The quality loss function assumes a fixed target and only accounts for immediate issues within manufacturing facilities whereas warranty loss occurs during customer use. Based on the two independent variables, product performance and consumers’ expectation, a methodology to predict the probability of customer complaint is presented in this paper. The formulation presented will serve as a basic ...

Abstract: In recent decades, high profits of extended warranty have caused that third-party firms consider it as a lucrative after-sales service. However, customers division in terms of risk aversion and effect of offering extended warranty on manufacturers’ basic warranty should be investigated through adjusting such services. Since risk-averse customers welcome extended warranty, while the cu...

This paper addresses the effect of twodimensional warranty policies on the procedure for forecasting the cost of unreliability. Automotive warranties are characterized by age or time in service and vehicle usage mileage. This paper presents a model where the usage time is a primary variable and the mileage accumulation is estimated from field return data. At each time interval the probability o...

in today’s fiercely competitive products market, product warranty has started playing an important role. currently, a large number of products are being sold with warranty policies in the form of free replacement warranty, pro-rata warranty, and combined warranty policies. pro-rata warranties are relatively a complex concept. the modeling of failures during the warranty period and the costs for...

currently, a large number of products are being sold with warranty policies. pro-rata warranties are relatively a complex concept. this paper focuses on developing a new pro-rata warranty policy. in this model components of the product are grouped into two disjointed sets, failures of components belonging to set one are covered by prw warranty and those components that belonging to set two are ...

Warranty is a powerful implement for marketing strategy that is used by manufacturersand creates satisfaction for consumers by ensuring to compensate for incorrect operation of the product. Warranty serviceresults ina cost named warranty cost for a manufacturer.This cost is a function of warranty policy, regions, and product failures pattern. Since this service coversthe cost of uncertain failu...

Automobile warranties and thus lifetimes are characterized in the two-dimensional space of time and mileage. This paper presents a non-homogenous Poisson Process (NHPP) predictive model for automobile warranty claims consisting of two components: a population size function and a failure or warranty claim rate. The population size function tracks the population in the time domain and accounts fo...

The objective of this paper is to understand the drivers of consumer choice under risk. We disentangle and study the relative importance of di erent preferences in explaining the high risk premia consumers pay for actuarially unfair insurance. Empirical and behavioral research on insurance is at odds on whether diminishing returns (curvature of the utility function), or loss aversion and non-li...