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General Information
    • ISSN: 2382-6185
    • Abbreviated Title: Int. J. Knowl. Eng.
    • Frequency: Semiyearly
    • DOI: 10.18178/IJKE
    • Editor-in-Chief: Prof. Chen-Huei Chou
    • Executive Editor: Ms. Nina Lee
    • Indexed by: Google Scholar, Crossref, ProQuest
    • E-mail: ijke@ejournal.net
Prof. Chen-Huei Chou
College of Charleston, SC, USA
It is my honor to be the editor-in-chief of IJKE. I will do my best to help develop this journal better.
IJKE 2015 Vol.1(2): 160-164 ISSN: 2382-6185
DOI: 10.7763/IJKE.2015.V1.28

A Bayesian Analysis in Determining Pro-rata Warranty Decision with Two-Dimensional Deterioration

Po-Chiang Tsai and Chih-Chiang Fang
Abstract—In practice, the condition of warranty should be taken into consideration for customers in order to get better post-sale service. Accordingly, manufacturers would use this as a marketing tool to advertise the quality of their products. However, offering warranty usually results in additional costs to the manufacturers. Therefore, the manufacturers would balance the costs and the benefits when they make the related decisions. Moreover, the deterioration of a product not only depends on time but also on usage. Under such situation, only considering one of them could misrepresent the estimation of products’ deterioration, and therefore a two-dimensional failure model would be fit for dealing with such problems. Furthermore, most of the studies regarding pro-rata warranty issue mainly focused on cost analysis or reliability estimation but few studies would consider how the marketing strategies can be integrated into a synthetic decision. Another important issue is the manufacturer may not have sufficient historical data to estimate the deterioration of a newly developed product, and therefore the results obtained from analytical models may not be reliable. In order to deal with such a problem for the situation of insufficient historical data, a Bayesian analysis should be a reasonable approach. Accordingly, this paper proposes a Bayesian decision model which considers the pro-rata warranty with the pricing and the production strategy for the manufacturers.

Index Terms—Pro-rata warranty, repairable products, bayesian analysis.

Po-Chiang Tsai is with the Department of Information Management, Shu-Te University, Taiwan, R.O.C. (e-mail: fransky@stu.edu.tw).
Chih-Chiang Fang is with the Department of International Business and Trade, Shu-Te University, Taiwan, R.O.C. (e-mail: ccfang@stu.edu.tw).


Cite: Po-Chiang Tsai and Chih-Chiang Fang, "A Bayesian Analysis in Determining Pro-rata Warranty Decision with Two-Dimensional Deterioration," International Journal of Knowledge Engineering vol. 1, no. 2, pp. 160-164, 2015.

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