Advanced Maintenance Modelling

Practical application of an Analytic Hierarchy Process for

the improvement of the warranty management

Vicente González Díaz, Juan Gómez Fernández, Adolfo Crespo Márquez

Industrial Management Department. School of Engineering, University of Seville.
Escuela Superior de Ingenieros Camino de los Descubrimientos, s/n
41092 Sevilla, Spain

Abstract

This paper will be focused in one of the stages included in a reference framework
proposal, suggested and developed by the author in former works for the
improvement of the warranty management. Once the warranty program objectives
and strategy are defined, the referred stage here considered will be the Criticality
Analysis. It will be understood along this paper as how crucial is a complaint of a
client, particularly the affected component, due to a failure on it and its consequences
to the business. Those decisions and actions taken from the warranty program will
involve the possibility of a certain deviation from business objectives in terms of
profit losses, redirection of resources, possible delays etc., or the use of assembly
pieces as spares, among others. Therefore, it is required the application of a
technique which help systematically to decide which assets should have priority
related to the management of the warranty program, in accordance of course with the
existing program strategy. Some techniques can be based for example on risk-cost
assessment, combining the probability of an occurring event, with the impact that this
event would cause.
The Analytic Hierarchy Process (AHP) is a multi-criteria decision making method
that will be depicted throughout this document and applied to a particular case study.
The paper will show how this method can help and improve the decision-making
related to some aspect of the warranty management, obtaining as a result a criticality
matrix which offers a prioritized view of warranty issues, which allow us to align
aftersales actions with the business targets. In general terms, this paper aims to
explore different aspects related to the Analytic Hierarchy Process (AHP), which can
influence in the management of warranty assistances. In the process of warranty
management for a specific product, many decisions and actions appear presenting a
great impact on the total cost of the product warranty service. The paper contains an
example study where AHP concepts are applied in a simply way in order to provide a
practical application view of the theoretical development, useful to aftersales
managers as a decision-making tool.

Keywords: After-Sales, Analytic Hierarchy Process, Decision-Making, Reference

Framework, Warranty Management.

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 38th ESReDA Seminar, Pecs, Hungary, 4-5 May 2010

1. Background
Warranty is usually defined as the assurance policy applied to all customers where the
purchased goods or services are (or shall be) as represented and, if not, they will be
replaced or repaired. This assurance is applied during a period of time after a product
has been sold. The management of such policy combines technical, administrative
and managerial actions during the warranty period of an item in order to maintain or
restore the item to a state in which it can perform the required function, needed to
provide a given service [1]. Several different types of warranties are suited for
different products (consumer, commercial and industrial; standard versus custom
built...) as the ones mentioned in reference [2]. In this paper we will consider such a
complex system as a custom-built product, where multitude components and
conditions must be taken into account.
In general, case studies have been normally used to support and help theoretical
subjects in engineering and other research fields. Developing these cases, it is usually
found such amount of information that can either trivialize the study or complicate it
beyond a reasonable level [3]. Therefore, the intention here is to synthesize a practical
case which transmits easily how an AHP method in the production / sale stage can
help to take, for instance, suitable decisions on the strategical stock of spare parts in
order to attend properly the claims under warranty [4]. The case here exposed will
deal with a custom-built product where its warranty includes the repair of defects in
materials, and the replacement of parts with valid manufacturing failures during the
warranty coverage. The AHP method provides ratio scales from paired comparisons.
The input can be obtained from actual measurement such as price, weight etc., or
from subjective opinion such as satisfaction feelings and preference. The AHP shows
an approached assessment of the best decision, allowing some small inconsistency in
judgment when subjective opinions are taken, due to the fact that human judgments
are not always consistent. The ratio scales are derived from the principal Eigen
vectors and the consistency index is derived from the principal Eigen value. All these
concepts will be defined in the following paragraph. Once briefly developed the
process, it will be applied to the company case which manufacture and purchase a
specific product. In this paper, our study scenario will be presented as a warranty
management system based on a several modules organization [5]. In the literature
review [1], [6], different interactions between warranty and other disciplines have
been observed, and how they are dealt by the different models and authors.
Particularly and summarizing, four important interactions can be considered:
1. Warranty and Maintenance: In many cases, the warranty period is the time
when the manufacturer still has a strong control over its product and its
behaviour. Additionally, the expected warranty costs depend normally not only
on warranty requirements, but also on the associated maintenance schedule of
the product [7].
2. Warranty and Outsourcing: The warranty service or, in general, the after-sales
department of a company, is usually one of the most susceptible to be
outsourced due to its low risk and due also to the fact that, among other
features, outsourcing provides legal insurance for such assistance services [8].
3. Warranty and Quality: The improvement of the reliability and quality of the
product has not only an advantageous and favourable impact in front of the
client; it also highly reduces the expected warranty cost [9].

