Importance of Full Product Lifetime Analyses in Parts and Materials Selection Process

Warranty Coverage and Its Relation to Customer Satisfaction and Business Profits

Sebastian B. Olejnik¹ and Bashir Al-Diri, PhD²

¹Cummins Generator Technologies Peterborough, UK olejnik@live.co.uk

²Lincoln School of Computer Science

University of Lincoln Lincoln, UK baldirii@lincoln.ac.uk

Accepted 01 August 2014

Abstract

A new combining customer and business objectives method of parts and materials selection process based on quality cost ratio is proposed and discussed. It is shown that pure reliability and cost approaches are biased and do not cover the main customer and business objectives. The impact of failures after warranty expires is analyzed, discussed and explored in relation to customer satisfaction and business profits. A paradox where increased warranty costs contribute to both higher business profits and customer satisfaction is discussed showing how the costs of lifetime warranty become an alternative to goodwill and sales losses. Conclusions are made based on analysis of real warranty data of three electronic temperature sensors.

Keywords: Quality; Reliability; Warranty; Cost; Lifetime; Weilbull; Monte Carlo; TQC; Parts; Materials; Selection; impact of failures.