Probability distributions of cost, revenue and profit over a warranty cycle

Polatoglu, Hakan; Şahin, İzzet

doi:10.1016/s0377-2217(97)00094-5

Cited by 31 publications

(11 citation statements)

References 9 publications

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“…All of this led to the thinking of legislators to pass laws to regulate the warranty period, For example, the Europe Union (EU) passed legislation on a 2-year warranty for all products Christozov et al, 2009). Polatoglu and Sahin (1998) in comprehensive study proposed some theory and methodology for probability distributions of cost, revenue and profit over a warranty cycle. Iskandar and Murthy (2009) proposed another repair-replace strategy based on usage rate for items sold with a two-dimensional warranty.…”

Section: Statement Of the Problemmentioning

confidence: 99%

Developing a benchmarking approach to evaluate the state of warranty in automakers: A case study of two biggest automakers in Middle East

Kheyrkhahan¹,

kalaei²,

Karkehabadi³

et al. 2012

msl

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Warranty is recognized as an important component of product marketing and it can increase customers' confidence. All services during warranty are considered as an additional cost for producers where these expenses are associated with product reliability and warranty components. Product reliability is also influenced by decisions taken in the field of product design and process and arrangement in this period. Product reliability also plays an important role in new products for production planning. As competition increases all around the world, there is an increasing interest in providing suitable substrates for the acceleration of economic growth and development and production. Warranty is one of the basic infrastructures and behaviors in today's competitive world, which is boosting sales and typically profits and customer's satisfaction and confidence play important roles in achieving this goal. In this study, we first evaluate warranty policies and strategies and then we consider after selling services taken in a case study. Finally, some strategies are introduced to improve the current situation and to achieve suitable model for ideal situation.

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Section: Statement Of the Problemmentioning

confidence: 99%

Developing a benchmarking approach to evaluate the state of warranty in automakers: A case study of two biggest automakers in Middle East

Kheyrkhahan¹,

kalaei²,

Karkehabadi³

et al. 2012

msl

View full text Add to dashboard Cite

show abstract

“…Patankar and Worm (1981) computed prediction intervals for the total warranty costs. Balcer and Sahin (1986), Sahin and Polatlioglu (1996), and Polatlioglu and Sahin (1998) studied the moments and probability distribution of warranty costs. Chukova and Hayakawa (2004) evaluated the warranty costs when the cost of each warranty claim depends on the length of repair time.…”

Section: Literature Reviewmentioning

confidence: 99%

Dynamic Cash Management of Warranty Reserves

Gurgur

2011

The Engineering Economist

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The objective in warranty reserve management is to cover contingent liabilities that arise from warranty obligations. Maintaining excess reserves would cause opportunity cost, whereas depleting the reserve would necessitate finding emergency funds. In this article we propose a policy rule to guide cash management of warranty reserves for an infinite horizon that involves periodic reviews. At the beginning of each period the decision maker determines how much to add to or subtract from the fund and how much to contribute after each sale. Numerical examples show how the optimal control variables change in response to change in problem parameters.

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“…The authors also derive the probability distribution for warranty costs and some related variables [19]. Polatoglu and Sahin [17] investigate the probability distribution of warranty costs compared to the expected cost analysis. A good discussion of various warranty policies, cost models in finite time and for perpetual warranties, preventive maintenance, and replacement strategies may be found in Sahin and Polatoglu [20].…”

Section: Literature Reviewmentioning

confidence: 99%

Warranty reserves for nonstationary sales processes

Kulkarni

Mitra

et al. 2002

Naval Research Logistics

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Estimation of warranty costs, in the event of product failure within the warranty period, is of importance to the manufacturer. Costs associated with replacement or repair of the product are usually drawn from a warranty reserve fund created by the manufacturer. Considering a stochastic sales process, first and second moments (and thereby the variance) are derived for the manufacturer's total discounted warranty cost of a single sale for single-component items under four different warranty policies from a manufacturer's point of view. These servicing strategies represent a renewable free-replacement, nonrenewable free-replacement, renewable pro-rata, and a nonrenewable minimal-repair warranty plans. The results are extended to determine the mean and variance of total discounted warranty costs for the total sales over the life cycle of the product. Furthermore, using a normal approximation, warranty reserves necessary for a certain protection level, so that reserves are not completely depleted, are found. Results and their managerial implications are studied through an extensive example.

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Probability distributions of cost, revenue and profit over a warranty cycle

Cited by 31 publications

References 9 publications

Developing a benchmarking approach to evaluate the state of warranty in automakers: A case study of two biggest automakers in Middle East

Developing a benchmarking approach to evaluate the state of warranty in automakers: A case study of two biggest automakers in Middle East

Dynamic Cash Management of Warranty Reserves

Warranty reserves for nonstationary sales processes

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