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Warranty menu design for a two-dimensional warranty

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  • Ye, Zhi-Sheng
  • Murthy, D.N. Pra

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.

Suggested Citation

  • Ye, Zhi-Sheng & Murthy, D.N. Pra, 2016. "Warranty menu design for a two-dimensional warranty," Reliability Engineering and System Safety, Elsevier, vol. 155(C), pages 21-29.
    • Handle: RePEc:eee:reensy:v:155:y:2016:i:c:p:21-29
    DOI: 10.1016/j.ress.2016.05.013
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    Citations

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    Cited by:

    1. Tong Peng & Liu Chunling, 2020. "Designing differential service strategy for two-dimensional warranty based on warranty claim data under consumer-side modularisation," Journal of Risk and Reliability, , vol. 234(3), pages 550-561, June.
    2. Chun Su & Longfei Cheng, 2018. "An availability-based warranty policy considering preventive maintenance and learning effects," Journal of Risk and Reliability, , vol. 232(6), pages 576-586, December.
    3. Wang, Xiaolin & Zhao, Xiujie & Liu, Bin, 2020. "Design and pricing of extended warranty menus based on the multinomial logit choice model," European Journal of Operational Research, Elsevier, vol. 287(1), pages 237-250.
    4. Liu, Bin & Shen, Lijuan & Xu, Jianyu & Zhao, Xiujie, 2020. "A complimentary extended warranty: Profit analysis and pricing strategy," International Journal of Production Economics, Elsevier, vol. 229(C).
    5. Luo, Ming & Wu, Shaomin, 2019. "A comprehensive analysis of warranty claims and optimal policies," European Journal of Operational Research, Elsevier, vol. 276(1), pages 144-159.
    6. Lijun Shang & Guojun Shang & Qingan Qiu, 2022. "A Bivariate Post-Warranty Maintenance Model for the Product under a 2D Warranty," Mathematics, MDPI, vol. 10(12), pages 1-18, June.
    7. Lin, Kunsong & Chen, Yunxia, 2021. "Analysis of two-dimensional warranty data considering global and local dependence of heterogeneous marginals," Reliability Engineering and System Safety, Elsevier, vol. 207(C).
    8. Wang, Xiaolin & Liu, Bin & Zhao, Xiujie, 2021. "A performance-based warranty for products subject to competing hard and soft failures," International Journal of Production Economics, Elsevier, vol. 233(C).
    9. 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.
    10. Shang, Lijun & Liu, Baoliang & Qiu, Qingan & Yang, Li & Du, Yongjun, 2023. "Designing warranty and maintenance policies for products subject to random working cycles," Reliability Engineering and System Safety, Elsevier, vol. 234(C).
    11. Lijun Shang & Yongjun Du & Cang Wu & Chengye Ma, 2022. "A Bivariate Optimal Random Replacement Model for the Warranted Product with Job Cycles," Mathematics, MDPI, vol. 10(13), pages 1-16, June.
    12. Xiaolin Wang & Wei Xie, 2018. "Two-dimensional warranty: A literature review," Journal of Risk and Reliability, , vol. 232(3), pages 284-307, June.
    13. Lijun Shang & Guojun Shang & Yongjun Du & Qingan Qiu & Li Yang & Qinglai Dong, 2022. "Post-Warranty Replacement Models for the Product under a Hybrid Warranty," Mathematics, MDPI, vol. 10(10), pages 1-18, May.
    14. Wang, Yukun & Liu, Yiliu & Li, Xiaopeng & Chen, Junyan, 2019. "Multi-phase reliability growth test planning for repairable products sold with a two-dimensional warranty," Reliability Engineering and System Safety, Elsevier, vol. 189(C), pages 315-326.
    15. Wei Xie, 2017. "Optimal pricing and two-dimensional warranty policies for a new product," International Journal of Production Research, Taylor & Francis Journals, vol. 55(22), pages 6857-6870, November.
    16. Yongjun Du & Lijun Shang & Qingan Qiu & Li Yang, 2022. "Optimum Post-Warranty Maintenance Policies for Products with Random Working Cycles," Mathematics, MDPI, vol. 10(10), pages 1-16, May.
    17. Hooti, Fatemeh & Ahmadi, Jafar & Longobardi, Maria, 2020. "Optimal extended warranty length with limited number of repairs in the warranty period," Reliability Engineering and System Safety, Elsevier, vol. 203(C).
    18. Shokouhyar, Sajjad & Ahmadi, Sadra & Ashrafzadeh, Mahdi, 2021. "Promoting a novel method for warranty claim prediction based on social network data," Reliability Engineering and System Safety, Elsevier, vol. 216(C).
    19. Anshu Dai & Guanzhou Wei & Zhaomin Zhang & Shuguang He, 2020. "Design of a flexible preventive maintenance strategy for two-dimensional warranted products," Journal of Risk and Reliability, , vol. 234(1), pages 74-87, February.
    20. Wang, Dongfan & He, Zhen & He, Shuguang & Zhang, Zhaomin & Zhang, Yiwen, 2021. "Dynamic pricing of two-dimensional extended warranty considering the impacts of product price fluctuations and repair learning," Reliability Engineering and System Safety, Elsevier, vol. 210(C).
    21. Wang, Xiaolin & Li, Lishuai & Xie, Min, 2020. "An unpunctual preventive maintenance policy under two-dimensional warranty," European Journal of Operational Research, Elsevier, vol. 282(1), pages 304-318.
    22. Zhao, Xiujie & Liu, Bin & Xu, Jianyu & Wang, Xiao-Lin, 2023. "Imperfect maintenance policies for warranted products under stochastic performance degradation," European Journal of Operational Research, Elsevier, vol. 308(1), pages 150-165.
    23. Wang, Jinting & Zhou, Zhuang & Peng, Hao, 2017. "Flexible decision models for a two-dimensional warranty policy with periodic preventive maintenance," Reliability Engineering and System Safety, Elsevier, vol. 162(C), pages 14-27.
    24. Luo, Ming & Wu, Shaomin, 2018. "A value-at-risk approach to optimisation of warranty policy," European Journal of Operational Research, Elsevier, vol. 267(2), pages 513-522.
    25. Luo, Ming & Wu, Shaomin, 2018. "A mean-variance optimisation approach to collectively pricing warranty policies," International Journal of Production Economics, Elsevier, vol. 196(C), pages 101-112.

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