D. N. P. Murthy

New product warranty: A literature review

Warranty is an important element of marketing new products as better warranty signals higher product quality and provides greater assurance to customers. Servicing warranty involves additional costs to the manufacturer and this cost depends on product reliability and warranty terms. Product reliability is influenced by the decisions made during the design and manufacturing of the product. As such warranty is very important in the context of new products. Product warranty has received the attention of researchers from many different disciplines and the literature on warranties is vast. This paper carries out a review of the literature that has appeared in the last ten years. It highlights issues of interest to manufacturers in the context of managing new products from an overall business perspective

A modified Weibull distribution

A new lifetime distribution capable of modeling a bathtub-shaped hazard-rate function is proposed. The proposed model is derived as a limiting case of the Beta Integrated Model and has both the Weibull distribution and Type 1 extreme value distribution as special cases. The model can be considered as another useful 3-parameter generalization of the Weibull distribution. An advantage of the model is that the model parameters can be estimated easily based on a Weibull probability paper (WPP) plot that serves as a tool for model identification. Model characterization based on the WPP plot is studied. A numerical example is provided and comparison with another Weibull extension, the exponentiated Weibull, is also discussed. The proposed model compares well with other competing models to fit data that exhibits a bathtub-shaped hazard-rate function.

Product warranty management -- I: A taxonomy for warranty policies

Effective management of product warranty requires proper evaluation of alternative warranty policies. Many different types of warranty policies are in common use. Still others are discussed in the literature on product warranty. In this paper we formulate a taxonomy for warranty to assist the manager responsible for product warranty in choosing appropriate alternatives for evaluation before a final choice is made.

Strategic maintenance management

The approach to maintenance management has changed over the last one hundred years. Over the last few years, the Reliability Engineering and Risk Management Group (RERMG) at the University of Queensland has developed an approach called the strategic maintenance management (SMM) approach. The paper outlines the approach and contrasts it with the current approaches. It then discusses the industry‐university partnership in the implementation of this approach and the current activities at the University of Queensland to assist industry in the implementation of the SMM approach.

Optimal reliability, warranty and price for new products

The success of a new product depends on both engineering decisions (product reliability) and marketing decisions (price, warranty). A higher reliability results in a higher manufacturing cost and higher sale price. Consumers are willing to pay a higher price only if they can be assured about product reliability. Product warranty is one such tool to signal reliability with a longer warranty period indicating better reliability. Better warranty terms result in increased sales and also higher expected warranty servicing costs. Warranty costs are reduced by improvements in product reliability. Learning effects result in the unit manufacturing cost decreasing with total sales volume and this in turn impacts on the sale price. As such, reliability, price and warranty decisions need to be considered jointly. The paper develops a model to determine the optimal product reliability, price and warranty strategy that achieve the biggest total integrated profit for a general repairable product sold under a free replacement-repair warranty strategy in a market and looks at two scenarios for the pricing and warranty of the product. The model assumes that the sale rate increases as the warranty period increases and decreases as the price increases. The maximum principle method is used to obtain optimal solutions for dynamic price and warranty situations. Finally, numerical examples are given to illustrate the proposed model.

Product warranty management — III: A review of mathematical models

A variety of mathematical models have been developed to study different aspects of warranty. In this paper we carry out a comprehensive review of these models by classifying them into three categories based on consumer, manufacturer and public policy decision maker perspectives.

Optimal decision making in a maintenance service operation

In recent years, there has been a dramatic increase in the out sourcing of equipment maintenance with the maintenance being carried out by an external agent rather than in-house. Often, the agent offers more than one option and the owners of equipment (customers) are faced with the problem of selecting the optimal option. The optimal choice depends on their attitude to risk and the parameters of the different options. The agent needs to take these issues into account in the optimal selection of the parameters for the different options and this requires a game theoretic formulation. The papers deals with one such model formulation to determine the agents optimal strategy with regards the pricing structure, the number of customers to service and the number of service channels.

Modeling failure-data by mixture of 2 Weibull distributions: a graphical approach

The paper presents a graphical approach to decide on the appropriateness of a mixture of 2 Weibull distributions to model a given failure data set. It involves plotting the data on Weibull paper. The plots are completely characterized and the parameters estimated for various cases. Two examples involving real data illustrate the usefulness of the approach. The results are compared with those of Jiang and Kececioglu (1992) and the errors therein are pointed out. >

Optimal Burn-in Time to Minimize Cost for Products Sold Under Warranty

Abstract For products with an initially high failure rate, burn-in can be used to reduce the warranty cost. This paper examines the optimal burn-in time to achieve a trade-off between the reduction in the warranty cost and the increase in the manufacturing cost (as burn-in can be viewed as a part of the manufacturing process). Conditions for burn-in to be beneficial are derived for various warranty policies. A numerical example is presented.

A new repair-replace strategy for items sold with a two-dimensional warranty

For repairable items, the manufacturer has the option to either repair or replace a failed item that is returned under warranty. In this paper, we look at a new warranty servicing strategy for items sold with two-dimensional warranty where the failed item is replaced by a new one when it fails for the first time in a specified region of the warranty and all other failures are repaired minimally. The region is characterised by two parameters and we derive the optimal values for these to minimise the total expected warranty servicing cost. We compare the results with other repair-replace strategies reported in the literature.