On dynamically monitoring aggregate warranty claims for early detection of reliability problems

Warranty databases managed by most world-leading manufacturers are constantly expanding in the big data era. An important application of warranty databases is to detect unobservable reliability problems that emerge at design and/or manufacturing stages, through modeling and analysis of warranty claims data. Usually, serious reliability problems will result in certain abnormal patterns in warranty claims, which can be captured by appropriate statistical methods. In this article, a dynamic control charting scheme is developed for early detection of reliability problems by monitoring warranty claims one period after another, over the product life cycle. Instead of specifying a constant control limit, we determine the control limits progressively by considering stochastic product sales and non-homogeneous failure processes, simultaneously. The false alarm rate at each time period is controlled at a desired level, based on which abrupt changes in field reliability, if any, will be detected in a timely manner. Furthermore, a maximum-likelihood-based post-signal diagnosis scheme is presented to aid in identifying the most probable time of problem occurrence (i.e., change point). It is shown, through in-depth simulation studies and a real case study, that the proposed scheme is able to detect an underlying reliability problem promptly and meanwhile estimate the change point with an acceptable accuracy. Finally, a moving window approach concerning only recent production periods is introduced to extend the original model so as to mitigate the “inertia” problem.