Product warranty handbook

Contents......Page 10
Preface......Page 4
Contributors......Page 32
Part A: Introduction......Page 35
  1.1. Introduction......Page 39
  1.2. Definition of Warranty......Page 40
  1.3. The Role of Product Warranty......Page 42
  1.4. Warranty Structure and Terminology......Page 43
  1.5. A Taxonomy for Classification of Warranties......Page 46
  References......Page 62
  2.1. Introduction......Page 63
  2.2. Origin of the Word \"Warranty\"......Page 64
  2.3. The Early Civilizations......Page 65
  2.4. The European Period......Page 69
  2.5. The Middle Ages......Page 72
  2.6. Industrial Revolution Era and Beyond......Page 74
  2.7. Conclusion......Page 77
  References......Page 78
  3.1. Introduction......Page 81
  3.2. Stakeholders in Warranty......Page 82
  3.4. Simplified System Characterization......Page 83
  3.5. Detailed System Characterization (Consumer/ Manufacturer Perspectives)......Page 91
  References......Page 106
Part B: Warranty and Law......Page 109
  4.1. Introduction......Page 113
  4.2. Warranty Legislation......Page 114
  4.3. Literature Review of the Effects of Warranty Legislation......Page 124
  4.4. Implications of Warranty Legislation for Business and Consumers......Page 126
  4.5. Future Research of Warranty Legislation......Page 128
  References......Page 129
  5.2. Warranty Litigation Under the Magnuson–Moss Warranty Act......Page 131
  5.3. Warranty Litigation Under the Uniform Commercial Code and Other State Laws......Page 150
  5.4. Conclusion......Page 157
  References......Page 159
Part C: Mathematical and Statistical Techniques for Analysis of Warranty......Page 163
  6.1. Introduction......Page 167
  6.2. Mathematical Model Building......Page 168
  6.3. Modeling Based on a Simplified System Characterization (Consumer and Manufacturer Perspectives)......Page 170
  6.4. Modeling for Study from Public Policy Perspective......Page 186
  References......Page 189
  7.2. Warranty Claims Modeled as Point Processes......Page 191
  7.3. Classification of Point Process Formulations......Page 194
  7.4. Analysis of Poisson Processes......Page 198
  7.5. Analysis of One-Dimensional Renewal Processes......Page 199
  7.6. Analysis of Two-Dimensional Renewal Processes......Page 210
  7.7. Other Process Formulations Relevant to Warranty Analysis......Page 220
  7.8. Conclusions......Page 221
  References......Page 222
  8.1. Introduction......Page 225
  8.2. Probability Distributions and Related Concepts......Page 228
  8.3. Parameter Estimation......Page 237
  8.4. Confidence Interval Estimation......Page 248
  8.5. Estimation of Renewal Functions......Page 255
  8.6. Applications in Warranty Analysis......Page 257
  8.7. Recommendations and Conclusions......Page 261
  References......Page 263
  9.1. Introduction......Page 265
  9.2. Simple Age-Specific Claims Analysis......Page 266
  9.3. Adjustments for Reporting Delays......Page 274
  9.4. Examples......Page 275
  9.5. Adjustments When Sales Are Estimated......Page 281
  9.6. Prediction......Page 282
  9.7. Covariates and Regression Analysis......Page 284
  9.8. Calendar Time Effects......Page 285
  9.9. Analysis of Costs......Page 286
  9.10. Estimation of Field Reliability......Page 287
  9.11. Concluding Remarks......Page 290
  Appendix......Page 291
  References......Page 293
Part D: Warranty Cost Models......Page 295
  10.1. Introduction......Page 299
  10.2. Assumed Life Distributions and Warranty Parameters......Page 302
  10.3. Modeling Seller\'s Per-Unit Warranty Cost......Page 305
  10.4. Modeling Buyer\'s Expected Cost of Warrantied Items......Page 313
  10.5. Present Value Cost Models for the FRW......Page 316
  10.6. Life-Cycle Cost Models for the FRW......Page 317
  10.7. Indifference Prices for the Nonrenewing FRW......Page 319
  10.8. Statistical Estimation of Cost Models......Page 321
  10.9. Concluding Remarks......Page 322
  References......Page 324
  11.1. Introduction......Page 327
  11.2. Modeling the Pro-Rata Warranty......Page 332