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 Advanced Maintenance Modelling

4. Warranty and Costs Analysis: In reference to costs estimations, there are

nowadays methods to estimate accurately the final cost of a specific acquisition
contract as, for instance, the method denominated “Estimate at Completion”
(EAC) [10], a management technique used in a project for the control of costs
progress.

S tep 1: EFFECTIVENES S

Balance Score Criticality Failure Root

Card Analysis Cause Analysis

Step 2: EFFICIENCY
RA & MDT
Six sigma adapted to
Warranty

Customer Warranty Policy

Risk-Cost-
Step 4: IMPROVEMENT

Relationship
Management Benefit Analysis

E-Technologies Reliability,
(E-Warranty) Life Cycle Cost Availability,
Analysis Maintenability
and Safety
S tep 3: AS S ES S MENT

Figure 1. Proposed Framework for Warranty Management

The Criticality Analysis, where we will apply the Analytic Hierarchy Process, is one
of the stages suggested in a framework proposal for the warranty management, where
blocks and methods may be used to improve the decision-making process. The
proposed reference framework (figure 1) was developed and more detailed by the
author in reference [11]. It is important here to emphasize that there are other tools
and techniques very relevant, and not only the one mentioned in this paper. Due to the
fact that this scope is widely broad and is a challenge to integrate, this paper tries to
outline in few words only some aspects of the AHP method. Other works on this wide
field are for instance the following sources: [12], [13], and [14].

2. General characteristics of the Analytic Hierarchy Process

The Analytic Hierarchy Process ("AHP") is a methodology developed by Thomas
Saaty in 1970, based on facilitating the understanding of a complex problem through
a breakdown in parts ordered hierarchically ranked (approaches and alternatives),
quantifying and comparing variables through addition of views with geometrical
average to synthesize a solution [15], [16].
The process has been used to assist numerous corporate and government decision
makers. Some examples of decision problems are: choosing a telecommunication
system, formulating a determined policy, choosing a product marketing strategy, etc.
Here, problems are decomposed into a hierarchy of criteria and alternatives (see
figure 2).

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 38th ESReDA Seminar, Pecs, Hungary, 4-5 May 2010

PROBLEM

Criterion 1 Criterion 2 …... Criterion n

Criterion 1.1

Alternative 1 Alternative 2 …... Alternative n

Figure 2. Problems decomposition into criteria and alternatives

There are thousands of published articles about AHP Method on decision making
[17], [18]. In the decision matrix (see Figure 3), it is synthesized decision maker
information with resulted elements in pair compared criteria with a normalized and
reciprocal scale of relative importance (see Table 1).

w11 w12 … w1n

w21 w22 … w2n
W= … … … …
wn1 wn2 … wnn

Figure 3. AHP decision matrix.

The elements of the decision matrix fulfil:

• Reciprocity: wij = 1/wji for all i, j = 1, ..., n.
• Consistency: wij = wik/wjk for all i, j, k = 1, ..., n.
• Σj = 1, …, n wj = 1.

