Study On The Combination Warranty For Product With Customer Preference On Product Performance

The after-sale warranty service of a product is closely related with the profits of the enterprise.As the warranty has many functions,such as protects the interests of both buyers and sellers,shows the quality of the product to consumers,have the function of promotion,now it has been an important channel for the enterprise to gain profit.As a result,more and more businesses are now considering how to provide consumers with more high quality warranty service,from this,they would gain more profits.At the same time,with the development of social economy,the customers' demand for products and services is becoming more and more diversified,the subdivided market requires the warranty service providers to provide much more diversified services.When the products that bought by different customers have the same quality,the preference of the customers on product performance may differ very much.Then the study on warranty policy for product with customer preference on product performance has got much more attention.The combination warranty,as it not only can satisfy the demands of consumers but also can effectively reduce the cost of warranty provider,has got extensive research and application.So the study on combination warranty for product with customer preference on product performance has very important practical and theoretical significance.This paper has reviewed many literatures,including warranty,the types of product failures,consumer preferences on performance,and introduced some related concepts about the product reliability,consumer demand theory and consumer utility theory.On this basis,we put forward the theory that using the failure frequency to represent the consumer preferences on product performance.When the failure frequency of a product reaches the threshold number N during the warranty period,the warranty provider will replace the product for free,thus forming a kind of repair-replacement warranty policy.In order to gain the best profit,the warranty provider sets different kinds of sale contract,considering the different failure types.In our paper,firstly,we consider the type of a product just is the repairable failure,and give out the total profit model of the warranty service providers.Based on consumer utility theory,we use the optimization theory to solve this model,and verify the validity of the model by the case analysis and sensitivity analysis.Then we analyze the difference between the differential pricing and the law of one price,and study the impact of consumer price amplitude coefficient on benefits to manufacturers.Then,basing on actual situation and the previous problem,we use the same method to study the case that considers both the repairable failure and unrepairable failure.