Modelling risks to manufacturer and buyer for lifetime warranty policies

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Title Modelling risks to manufacturer and buyer for lifetime warranty policies
Author Rahman, Anisur; Chattopadhyay, Gopinath
Journal Name International Journal of Management Science and Engineering Management
Editor Prof. Dr. Dr. Jiuping Xu
Year Published 2010
Place of publication United Kingdom
Publisher World Academic Union
Abstract Currently, manufacturers/dealers have started selling products with lifetime warranty policies. In this paper, risk attitudes of both buyers and manufacturer/dealers to lifetime warranty policies are discussed. In line with Chun and Tang (1995) [2], Risk models are developed for products with time dependent failure intensity (rate). These models have been proposed with Non homogeneous Poisson's process for failure intensity function, a constant repair cost, and concave utility function. Using the exponential utility function, the decision models are developed to maximise the manufacturer/dealer's certainty profit equivalent. Risk preference models are developed to find the optimal warranty price through the use of the manufacturer's utility function for profit and the buyer's utility function for repair costs. Finally, the sensitivity of the warranty price models is analysed using numerical examples.
Peer Reviewed Yes
Published Yes
Publisher URI
Copyright Statement Copyright 2010 IJMSEM. Self-archiving of the author-manuscript version is not yet supported by this publisher. Please refer to the journal link for access to the definitive, published version or contact the authors for more information.
Volume 5
Issue Number 3
Page from 203
Page to 209
ISSN 1750-9653
Date Accessioned 2010-06-23
Language en_AU
Faculty Faculty of Science, Environment, Engineering and Technology
Subject Manufacturing Management
Publication Type Journal Articles (Refereed Article)
Publication Type Code c1

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