2008 ARS, India
Track 2 Session 6

Warranty Management and Forecasts

Products are becoming increasingly complex resulting in customers often being uncertain about the performance of these products. A warranty is the seller's assurance to a buyer that a product is as has been represented. It can be viewed as a signal that conveys information about product reliability and as such it serves as an important marketing tool.

Servicing a warranty involves additional costs to the manufacturer and this has an impact on the profit levels. The warranty cost is a function of the product reliability and can be reduced through the use of various techniques to improve product reliability (such as reliability improvement through development and redundancy processes). However, this improvement generally involves incurring additional costs and as a result the manufacturing cost increases, which may imply a higher selling price. The design phase must incorporate marketing variables and the design and marketing decisions must be made jointly.

In this presentation, we develop a method to forecast the warranty claims for the product already in service from the field failure data and also set the optimum warranty period for the products.

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