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).
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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.
