Warranty menu design for a two-dimensional warranty. (November 2016)

• Record Type: Journal Article
• Authors: Ye, Zhi-Sheng; Murthy, D.N. Pra
• Is Part Of: Reliability engineering & system safety. Volume 155(2016:Nov.)
• Page Start: 21
• Page End: 29
• Publication Date: 2016-11
• Subjects: Flexible warranty policy -- Stair-case warranty -- Accelerated failure time model -- Reliability; Reliability (Engineering) -- Periodicals; System safety -- Periodicals; Industrial safety -- Periodicals; Fiabilité -- Périodiques; Sécurité des systèmes -- Périodiques; Sécurité du travail -- Périodiques; 620.00452
• DOI: 10.1016/j.ress.2016.05.013
• Languages: English
• ISSNs: 0951-8320

Abstract

Abstract: Fierce competitions in the commercial product market have forced manufacturers to provide customer-friendly warranties with a view to achieving higher customer satisfaction and increasing the market share. This study proposes a strategy that offers customers a two-dimensional warranty menu with a number of warranty choices, called a flexible warranty policy. We investigate the design of a flexible two-dimensional warranty policy that contains a number of rectangular regions. This warranty policy is obtained by dividing customers into several groups according to their use rates and providing each group a germane warranty region. Consumers choose a favorable one from the menu according to their usage behaviors. Evidently, this flexible warranty policy is attractive to users of different usage behaviors, and thus, it gives the manufacturer a good position in advertising the product. When consumers are unaware about their use rates upon purchase, we consider a fixed two-dimensional warranty policy with a stair-case warranty region and show that it is equivalent to the flexible policy. Such an equivalence reveals the inherent relationship between the rectangular warranty policy, the L-shape warranty policy, the step-stair warranty policy and the iso-probability of failure warranty policy that were extensively discussed in the literature. Highlights: We design a two-dimensional warranty menu with a number of warranty choices. Consumers can choose a favorable one from the menu as per their usage behavior. We further consider a fixed 2D warranty policy with a stair-case warranty region. We show the equivalence of the two warranty policies.