Table I: Saaty scale to compare criteria in pairs

Saaty Scale Reciprocal Saaty Scale
1 Equal importance of both elements
Weak importance of one element over Slightly less importance of
3 1/3
another one over another
Essential or strong importance of one Less importance of one over
5 1/5
element over another another
Demonstrated and very strong Far less importance of one
7 1/7
importance of one element over another over another
Absolute importance of one element Absolute less importance of
9 1/9
over another one over another
½, ¼,
2, 4, 6, 8 Intermediate values 1/6, 1/8 Intermediate values

The method has the following axioms:

1. Reciprocity. The importance of Wi/Wj is the inverse of Wj/Wi, so wii=1.

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 Advanced Maintenance Modelling

2. Homogeneity. Compared elements in relation to the same property have the

same order of magnitude.
3. Dependence. To control the dependence among the elements from the same
level and consecutive levels.
4. Performance of expectations. The structure of criteria and alternatives has to
represent the expectations in a ranking.
In the application of this method, subjective values can be used. This subjectivity is
presented, implying a degree of uncertainty or lack of reliability. That makes
necessary to measure the sensitivity in changes of parameters.
To measure here the reliability (“CR”), it is used the ratio between consistency rate
CI of a comparisons array into pairs, and the value of the same index of a
comparisons array into pairs randomly generated:
CI λmax - n
CR = ≤ Where: CI =
CIrando n-1

λmax is the highest positive eigenvalue. The reliability is sufficient if CR is smaller

than or equal to 0.10; otherwise, it must be reviewed to improve its consistency. The
implementation of this method for making decisions entails the acquisition of the
following objectives:
• Improve organization, structuring and documentation (feedback) of the process.
• Use a rational and logical analysis, which minimizes emotional burden of trials.
• Classify and compare alternatives.
• Employ quantitative and qualitative criteria, accurate or measurable, and
inaccurate or estimated.
• Consensus and satisfaction in group decision making.
• Predict at times likely results.
Analytical Hierarchy Process has been applied to multiple business situations, as well
as political or personal issues; especially when it is necessary to synthesize the
knowledge of different specialists to support decisions:
1. Personal situations, where everything is looking on organizing and reflecting
internal preferences, for example: acquisition of resources, identification of
tracks, etc.
2. Political situations in public administrations. Generally is geared to consensus
achievement or forecasting future: identification of public transport routes, public
services allocation, etc…
3. Business situations in private companies. Geared mainly by competitiveness and
improvement, it is used in all situations to achieve objectives: organization,
structuring projects, resources allocation, prediction, social benefits, etc…
However in our case, AHP method is oriented to continuous improvement, where it
has the following criticisms [19], [20], [21]:
• If the number of alternatives grows, comparisons grow exponentially, and the
use of method can be made cumbersome [22].
• It does not consider variation of criteria ranges.
• It is more a comparing tool for management than a statistical method [23]
• Valuations of comparisons can be interpreted differently by different subjects

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 38th ESReDA Seminar, Pecs, Hungary, 4-5 May 2010

• Individually comparison may lead to conflicts, because if A > B and B > C, it

may occur A < C
• Inclusion of a new irrelevant approach may affect management of two relevant
criteria [24]. This is contradicting the axiom of MAVT on irrelevant
alternatives, Problem of inverse preference order [25].
• Asymmetrical inconsistency in eigenvectors by Saaty scales [26], [27].
To correct this lack of consistency, it was developed the Modified AHP Method [26].
[27], but also it has its criticisms [28], indicating that improvements in real cases are
not as crucial as Saaty AHP.

3. Case study
The intention here is to synthesize a practical case which transmits easily how a
proper management of warranty assistances helps to reduce costs, enables to take
suitable decisions, and improves the image of the company in front of the client.
Several different types of warranties are suited for different products (consume,
commercial and industrial; standard versus custom-built...) [6]. The case here exposed
will deal with a custom-built product where its warranty management is negotiated
with the customer [3]. Other warranty case studies can be found for instance in [29].

