Effects of warranty execution on warranty reserve costs

Article Abstract:

The influence of warranty execution on the expected warranty reserves of a linear pro rate rebate plan is investigated. This extends previous studies which have historically assumed full execution of warranty when a product fails within the warranty time. A better method for customer-behavior modelling is developed by incorporating a general warranty execution function, addressing the fact that not all customers may exercise warranty. For this investigation, the failure distribution includes the Weibull distribution with a variety of parameter values. A weight function that demonstrates the impact of warranty execution is employed. The expected present values of warranty reserves for the different warranty execution functions are determined by applying a factor that incorporates the discount rate of a firm and the general inflation rate. The effect of the warranty execution function on the warranty reserves is then assessed.

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A prediction model for manufacturer warranty reserves

Article Abstract:

Manufacturers must face the problem of calculating the amount of funds necessary to cover warranty claims for defective products. Calculations must factor in risk. They are complex due to uncertainties in: the product failure rate; product quality; and future economic conditions. Warranty reserve predictions are dependent upon product failure distributions. A prediction model for estimating the warranty reserve fund based on exponential product failures can be extended to include general product failure distribution.

Manufacturing industry, Manufacturing industries

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Approximating expected warranty costs

Article Abstract:

Researchers have examined the consumer's costs under two general warranty policies. Evaluation of the costs is complicated from either the short- or long-run perspective, so approximations are often desirable. A framework has been devised for comparing the price of different warranty policies which leads to expressing the expected costs in terms of complex functions arising in renewal theory. Straight line approximations have proven to be superior to the new better than used approximations.

Decision-making, Models, Decision making, Product liability, Products liability, Renewal theory

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