  11.3. Estimation of Expected Warranty Costs......Page 339
  11.4. Results......Page 342
  11.5. Conclusions......Page 350
  References......Page 351
  12.1. Introduction......Page 353
  12.2. Modeling Seller\'s Per-Unit Warranty Cost......Page 358
  12.3. Per-Unit Cost to Buyer......Page 364
  12.4. Present Value Cost Models......Page 366
  12.5. Life-Cycle Cost Models......Page 368
  12.6. Estimating Cost Models......Page 371
  12.7. Recommendations and Conclusions......Page 372
  References......Page 373
  13.1. Introduction......Page 375
  13.2. Two-Dimensional Warranty Policies......Page 377
  13.3. Assumptions......Page 378
  13.4. Modeling Two-Dimensional Warranties......Page 380
  13.5. Cost Analysis of Two-Dimensional Free-Replacement  Warranty Policies......Page 381
  13.6. Implications for the Manufacturer......Page 383
  13.7. Concluding Remarks......Page 391
  Appendix......Page 392
  References......Page 396
  14.1. Introduction......Page 399
  14.2. Pro-Rata Warranty Policies......Page 400
  14.3. Combination Warranty Policies......Page 403
  14.4. Model Formulation......Page 406
  14.5. Cost Analysis: Pro-Rata Policies......Page 408
  14.6. Cost Analysis: Combination Policies......Page 413
  14.7. Conclusions......Page 420
  References......Page 421
Part E: Warranty and the Marketplace......Page 423
  15.1. Introduction......Page 427
  15.2. The Conventional Wisdom......Page 428
  15.3. Theories of Product Warranty......Page 429
  15.4. Warranty Provision and Postpurchase Behavior......Page 432
  15.5. Quantifying the Warranty Elasticity......Page 433
  15.6. Warranty and Distribution Channel Structure......Page 434
  15.7. Extended Service Contracts......Page 435
  15.9. Warranty and Packaged Goods......Page 436
  15.10. Summary Discussion......Page 437
  References......Page 440
  16.1. Introduction......Page 443
  16.2. Warranties and Product Attributes......Page 444
  16.3. Explanations of the Impact of Warranties on Product Choice......Page 445
  16.4. Impact of Warranties on Postpurchase Behavior......Page 448
  16.5. Directions for Future Research......Page 451
  References......Page 452
  17.1. Introduction......Page 455
  17.2. Model Development......Page 457
  17.3. Analysis and Results......Page 465
  17.4. Conclusions......Page 471
  References......Page 472
  18.1. Introduction......Page 473
  18.2. The Conventional Wisdom......Page 474
  18.3. Research on Consumer Perceptions of EW......Page 475
  18.4. Theories of Product Warranty and EW......Page 476
  18.5. Recent Institutional Developments......Page 480
  18.6. Design of Alternative EW Policies......Page 482
  18.7. Conclusion......Page 484
  References......Page 485
  19.1. Introduction......Page 487
  19.2. Warranty/Servicing Practices in Distribution Environments......Page 490
  19.3. Product Distribution Overview......Page 492
  19.4. Channel Design for Distribution and Warranty/Servicing......Page 497
  19.5. Optimal Distribution and Warranty/Servicing Models......Page 499
  19.6. A Numerical Example......Page 506
  19.7. Conclusions......Page 509
  Appendix......Page 510
  References......Page 514
  20.1. Introduction......Page 517
  20.2. The Warranties Considered......Page 518
  20.3. Warranty Design......Page 519
  20.4. Risks and Benefits of Offering Warranty......Page 520
  20.7. Nonrenewing Free-Replacement Warranty......Page 527
  20.8. Renewing Free-Replacement Warranty......Page 532
  20.9. Renewing Pro-Rata Warranty......Page 537
  20.10. Conclusion......Page 542
  References......Page 543
Part F: Warranty and Engineering......Page 545
  21.1. Introduction......Page 549
  21.2. Design Process......Page 551
  21.3. Reliability Choice and Allocation......Page 552
  21.4. Redundancy......Page 560
  21.5. Product Development......Page 568
  21.6. Other Design Issues......Page 571
  21.7. Implementation Aspects......Page 572
  References......Page 573
  22.1. Introduction......Page 577
  22.2. Warranty Policies......Page 579
  22.3. Modeling Failures (Warranty Claims)......Page 580
