Prediction Model for Warranty Costs: A Case Study of a LCD Monitor Company

In the OEM/ODM business, the total cost of a product and its after-sales service is always one of the top considerations for customers buying the product or service. The cost management on the bill of material (BOM) and warranty is therefore a very important task for gaining an OEM/ODM order. Based on the analysis of repair data collected over more than four years by an ODM company, this study generates a prediction model for the warranty service costs on LCD monitors. Once a prediction model is built, a company can apply it to figure out the volume prediction of warranty returns and to prepare the necessary spare parts and resources so as to maintain the warranty returns.