Determination of Risks to Manufacturer and Buyers for Lifetime Warranty Policies by Considering Uncertainties of Lifetime

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Title Determination of Risks to Manufacturer and Buyers for Lifetime Warranty Policies by Considering Uncertainties of Lifetime
Author Rahman, Anisur; Chattopadhyay, G.
Publication Title COMADEM 2010: Advances in Maintenance and Condition Diagnosis Technologies towards Sustainable Society
Editor Sosumu Okumura, Tadao Kawai, Peng Chen, Raj. B.K.N. Rao
Year Published 2010
Place of publication Japan
Publisher Sunrise Publishing Limited
Abstract The warranty period offered by the manufacturer has been progressively increasing since the beginning of the 20th Century. Due to fierce competition and customer demand, manufacturers have started selling products with lifetime warranty policies. Under such policies, both the manufacturer and the buyer are exposed to uncertainties and risks of warranty pricing and product performance since products lifetime are uncertain and are not defined well in these policies. This paper extends the work of Chattopadhyay and Rahman (COMADEM 2005) to determine the manufacturer's and buyer's risk preferences by capturing the uncertainties of warranty duration in the lifetime warranty. Using the exponential utility function, the decision models are developed to maximise the manufacturer'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.
Peer Reviewed Yes
Published Yes
Publisher URI
Copyright Statement Copyright remains with the authors 2010. The attached file is posted here with permission of the copyright owners for your personal use only. No further distribution permitted. For information about this conference please refer to the publisher's website or contact the authors.
ISBN 9784883254194
Conference name COMADEM2010: 23rd International Congress on Condition Monitoring & Diagnostic Engineering Management
Location Nara, Japan
Date From 2010-06-28
Date To 2010-07-02
Date Accessioned 2010-09-16
Language en_AU
Faculty Faculty of Science, Environment, Engineering and Technology
Subject Operations Research; PRE2009-Industrial Engineering
Publication Type Conference Publications (Full Written Paper - Refereed)
Publication Type Code e1

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