3.1 Study scenario and warranty evolution

The case company is a large manufacturer in the metal industry that operates
worldwide. The company designs, manufactures and purchases a wide range of
industrial vehicles (such as forest machines, hydraulic excavators or track loaders) for
industrial customers, as well as other related products like spare parts. Additionally to
the purchase of standard vehicles, nowadays is being also often the customization of
machines. Therefore, in our case the company must supply to a client a specific
amount of customized vehicles following a defined schedule. In the contract is
included the assistance of warranty for the vehicles of the fleet during a period,
starting when each vehicle is delivered to the customer. To provide the after-sales
service in a satisfactory way, it is required the fulfilment of some conditions by the
company:
1. Teams formed by personal with appropriate training.
2. Tools for maintenance / warranty tasks.
3. Materials and spare parts to carry out the repairs.
The first two conditions are considered fulfilled. Regarding the third condition, the
necessary materials for warranty operations are obtained from the same warehouse of
the assembly line. By this way, there are two possibilities to give back the material:
• When the piece is repairable, a spare part is taken from warehouse being later
put it back after the repair of the disassembled piece.
• When the piece is not repairable, a spare is also taken from warehouse, but the
material must be restored by purchasing.
This situation is possible because the stock for manufacturing allows the loan of
material for warranty without risk to the necessities of the assembly line. The problem
in this scenario is defined as follows: Due to the fact that manufacturing and warranty
assistance share the same warehouse, there will be a moment when the manufacturing

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 Advanced Maintenance Modelling

is very advanced and simultaneously there are many vehicles under warranty (t2).
From this moment onwards, every decision must be taken prioritizing one of the two
activities.
Monthly Delivery
Delivered Vehicles (Acumulate)
Warranty Evolution
Vehicles in warranty
t1 t2
400
350
Amount of Vehicles

300
250
200
150
100
50
0
se 6

se 7

se 8

se 9

se 0

se 1

se 2

se 3

se 4

5
m 6

m 7

m 8

m 9

m 0

m 1

m 2

m 3

m 4
-0

-0

-0

-0

-1

-1

-1

-1

-1

-1
0

1
p-

p-

p-

p-

p-

p-

p-

p-

p-
ar

ar

ar

ar

ar

ar

ar

ar

ar

ar
m

Month

Figure 4. Data of the described scenario

Apart from the above described context, the study takes place during the lifetime
distribution of deliverables (t1). That means that, historical data regarding costs,
failured items etc. are available for the research. Summarizing, the described scenario
and the delivery schedule are as shown in figure 4. Here, the total amount of
customized vehicles to be delivered is 350 units, the warranty period for each vehicle
is 2 years, and the warranty expiration for last vehicle is March 2015.
Additionally, the graphic helps to illustrate some other details as t2 (September 2011),
when the already delivered fleet -285 units- will have a maximum in the amount of
vehicles simultaneously under warranty –128 units- (see yellow graphic line). In this
moment, we can observe how close the end of the deliveries is (April 2013).
Consequently, much closer (and critical) is therefore the manufacturing of such last
vehicles.

Custom ized Vehicle Level 0

Electrical System Hydralic System Mechanical System Auxiliary System Level 1

Disjunctor Cable Valve Pum p Gear Brake Intercom Navigator Level n

Figure 5. Classification tree of components

In t2, our teams of maintenance / warranty technicians will have to assist a high
number of vehicles which will demands a huge amount of spare parts. At the same
time, the operators of the assembly line will be requesting pieces for the production of
the last vehicles. The shared warehouse will have then in store enough pieces for
manufacturing but no more, so the loan of any spare part demanded by the after-sales
personal must be decided taken into consideration the importance of the material, the
time to repair the disassembled piece, and / or the time to restore it by purchasing.

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 38th ESReDA Seminar, Pecs, Hungary, 4-5 May 2010

Therefore, every piece in the classification tree (see figure 5) belonging to the lowest
level (level where materials can be procured), will have a weight (or criticity) in order
to be lent or not, which changes with the time. Every piece will be considered much
more critical, as closer is the end of manufacturing.
Therefore, and taking into account a costs analysis, it will be necessary to have in
mind the investment of a minimum strategical stock in order not to leave warranty
claims unattended. The budget for warranty depends on the company policy. Usually,
it is determined as a percentage of the project total cost. These cost data are not
relevant in this paper since the objective here is to check the warranty process.
Nevertheless, many cases can be found dealing with costs, warranty data analysis
(qualitative and quantitative), etc., using also real data and providing more details.
Two review papers on this topic are, for instance, [30] and [31].

