The Analysis And Design Of Two-dimensional Warranty Policy For Vehicle Products

The two-dimensional(2-D)warranty policy design of vehicle products has significant effects on the manufacturer's profit and customers' satisfaction.Designing reasonable and efficient warranty policies and services can take an important breakthrough for automotive manufacturers who wants to stand out from the competition.C urrently in C hina,the obligated warranty coverage of a vehicle is 3 years or 60,000 kms.In addition to the warranty mandated by different countries,a manufacturer can choose to offer its own premium warranty policy as an upgrade to the warranty to stimulate sales.In practice,however,it is difficult for manufacturers to judge whether current warranty policies are optimal and effective.In this paper,we provide a base warranty extension model under 2-D warranty,which helps the manufacturer to make optimal choices within certain product reliability and current maintenance policies.Firstly,we provide the demand function under two-dimensional warranty,which is affected by not only the product price but also the age and usage limits defined by warranty policy.Based on the analysis of sales revenue,preventive maintenance profit and warranty costs under 2-D warranty,we propose two base warranty extension strategy.One is the unchanged profit extension(UPE)and the other is maximum profit extension(MPE).N umerical results with sensitivity analysis suggests that MPE and UPE can be implemented if the values of parameters are suitable.It shows that in general,MPE results is a mild warranty extension,while UPE tends to be more aggressive.MPE is more suitable for manufacturers who have already established a well-known brand and kept good balance between manufacturing and market sales.Manufacturers who introduced new products to the market may prefer UPE to MPE.The quantitative and qualitative results of this study can provide managers with useful guidelines for designing better warranty,marketing and servicing strategies.We analyze the relationship between the product's reliability and the target warranty policy,which helps the manufacturer to set its reliability improvement objective.We provide several improvement approaches of product reliability and warranty services.