Warranty Claims Prediction with a Combined Model of Market Absorption and Failure Process

The paper addresses an important part of enterprise activity, which is the warranty claims control and prediction. Warranty claims have a significant impact on the financial aspect of the company, because of the funds that need to be reserved for repair of the defected products within the warranty period. The failure process is considered as a combination of market absorption and failure process. Prediction and determination of terminal call rate (TCR) is important for monitoring of the production system efficiency. Several models to predict TCR have been analyzed, such as Weibull model and the Markov Modulated Fluid model (MMFM). The models were validated against two types of data: a) from sales to failure, and b) from production to failure. The results show that MMFM model provides promising prediction results.