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A poisson regression model for two‐attribute warranty policies

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  • Herbert Moskowitz
  • Young Hak Chun

Abstract

We discuss the two‐attribute warranty policy in which two types of warranty characteristics, such as product age and mileage in the y‐year‐m‐mile protection plan in the automobile industry, are employed simultaneously as criteria in determining the warranty eligibility of a failed product. Based on the Poisson regression model and von Neumann‐Morgenstern expected utility theory, we develop two kinds of two‐attribute warranty policies: a fixed two‐attribute warranty policy in which all customers are offered the same warranty plan, and a flexible two‐attribute warranty policy in which customers are permitted to choose any warranty plan among the numerous plans furnished by the producer. A numerical example is presented to illustrate the procedure for determining the optimal warranty price in the fixed two‐attribute warranty model and for generating a set of warranty plans for the same warranty price in the flexible warranty model. It appears desirable from both the producers' and consumers' viewpoints to convert the classical single‐attribute warranty policy into a fixed two‐attribute policy or, even further, into a flexible two‐attribute policy. © 1994 John Wiley & Sons. Inc.

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  • Herbert Moskowitz & Young Hak Chun, 1994. "A poisson regression model for two‐attribute warranty policies," Naval Research Logistics (NRL), John Wiley & Sons, vol. 41(3), pages 355-376, April.
    • Handle: RePEc:wly:navres:v:41:y:1994:i:3:p:355-376
    DOI: 10.1002/1520-6750(199404)41:33.0.CO;2-D
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    References listed on IDEAS

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    1. Edward W. Frees, 1986. "Warranty analysis and renewal function estimation," Naval Research Logistics Quarterly, John Wiley & Sons, vol. 33(3), pages 361-372, August.
    2. John W. Mamer, 1987. "Discounted and Per Unit Costs of Product Warranty," Management Science, INFORMS, vol. 33(7), pages 916-930, July.
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    4. Theodore S. Glickman & Paul D. Berger, 1976. "Optimal Price and Protection Period Decisions for a Product Under Warranty," Management Science, INFORMS, vol. 22(12), pages 1381-1390, August.
    5. Hausman, Jerry & Hall, Bronwyn H & Griliches, Zvi, 1984. "Econometric Models for Count Data with an Application to the Patents-R&D Relationship," Econometrica, Econometric Society, vol. 52(4), pages 909-938, July.
    6. Gourieroux, Christian & Monfort, Alain & Trognon, Alain, 1984. "Pseudo Maximum Likelihood Methods: Theory," Econometrica, Econometric Society, vol. 52(3), pages 681-700, May.
    7. Gourieroux, Christian & Monfort, Alain & Trognon, Alain, 1984. "Pseudo Maximum Likelihood Methods: Applications to Poisson Models," Econometrica, Econometric Society, vol. 52(3), pages 701-720, May.
    8. Wallace R. Blischke & Ernest M. Scheuer, 1975. "Calculation of the cost of warranty policies as a function of estimated life distributions," Naval Research Logistics Quarterly, John Wiley & Sons, vol. 22(4), pages 681-696, December.
    9. Yves Balcer & Izzet Sahin, 1986. "Replacement Costs Under Warranty: Cost Moments and Time Variability," Operations Research, INFORMS, vol. 34(4), pages 554-559, August.
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    Cited by:

    1. Marlin U. Thomas & Sridevi S. Rao, 1999. "Warranty Economic Decision Models: A Summary and Some Suggested Directions for Future Research," Operations Research, INFORMS, vol. 47(6), pages 807-820, December.
    2. 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.
    3. P A Scarf & H A Majid, 2011. "Modelling warranty extensions: a case study in the automotive industry," Journal of Risk and Reliability, , vol. 225(2), pages 251-265, June.
    4. Rui Zheng & Chun Su & Yuqiao Zheng, 2020. "Two-stage flexible warranty decision-making considering downtime loss," Journal of Risk and Reliability, , vol. 234(3), pages 527-535, June.
    5. Xiaolin Wang & Wei Xie, 2018. "Two-dimensional warranty: A literature review," Journal of Risk and Reliability, , vol. 232(3), pages 284-307, June.
    6. W. Y. Yun & K. M. Kang, 2007. "Imperfect repair policies under two-dimensional warranty," Journal of Risk and Reliability, , vol. 221(4), pages 239-247, December.
    7. Guillermo Gallego & Ruxian Wang & Ming Hu & Julie Ward & Jose Luis Beltran, 2015. "No Claim? Your Gain: Design of Residual Value Extended Warranties Under Risk Aversion and Strategic Claim Behavior," Manufacturing & Service Operations Management, INFORMS, vol. 17(1), pages 87-100, February.

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