Predicting Customer-Expectation-Based Warranty Cost for Smaller-the- Better and Larger-the-Better Performance Characteristics

The quality loss function assumes a fixed target and only accounts for immediate issues within manufacturing facilities whereas warranty loss occurs during customer use. Based on the two independent variables, product performance and consumers’ expectation, a methodology to predict the probability of customer complaint is presented in this paper. The formulation presented will serve as a basic model for predicting warranty loss for larger-the-better and smaller-the-better characteristics which is dependent on both product performance and customer expectation. As an example, warranty cost is estimated for automotive disc brakes to demonstrate the methodology for the smaller-the-better case. Another example of solar panels is considered for demonstrating the prediction of warranty loss for the larger-the-better characteristic.