  22.4. Warranty Cost Analysis: Independent Failures......Page 595
  22.5. Warranty Cost Analysis: Dependent Failures......Page 600
  22.6. Conclusions and Recommendations......Page 616
  References......Page 617
  23.1. Introduction......Page 619
  23.2. Modeling Product Quality Variations and Control......Page 620
  23.3. Quality Control Models for Type A Nonconformance......Page 626
  23.4. Quality Control Models for Type B Nonconformance......Page 633
  23.5. Presale Testing......Page 648
  23.6. Implementation Aspects......Page 652
  References......Page 653
  24.1. Introduction......Page 655
  24.2. Warranty Reserves (Nonrenewing PRW Policies)......Page 656
  24.3. Demand for Spares (FRW Policy)......Page 663
  24.4. Demand for Repairs......Page 666
  24.5. Repair Versus Replace......Page 673
  24.6. Cost Repair Limit Strategy......Page 678
  24.7. Some Additional Topics......Page 680
  24.8. Implementation Aspects......Page 685
  References......Page 686
Part G: Warranty and Society......Page 689
  25.1. Introduction......Page 693
  25.2. Attributes of Any Economic Model of Warranties......Page 694
  25.3. Economic Reasons for Warranties......Page 698
  References......Page 706
  26.1. Introduction......Page 709
  26.2. Financial Accounting and Reporting Requirements......Page 710
  26.3. Current Reporting and Disclosure Practices......Page 718
  26.4. The Need for Disclosure Reform on Warranties......Page 723
  26.5. Future Research on the Accounting and Disclosure of Warranties......Page 726
  References......Page 728
  27.1. Introduction......Page 731
  27.2. Magnuson-Moss: An Overview......Page 733
  27.3. Warranties as Signals of Reliability......Page 739
  27.4. Warranty Coverage and Quality......Page 744
  27.6. Summary and Implications......Page 747
  References......Page 749
  28.1. Introduction......Page 753
  28.2. The First Consumer Movement......Page 755
  28.3. The Second Consumer Movement......Page 757
  28.4. The Third Consumer Movement......Page 759
  28.5. Consumer Entrepreneurs and the Passage of Magnuson-Moss......Page 768
  28.6. Evaluation of Magnuson-Moss from a Consumerist Perspective......Page 771
  28.7. Summary of the Evaluation of Warranty Policy......Page 781
  28.8. A Consumerist\'s Suggestions for Improvements in Magnuson-Moss......Page 782
  28.9. Possible Future Legislation......Page 785
  References......Page 786
Part H: Warranty and Management......Page 793
  29.1. Introduction......Page 797
  29.2. External Versus Internal Accounting......Page 798
  29.3. The Role of Warranties in Product Life Cycles......Page 800
  29.4. The Relationship of Product Warranty Cost to Other Quality Enhancement Costs......Page 803
  29.5. Strategic Management of Warranty Costs......Page 809
  29.6. Estimation Models for Planning and Control......Page 815
  References......Page 821
  30.1. Warranties and Financial Risks......Page 823
  30.2. Management Perspective......Page 824
  30.3. Actuarial Models of Individual Contracts......Page 827
  30.4. Actuarial Models of Groups of Contracts......Page 834
  References......Page 835
  31.1. Introduction......Page 837
  31.2. Dynamic Linear Models......Page 842
  31.3. Dynamic Linear Models with Leading Indicators......Page 844
  31.4. Results of Data Analysis......Page 846
  31.5. Concluding Comments......Page 849
  References......Page 850
  32.1. Introduction......Page 853
  32.2. Multiple Criteria in Modeling......Page 856
  32.3. Model Formulation and Application......Page 866
  32.4. Conclusions......Page 870
  References......Page 871
Part I: Warranty Bibliography......Page 872
  33.1. Introduction......Page 873
  33.2. Categories for Classification......Page 874
  33.3. Classification of References......Page 876
  33.4. Warranty References......Page 884
 B......Page 951
 C......Page 953
 D......Page 956
 E......Page 957
 F......Page 959
 I......Page 960
 L......Page 961
 M......Page 962
 P......Page 964
 R......Page 967
 T......Page 970
 W......Page 971