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Effects of Warranty Execution on Warranty Reserve Costs

Author

Listed:
  • Jayprakash G. Patankar

    (Department of Management, The University of Akron, Akron, Ohio 44325)

  • Amitava Mitra

    (Department of Management, Office of the Dean, Auburn University, 415 West Magnolia, Suite 516, Auburn, Alabama 36849)

Abstract

Previous research has usually assumed full execution of warranty if a product fails within the warranty time. This paper investigates the effect of warranty execution on the expected warranty reserves of a linear pro rata rebate plan. The failure distribution investigated includes the Weibull distribution with different parameter values. A weight function is used that depicts the effect of warranty execution. Several forms of this warranty execution modeling consumer behavior, which is influenced by factors such as the rebate plan, warranty time, product class, and warranty attrition, are studied. Expected present value of warranty reserves, by using a factor that includes the firm's discount rate and the general inflation rate, are found for the different warranty execution functions. The impact of the warranty execution function on the warranty reserves per unit is explored. The paper also investigates the effects of the model parameters, such as the failure distribution parameters and differences in consumer behavior in claiming warranties on warranty costs per unit.

Suggested Citation

  • Jayprakash G. Patankar & Amitava Mitra, 1995. "Effects of Warranty Execution on Warranty Reserve Costs," Management Science, INFORMS, vol. 41(3), pages 395-400, March.
    • Handle: RePEc:inm:ormnsc:v:41:y:1995:i:3:p:395-400
    DOI: 10.1287/mnsc.41.3.395
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    Citations

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    Cited by:

    1. Wu, Shaomin, 2013. "A review on coarse warranty data and analysis," Reliability Engineering and System Safety, Elsevier, vol. 114(C), pages 1-11.
    2. Wang, Xin & Xie, Wei & Ye, Zhi-Sheng & Tang, Loon-Ching, 2017. "Aggregate discounted warranty cost forecasting considering the failed-but-not-reported events," Reliability Engineering and System Safety, Elsevier, vol. 168(C), pages 355-364.
    3. Mitra, Amitava, 2021. "Warranty parameters for extended two-dimensional warranties incorporating consumer preferences," European Journal of Operational Research, Elsevier, vol. 291(2), pages 525-535.
    4. Wei Xie & Haitao Liao, 2013. "Some aspects in estimating warranty and post‐warranty repair demands," Naval Research Logistics (NRL), John Wiley & Sons, vol. 60(6), pages 499-511, September.
    5. Wu, Shaomin, 2011. "Warranty claim analysis considering human factors," Reliability Engineering and System Safety, Elsevier, vol. 96(1), pages 131-138.
    6. Cao, Zixia, 2022. "Brand equity, warranty costs, and firm value," International Journal of Research in Marketing, Elsevier, vol. 39(4), pages 1166-1185.
    7. Mitra, Amitava & Patankar, Jayprakash G., 1997. "Market share and warranty costs for renewable warranty programs," International Journal of Production Economics, Elsevier, vol. 50(2-3), pages 155-168, June.
    8. Murthy, D. N. P. & Djamaludin, I., 2002. "New product warranty: A literature review," International Journal of Production Economics, Elsevier, vol. 79(3), pages 231-260, October.
    9. Huang, Yeu-Shiang & Gau, Wei-Yo & Ho, Jyh-Wen, 2015. "Cost analysis of two-dimensional warranty for products with periodic preventive maintenance," Reliability Engineering and System Safety, Elsevier, vol. 134(C), pages 51-58.
    10. Duong, Quang Huy & Zhou, Li & Meng, Meng & Nguyen, Truong Van & Ieromonachou, Petros & Nguyen, Duy Tiep, 2022. "Understanding product returns: A systematic literature review using machine learning and bibliometric analysis," International Journal of Production Economics, Elsevier, vol. 243(C).

    More about this item

    Keywords

    marketing; product warranty policy;

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