Estimating mean cumulative functions from truncated automotive warranty data. (English)
Wilson, Alyson (ed.) et al., Modern statistical and mathematical methods in reliability. Selected papers based on the presentation at the 4th international conference on mathematical methods in reliability (MMR 2004), Santa Fe, New Mexico, USA, June 21‒25, 2004. Hackensack, NJ: World Scientific (ISBN 981-256-356-3/hbk). Series on Quality, Reliability and Engineering Statistics 10, 121-135 (2005).
Summary: This article deals with a type of truncation that occurs with typical automotive warranties. Warranty coverage and the resulting claims data are limited by mileage as well as age. Age is known for all sold vehicles all the time, but mileage is only observed for a vehicle with a claim and only at the time of the claim. Here we deal with the univariate case, taking either age or mileage as the usage measure. We evaluate the mean cumulative number of claims or cost of claims and its standard error as functions of the usage measure. Within a nonparametric framework, we extend the usual methods in order to account for the fact that the odometer readings are available only for a vehicle with a claim and only at the time of the claim. We illustrate the ideas with real data on four cases based on whether the usage measure is age or miles and whether the results are adjusted for withdrawals from warranty coverage. We also note that these adjustments can be further refined by taking into account the effects of reporting delay.