Analysis of Field Return Data With Failed-But-Not-Reported Events

ABSTRACT Warranty data contain valuable information on product field reliability and customer behaviors. Most previous studies on analysis of warranty data implicitly assume that all failures within the warranty period are reported and recorded. However, the failed-but-not-reported (FBNR) phenomenon is quite common for a product whose price is not very high. Ignorance of the FBNR phenomenon leads to an overestimate of product reliability based on field return data or an overestimate of warranty cost based on lab data or tracking data. Being an indicator of customer satisfaction, the FBNR proportion provides valuable managerial insights. In this study, statistical inference for the FBNR phenomenon as well as field lifetime distribution is described. We first propose a flexible FBNR function to model the time-dependent FBNR behavior. Then, a framework for data analysis is developed. In the framework, both semiparametric and parametric approaches are used to jointly analyze warranty claim data and supplementary tracking data from a follow-up of selected customers. The FBNR problem in the tracking data is minimal and thus the data can be used to effectively decouple the FBNR information from the warranty claim data. The proposed methods are illustrated with an example. Supplementary materials for this article are available online.

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