Long Term Warranty and After Sales Service

Concept, Policies and Cost Models

verfasst von: Anisur Rahman, Gopinath Chattopadhyay

Verlag: Springer International Publishing

Buchreihe : SpringerBriefs in Applied Sciences and Technology

Enthalten in: Springer Professional "Wirtschaft+Technik" , Springer Professional "Technik" , Springer Professional "Wirtschaft"

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Über dieses Buch

This volume presents concepts, policies and cost models for various long-term warranty and maintenance contracts. It offers several numerical examples for estimating costs to both the manufacturer and consumer. Long-term warranties and maintenance contracts are becoming increasingly popular, as these types of aftersales services provide assurance to consumers that they can enjoy long, reliable service, and protect them from defects and the potentially high costs of repairs.

Studying long-term warranty and service contracts is important to manufacturers and consumers alike, as offering long-term warranty and maintenance contracts produce additional costs for manufacturers / service providers over the product’s service life. These costs must be factored into the price, or the manufacturer / dealer will incur losses instead of making a profit. On the other hand, the buyer / consumer needs to weigh the cost of maintaining it over its service life and to decide whether or not these policies are worth purchasing.

There are a number of complexities involved in developing failure and cost models for these policies due to uncertainties concerning the service life, usage pattern, maintenance work and long-term costs of rectifications. Mathematical models for predicting failures and expected costs for various one-dimensional long-term warranty policies are developed at the system level and analyzed by taking into account the uncertainties in connection with longer coverage periods and the rectification costs over the warranty period. Failures and costs are modeled using stochastic techniques and illustrated by means of numerical examples for estimating costs to the manufacturer and consumer. Various rectification policies are proposed and analyzed. The models developed here can be used to aid in managerial decisions on purchasing products with long-term warranty policies and maintenance contracts or outsourcing maintenance.

Inhaltsverzeichnis

Frontmatter

Chapter 1. Long Term Warranty and After Sales Service

Abstract

Reliability of products is becoming more and more important due to tough competition in the product market. The effective ways to ensure reliability are to consider design, manufacturing, and after sales services. One way to signal the reliability through after sales service of the product is by offering better warranty terms. The warranty period offered by the manufacturer/dealer has been progressively increasing since the beginning of the 20th century. Currently, a large number of products are being sold with long term warranty policies in the form of lifetime warranty, extended warranty, warranty for used products, and service contracts and performance based maintenance contracts policies. These types of warranties are becoming more and more popular as these provide assurance for a longer reliable service life, protection of customers against poor quality and the potential high cost of failure occurring in products life cycle. Formulation of attractive policies and cost models for these warranties is important to the manufacturer/service agents for estimating future costs to build it into the sales/contract price. This chapter recollects warranty basics in the beginning and then introduces the a number of currently available long term warranty policies to develop foundation for further studies on long term warranty and service contract policies and cost models in the subsequent chapters.

Anisur Rahman, Gopinath Chattopadhyay

Chapter 2. Lifetime Warranty: Policies and Cost Models

Abstract

Lifetime warranties are relatively new concept. These types of warranties are becoming more and more popular as these provide assurance for a longer reliable service life, protection of customers against poor quality and the potential high cost of failure occurring during the long uncertain life of products. Formulation of attractive policies and cost models for these warranties is important to the manufacturer/dealer for estimating future costs to build it into the sales price. Modelling failures during the warranty period and the costs for such policies are complex since the useful life of products are uncertain and are not defined well and it is often difficult to tell about life measures for the longer period of coverage due to usage pattern/maintenance activities undertaken and uncertainties of costs over the period. This chapter focuses on defining lifetime, developing lifetime warranty policies and models for predicting failures and estimating costs for lifetime warranty policies. In this article, stochastic models for different lifetime warranty policies have been developed and analysed for the cost of these warranty policies when offered with sale of new product. The developed models are analysed by considering products with time dependent failure mode.

Anisur Rahman, Gopinath Chattopadhyay

Chapter 3. Used Second-Hand Product Warranty

Abstract

The market for second-hand/used products is growing rapidly. The buyers are demanding warranties for items purchased from second-hand or used product market. In response to buyer’s demand, public policy makers have begun enacting laws requiring dealers to offer warranties and service warranty claims. Dealers of used products are using warranty to promote sales. Offering warranty results in additional costs associated with warranty servicing. Dealers of second-hand products need to formulate policies and do a proper cost analysis of alternative warranty policies. This section gives an overview of warranty policies for second hand products and the mathematical models, which have been developed for cost estimation of warranties for second-hand products.

