Methodological principles of verification of the concept of "competition": microeconomic aspect

Competition and competitiveness issues are extremely topical at the present stage. However, the role of price and non-price competition in enterprises has not been sufficiently studied and requires a more detailed study, which was the purpose of the article. It has been established that the first theories of competition were formulated at the turn of the 17th and 18th centuries and since then have been constantly undergoing various modifications. Given the evolution of the concept of "competition", it can be defined as a set of activities carried out by market participants to achieve their goals and consist in the integration of various instruments of competition - the provision of additional services by joining the offer of related services; formation of attractive prices by differentiating the forms and terms of payment; improving the forms and channels of product sales, customer service, improving communication through prompt and reliable information. The importance of dividing competition into price and non-price competition has been proven. Price competition. This is a kind of struggle with competitors by reducing the price of goods. Non-price competition offers more progressive and modern methods. These include isolating their products from similar competitors' products, introducing special features, expanding the range of products, improving quality, increasing advertising and warranty costs. Non-price competition allows you to focus on progress and drive sales without price fluctuations. Non-price competition indicates a higher level of quality of interactions in the market. The main advantages and disadvantages of non-price competition are determined. Thus, we can conclude that competition is an integral part of the market. The concept of competition has changed with the development of society, various economic trends and schools have contributed to this concept. From the point of view of microeconomics, it is important to divide competition into price and non-price, the use of which contributes to the increase in the efficiency of entrepreneurial activity.

A lifecycle cost model considering both component and system burn-in for operationally unrepairable systems

PurposeThis study presents a lifecycle cost model considering multi-level burn-in for operationally unrepairable systems including assembly and warranty costs. A numerical method to obtain system reliability under component replacement during burn-in is also presented with derived error bounds.Design/methodology/approachThe final system reliability after component and system burn-in is obtained and warranty costs are computed. On failure during operation, the system is replaced with another that undergoes an identical burn-in procedure. Cost behaviours for a small and large system are shown in a numerical example.FindingsThere are more cost savings when system burn-in is conducted for a large system whereas a strategy focusing on component burn-in only can also result in cost savings for small systems. In addition, a minimum system burn-in duration is required before cost savings are achieved for these operationally unrepairable systems.Originality/valueThe operationally unrepairable system is a niche class of systems which small satellites fall under and no such study has been conducted before. The authors present a different approach towards the testing of small satellites for a constellation mission.

Light duty automotive duplex drum brake squeal analysis using the finite element method

The brake system creation is an important achievement for automotive production. However there is a secondary response of this system, its noise emission. Brake noise researches started in 1920’s and since then several causes were identified. In addition, many kinds of noises, their frequency range and characteristics were detected. Between these, the squeal is the noise that most concerns the automotive industry by reason of high warranty costs and environmental impact. The squeal noise occurs as a result of three mechanisms that are the stick-slip, the sprag-slip and the modal coupling and these are connected to material parameters of the brake components. This paper proposes a correlation between material and stability parameters of a light duty automotive duplex drum brake to indicate the influence of this on brake squeal. The results suggest that friction coefficient is the most influential parameter and its restrain does make possible to maintain squeal level under emissions regulations.

Customized Preventive Maintenance Strategies for Products Sold with Two-Dimensional Warranty

Two-dimensional warranty has played a significant role in improving product quality and competitiveness. However, two-dimensional basic warranty (BW) and extended warranty (EW) have not yet been combined effectively, and the customized maintenance strategies based on the consumers’ heterogeneity have been quite limited, which result in high maintenance costs. In this paper, the possibility of reducing warranty cost over BW and EW is explored by classifying customers based on their usage rates and then offering them with customized preventive maintenance (PM) strategies. By considering the purchasing ratio of EW contracts, the PM strategies for BW and EW are closely combined by the bi-level programming model. Numerical analysis is given to show the application of the proposed warranty strategy, and the significant findings and sensitivity of the main parameters are analyzed in the end. The findings demonstrate that the customized PM strategies combining BW and EW can effectively reduce warranty costs within the warranty period and provide a scientific guidance for manufacturers to design a more reasonable PM strategy.

Estimating the Cost of Car Warranty in Indonesia using the Gertsbakh-Kordonsky Method

