Warranty Cost Analysis And Optimization To Finalize Asuitable Warranty Period For An Organization

Abstract: Since the beginning of industrialization, reliability and warranty concerns have taken top priority. It's mostly because the warranty failures costs a lot of money for the manufacturer (Glickman and Berger 1976). The turnover and profitability of the business are significantly impacted by the warranty cost. The goal of manufacturers is to extend the product warranty period not only to improve customer perception and satisfaction, but also to improve product development and production methods to reduce the warranty cost.The advancement in technology over the last decade has been tremendous. This rise in the use of digital technology has not only led to making the competition fierce among the industrial companies but also increase customer expectations towards products and services. Among the different choices, there has been an immense increase in the demand for product warranty and services related to warranty. The warranty period is one of the crucial elements in the decision-making process for consumers. Customers typically choose the product with the best warranty when choosing between numerous options with comparable features and specifications. All these factors have led to a stronger belief among the manufacturers to have a good warranty period and services related to warranty. In order to remain competitive in the market there is a need for the manufacturers to arrive at the best warranty policy in this competitive worldThis thesis study concerns using an existing failure data set from a manufacturing company based out of Sweden to • Develop an optimization model that would help the organization choose the optimal warranty period / policy based on current warranty costs and based on competitors’ warranty period or time frame.The above analysis would thus, help to answer the following research questionHow can the organization arrive at the optimal warranty period (i.e., free replacement warranty and pro rata warranty) and based on its current warranty failure rate and warranty cost?