Anisur Rahman, Gopinath Chattopadhyay

Chapter 4. Extended Warranty

Abstract

An extended warranty is the extension of the base warranty which is an obligation or responsibility assumed by the manufacturer or dealer for further service to buyers beyond the base warranty period for a certain premium. In recent years, the concept of extended warranty has received significant attention due to the claims made by some authors that many extended warranty service providers are earning huge profits by selling extended warranty. These types of warranties are becoming more and more popular to the buyers as these provide assurance for a longer reliable service life, protection of customers against poor quality and the potential high cost of failure occurring in products life cycle. At the same time a large number of buyers are still unsure about the additional costs and benefits of buying extended warranty for their products. Although the concept of extended warranty has attracted significant attention among practitioners, especially in recent years, the academic research on extended warranty is very limited. This chapter overviews the existing academic research outcomes on extended warranty basics in the beginning and then focuses on developing models for predicting the minimum duration of extended warranty a customer should purchase and the cost of providing extended warranty. Mathematical models are developed using cumulative hazard function and renewal function.

Anisur Rahman, Gopinath Chattopadhyay

Chapter 5. Maintenance Contract

Abstract

In recent years, maintenance or service contracts have received significant attention due to increased profits for the service providers and reduction of cost and risk for owners through expert services provided by the service providers. There is a growing trend for asset intensive industries to outsource maintenance services of their complex assets since outsourcing maintenance through contract reduces upfront investments in infrastructure, expertise and specialised maintenance facilities. As a consequence, maintenance contracts have become a billion dollars annual business, typically, at least half of that goes into the service provider’s pocket as profit, with less than 20 % spent on the repair or replacement of item. Therefore, to make maintenance contracts more effective there is a great need for appropriate policies and also a need to develop mathematical models for cost estimation of maintenance contracts in order to balance the service provider’s profit and the owner’s total costs, and understand future costs that could be built into the contract price. Estimation of costs for such contracts is complex and it is important to the owner and the service providers for economic variability. The service provider’s profit is influenced by many factors such as the terms of the contract, reliability of item, the servicing strategies, and costs of resources needed to carryout maintenance. Three policies for maintenance contracts are proposed in this chapter considering the concepts of outsourcing assets to the service providers. Conceptual models are developed for estimating servicing costs of outsourcing through service contracts by considering time dependent failure mode.

Anisur Rahman, Gopinath Chattopadhyay

Chapter 6. Outsourcing Rail Maintenance Through Maintenance Contracts—A Case Study

Abstract

Rail networks are generally spread over wide geographically distant areas. It is expensive and complex for mining and other big industries to install and manage these huge network services as it needs investment in infrastructure, experts and specialised facilities to provide the services and carry out maintenance work. In such case, it is economical for the industry to outsource the maintenance services for their rail network from external agent instead of managing this services in-house. The cost to provide such services depends on the maintenance strategies to be considered during the contract period. Maintenance strategy of a rail network is developed by understanding reliability of rails used in the rail track system. Reliability analysis of rails can be carried out by understanding the failure mechanism of rail through modelling and analysis of failure data. These failure data are time or usage dependent for certain conditions. In a probabilistic sense, rail failure is a function of its usage in terms of Million Gross Tonnes (MGT) for certain conditions. This chapter provides a case study of outsourcing rail maintenance through maintenance contracts using the maintenance contract models developed in Chap. 5. This case study is to analyse real life rail industry data, deal with the limitations of available data and utilise the maintenance contract models for maintenance and replacement decisions. Parameters of the models are estimated using real world data with an application of non-homogeneous Poisson process.

Anisur Rahman, Gopinath Chattopadhyay

Titel: Long Term Warranty and After Sales Service
verfasst von: Anisur Rahman
Gopinath Chattopadhyay
Verlag: Springer International Publishing
Electronic ISBN: 978-3-319-16271-3
Print ISBN: 978-3-319-16270-6
DOI: https://doi.org/10.1007/978-3-319-16271-3