Warranty cost analysis for second-hand products using bivariate approach

Proceedings of the Institution of Mechanical Engineers, Part O:

Xie

2017

The warranty policies for capital-intensive products, such as automobiles, heavy equipment, and aircraft engines, typically have two dimensions, that is, the age and usage. During the last two decades, much research has been published on the two-dimensional warranty from many different perspectives. This article reviews and summarizes work and state-of-theart developments in this research field, with emphasis on both theoretical methodologies and practical applications. In this review, five principal topics are covered: (1) two-dimensional warranty policies, (2) cost analysis of two-dimensional warranty, (3) two-dimensional warranty and engineering/marketing problems, (4) two-dimensional warranty and logistics issues, and (5) two-dimensional long-term warranty. In particular, the practical and application aspects of twodimensional warranty policies have been surveyed. Overall, 105 journal papers covering 49 journals, published from 1993 to present, are selected and discussed in detail. Finally, some interesting and challenging research topics are presented for the scholars and practitioners to explore new research in this field.

Section: Other Miscellaneous Issuesmentioning

confidence: 99%

Section: D Long-term Warrantymentioning

confidence: 99%

Two-dimensional warranty: A literature review

Proceedings of the Institution of Mechanical Engineers, Part O:

Xie

2017

“…Shafiee et al developed statistical models to estimate the dealer's expected warranty cost for second‐hand products sold with 2D warranty policies. Moreover, two stochastic models were proposed in Sarada and Mubashirunnissa to calculate the expected warranty cost for second‐hand products under various 2D warranty policies.…”

Section: Introductionmentioning

confidence: 99%

Optimal Upgrade Policy for Used Products Sold with Two‐dimensional Warranty

Quality & Reliability Eng

2016

aIn this paper, a pre-sale upgrade model is developed for repairable used products sold with two-dimensional warranty policies. Two kinds of two-dimensional warranty regions are considered, that is, rectangular and L-shaped regions. The marginal approach is used to describe the effect of age and usage on product reliability by treating usage as a random function of age. The optimal upgrade policy is determined to minimize the dealer's total expected servicing cost which is the sum of upgrade cost and warranty servicing cost. Analytical properties of the optimal solutions are also investigated. Furthermore, a five-step approach is presented to design flexible warranty contracts with optimized upgrade policies for used products, which allow customers to choose the most suitable warranty plans among the available options offered by the dealer. Numerical example and sensitivity analysis are provided to demonstrate the proposed models. This study provides the dealers of used products with useful guidelines on designing flexible and optimized warranty contracts.

“…Shafiee et al 5 developed statistical models to estimate the dealer’s expected warranty cost for second-hand products sold with 2D FRW policy, and a case study of used refrigerators was also illustrated. Besides, in Sarada and Mubashirunnissa, 21 two stochastic models were proposed to calculate the expected warranty cost for second-hand products under 2D free repair/replacement warranty and PRW policies. Up to now, little research can be found on modeling and analyzing reliability improvement strategies for used products sold with 2D warranty policies, and this study intends to fulfill this gap.…”

Section: Introductionmentioning

confidence: 99%

Modeling flexible two-dimensional warranty contracts for used products considering reliability improvement actions

Proceedings of the Institution of Mechanical Engineers, Part O:

2016

In this article, a new pre-sale reliability improvement model is proposed for repairable used products sold with a twodimensional free repair warranty policy. Using bivariate failure modeling framework, this model can describe the effect of reliability improvement action on the past age and past usage of a used product separately. Under the twodimensional free repair warranty policy, product failures within the warranty coverage are rectified minimally by the dealer at no cost to new buyers. The optimal reliability improvement policy is determined to minimize the total expected servicing cost per unit sale from the dealer's perspective. Moreover, a four-step approach is developed to design flexible warranty contracts with optimized reliability improvement policies for used products. Numerical example and sensitivity analysis are provided to demonstrate the effectiveness of the proposed model and approach.