An integrated multicriteria model for warranty cost estimation and production

Warranty cost estimation for multiple products is considered. The decision variables include the price, warranty time, production quantity, and lot size. System constraints on the above decision variables are based on absolute minimum and maximum values between which those variables should lie. Several goals are considered at different levels of priorities. Some of these goals may be conflicting. The goals considered included operation within a limited resource capacity, the achievement of a specified market share for each product, limitation on the total warranty cost as a given proportion of total sales, limitation of the warranty reserve for a given product as a proportion of the total warranty reserve for all products, and attainment of a minimum level of warranty reserve for a given product as a proportion of the total warranty reserve cost. A goal programming approach is used to solve the formulated problem. An example is illustrated using the proposed formulation, and goal achievements are discussed. Sensitivity analysis is also conducted for some of the model parameters