Chapter 8: WA-RI Case Studies

8.1 Case Study 1: Clients Claiming Refrigerator Warranty

A refrigerator model has a six-month warranty period, and customers were complaining about how short that is in vendors websites, causing its sales and rating to go down. Studying how extending the warranty period might affect the company, a reliability engineer was tasked to inform product management about the costs of one year warranty for this refrigerator.

Usually, when clients reported a claim, the refrigerator was taken to maintenance in the company’s distribution centers, and then returned when it was done. The seven most recurring causes of warranty claims were:

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With that information in hand and having access to warranty claim data from the last 6 months and knowing the company’s factories release 12000 units of this refrigerator per month, he proceeded to make a Warranty Analysis for Repairable Items.

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The refrigerator’s RGA beta parameter points out that the system’s MTBF is decreasing over time.

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The total sum of forecast claims during the next six months is 9,500.7 claims (both for the already produced units and the yet to be produced). Using the data available for the causes of claiming and their respective costs, it is possible to estimate the total cost of this extending period:

9500.7 * 0.08 * 20 =$15,201.12

9500.7 * 0.26 * 5 = $12,350.91

9500.7 * 0.06 * 45 = $25,651.89

9500.7 * 0.02 * 300 = $57,004.2

9500.7 * 0.11 * 12 = $12,540.92

9500.7 * 0.03 * 30 = $8,550.63

9500.7 * 0.46 * 5 = $21,851.61

 

The total estimated cost is about $153,151.30. As the company charges $130 per refrigerator, almost one month of revenue will be lost if management decides to expand the warranty time for a one-year period, unless redesign is considered, to reduce the number of claims.