Car manufacturers in Indonesia need to determine reasonable warranty costs that do not burden companies or consumers. Several statistical approaches have been developed to analyze warranty costs. One of them is the Gertsbakh-Kordonsky method which reduces the two-dimensional warranty problem to one dimensional. In this research, we apply the Gertsbakh-Kordonsky method to estimate the warranty cost for car type A in XYZ company. The one-dimensional data will be tested using the Kolmogorov-Smirnov to determine its distribution and the parameter of distribution will be estimated using the maximum likelihood method. There are three approaches to estimate the parameter of the distribution. The difference between these three approaches is in the calculation of mileage for units that do not claim within the warranty period. In the application, we use claim data for the car type A. The data exploration indicates the failure of car type A is mostly due to the age of the vehicle. The Kolmogorov-Smirnov shows that the most appropriate distribution for the claim data is the three-parameter Weibull. Meanwhile, the estimated using the Gertsbakh-Kordonsky method shows that the warranty costs for car type A are around 3.54% from the selling price of this car unit without warranty i.e. around Rp. 4,248,000 per unit.Keywords: warranty costs; the Gertsbakh-Kordonsky method; maximum likelihood estimation; Kolmogorov-Smirnov test. AbstrakPerusahaan produsen mobil di Indonesia perlu menentukan biaya garansi yang bersifat wajar tidak memberatkan perusahaan maupun konsumen. Beberapa pendekatan statistik telah dikembangkan untuk menganalisis biaya garansi. Salah satunya adalah metode Gertsbakh-Kordonsky yang mereduksi masalah garansi dua dimensi menjadi satu dimensi. Pada penelitian ini, metode Gertsbakh-Kordonsky akan digunakan untuk mengestimasi biaya garansi untuk mobil tipe A pada perusahaan XYZ. Data satu dimensi hasil reduksi diuji kecocokan distribusinya menggunakan uji kecocokan Kolmogorov-Smirnov dan taksiran parameter distribusinya menggunakan metode penaksir kemungkinan maksimum. Ada tiga pendekatan yang digunakan untuk menaksir parameter distribusi. Perbedaan dari ketiga pendekatan tersebut terletak pada perhitungan jarak tempuh untuk unit yang tidak melakukan klaim dalam periode garansi. Sebagai bahan aplikasi, kami menggunakan data klaim unit mobil tipe A. Hasil eksplorasi data menunjukkan bahwa kegagalan mobil tipe A lebih banyak disebabkan karena faktor usia kendaraan. Hasil uji kecocokan distribusi untuk data hasil reduksi menunjukkan bahwa distribusi yang cocok adalah distribusi Weibull 3-parameter. Sementara itu, hasil perhitungan taksiran biaya garansi menunjukan bahwa taksiran biaya garansi untuk unit mobil tipe A sekitar 3,54% dari harga jual unit mobil tipe A tanpa garansi, atau sekitar Rp. 4.248.000,- per unit.Kata Kunci: biaya garansi; metode Gertsbakh-Kordonsky; penaksiran kemungkinan maksimum; uji Kolmogorov-Smirnov.

Managing risk for auto warranties

Purpose The purpose of this paper is threefold: first, to analyse the existing work of warranty risk management (WaRM); second, to develop a generic WaRM framework; and third, to design a generic taxonomy for warranty hazards from a warranty chain perspective. Design/methodology/approach To understand the top warranty hazards, the authors designed a questionnaire, received 40 responses from the warranty decision makers (WDM) in the automotive industry in the UK and then analysed the responses. Findings The assembly process capability at suppliers is the top contributor to warranty incidents from the suppliers’ and original equipment manufacturers’ (OEMs’) viewpoints. The human error at different stages of the product lifecycle contributes to the occurrence of warranty incidents. The collaboration among parties, particularly, the accessibility to warranty-related data between parties (i.e. suppliers, OEM and dealers), is limited. Customers’ fraud contributes more to warranty costs than warranty services providers’ fraud. The top contributors to customer dissatisfaction relating to warranty are the warranty service time and service quality. Research limitations/implications The questionnaires were used to collect data in the UK, which implies the research outcomes of this paper may only reflect the UK area. Practical implications The WaRM framework and taxonomy proposed in this paper provide WDM with a holistic view to identifying the top contributors to warranty incidents. With them, the decision makers will be able to allocate the required fund and efforts more effectively. Originality/value This paper contributes to the literature by providing the first work of systematically analysing the top contributors to warranty incidents and costs and by providing a WaRM framework.

Warranty cost analysis with an alternating geometric process

In this study, we model the warranty claims process and evaluate the warranty servicing costs under non-renewing, renewing and restricted renewing free repair warranties. We assume that the repair time for rectifying the claims is non-zero and the repair cost is a function of the length of the repair time. To accommodate the ageing of the product and repair equipment, we use a decreasing geometric process to model the consecutive operational times and an increasing geometric process to model the consecutive repair times. We identify and study the alternating geometric process, which is an alternating process with cycles consisting of the item’s operational time followed by the corresponding repair time. We derive new results for the alternating geometric process in a finite horizon and use them to evaluate the warranty costs over the warranty period and over the life cycle of the product under a non-renewing free repair warranty, a renewing free repair warranty and a restricted renewing free repair warranty. Properties of the model are demonstrated using a simulation study and by fitting the models to real data from an automotive manufacturer.

The adoption and benefits of life cycle costing

Purpose Although life cycle costing (LCC) is well established in theory and practice, little is known about the conditions of its adoption and its impact on the achievement of cost-management goals. Therefore, this paper aims to analyze the adoption and benefits of LCC. Design/methodology/approach The analyses are based on questionnaires collected from a survey of German firms. Findings The results demonstrate that the extent of LCC adoption is positively associated with the extent of guarantee and warranty costs, voluntary upfront and follow-up costs for ecological sustainability and the extent of target costing adoption. In contrast, the extent of LCC adoption is negatively associated with the amount of precursors and/or intermediates that are purchased. The results also demonstrate that firms perceive LCC to be beneficial for various aspects of cost management. Firms report that the greatest benefit of LCC is related to the identification of cost drivers. Research limitations/implications This investigation provides a starting point for future studies of the conditions of LCC adoption and the benefits of LCC. This study is subject to limitations, particularly with respect to the operationalization of our independent variables, the number of contextual variables and the general limitations of survey research. Practical implications The results inform practitioners of the situations in which it is most appropriate to adopt LCC. In addition, this study identifies various cost-management goals that are supported by the use of LCC. Originality/value This study provides the first comprehensive analysis of the conditions of LCC adoption and advances the literature regarding the impact of LCC on the achievement of cost-management goals. Furthermore, this study provides a starting point for future research into the implementation of LCC and the effects of LCC on management accounting practices.