Dynamic prediction of repair costs in heavy-duty trucks

University essay from Linköpings universitet/Statistik och maskininlärning

Abstract: Pricing of repair and maintenance (R&M) contracts is one among the most important processes carried out at Scania. Predictions of repair costs at Scania are carried out using experience-based prediction methods which do not involve statistical methods for the computation of average repair costs for contracts terminated in the recent past. This method is difficult to apply for a reference population of rigid Scania trucks. Hence, the purpose of this study is to perform suitable statistical modelling to predict repair costs of four variants of rigid Scania trucks. The study gathers repair data from multiple sources and performs feature selection using the Akaike Information Criterion (AIC) to extract the most significant features that influence repair costs corresponding to each truck variant. The study proved to show that the inclusion of operational features as a factor could further influence the pricing of contracts. The hurdle Gamma model, which is widely used to handle zero inflations in Generalized Linear Models (GLMs), is used to train the data which consists of numerous zero and non-zero values. Due to the inherent hierarchical structure within the data expressed by individual chassis, a hierarchical hurdle Gamma model is also implemented. These two statistical models are found to perform much better than the experience-based prediction method. This evaluation is done using the mean absolute error (MAE) and root mean square error (RMSE) statistics. A final model comparison is conducted using the AIC to draw conclusions based on the goodness of fit and predictive performance of the two statistical models. On assessing the models using these statistics, the hierarchical hurdle Gamma model was found to perform predictions the best

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