data, the practitioner must identify parametric distributions for each of the two failure processes. To demonstrate the model, this paper develops a Weibull-Uniform mixture for manufacturer supplied warranty claim data.