3.2 Quantitative analysis of the claims

Data for a huge variety of items have been possible to compile with the customer’s
complaints. These items are classified according to their functionality and divided
also into components that can be procured (see figure 5: Classification tree of
components).
The figure 6 exposes a sample of the gathered data as an example for this case study.
This kind of analysis usually helps not only to the Quality department, but also to the
Manufacturing, in order to pay much more attention in those components that have
many incidents during the warranty period. Improving the manufacturing process or
taking care during the component assembly, it is possible to reduce the complaints
regarding a specific item.
COMPLAINTS ACCORDING TO COMPONENT

100
95

90

80

70
70

62
No. of COMPLAINTS

60
54

50 46

40 38

30
30 26
22
20 18
14
12
10
10 8
6
4 3 2
0
Disjunctor

Horn
Lights
Engine

Brake

Antenna

Seats

Cable
Alarm

Gear

Regulator

Navigator
Pump

Intercom

Heater
Battery

Valve

Steering wheel

Figure 6. No. of Complaints per Component

Due to the huge amount of components in such complex systems as an industrial

customized vehicle, is suggested the choice of items in order to make all the gathered
information easily manipulated. The criteria to select a group of items can be not only
in terms of failures quantity. It is also important the cost of such components, the
delivery time to procure them, etc.
In general, is important to know how critical each component is for the company and
for the fulfilment of the production line. All these features will be conditions to have

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 Advanced Maintenance Modelling

in mind when comes the time to take a decision. In other words, these features will be
turn into factors which will give a specific weight to each component. This weight
will help finally to the manager to take the proper decision.
Taking this into account, and regarding again the former figures, those data included
in the graphic, are possible to be transformed in terms of relative frequency. This
relative frequency refers to the number (ni) of times that an event (i) takes place (in
our case, failures), and divided per the total number of events (Σni).
Considering therefore statistical concepts (together with other factors) is possible
further on to weight, as mentioned, the value of each component in order to prioritize
between the loan to warranty assistance or to keep the piece available for the
manufacturing.

Table II: Relative frequencies

Component Claims Nº fi = ni / Σ ni Component Claims Nº fi = ni / Σ ni
Pump 95 0,1827 Lights 18 0,0346
Engine 70 0,1346 Intercom 14 0,0269
Battery 62 0,1192 Antenna 12 0,0231
Brake 54 0,1038 Seats 10 0,0192
Valve 46 0,0885 Heater 8 0,0154
Alarm 38 0,0731 Navigator 6 0,0115
Gear 30 0,0577 Horn 4 0,0077
Disjunctor 26 0,05 Steering wheel 3 0,0058
Regulator 22 0,0423 Cable 2 0,0038

The rest of components are basically not considered because:

• They have been affected by very little amount of failures.
• They have been delivered fast enough and mostly in time.
• There is an extra stock in warehouse due to the purchasing of minimum
quantities, higher than the real necessity.
• Or they are not, definitively, under the interest of the project managers’ point of
view, due to other reasons.
Summarizing, with the tasks before explained in order to obtain a set of chosen
components (those acknowledged as critical), what we are really composing is a list
of strategical spare parts. This means that, in case the company approves the use of a
budget for the supporting of the warranty service, the purchasing process can be
quickly launched.
All these actions will finally lead the company to positive returns by reducing the
probability of paying penalties due to a global delay in the project delivery, and
improving the confidence of the client due to the completion of contractual terms as
the warranty assistance.
It is necessary to remark that, every failure referred here were incidences considered
under warranty. For further researches on this field, is proposed for example the
inclusion also of those incidences not considered under warranty. The analysis of
such events must take into account the reasons why these situations happen (bad
training of the user?; poor information for maintenance?; clients accustomed to other
family product with different behaviour?...). Anyway, in each case and even when the
failure is not attributed to the manufacturer, the company must be interested in the
possible causes.

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 38th ESReDA Seminar, Pecs, Hungary, 4-5 May 2010

3.3 Spare parts management for warranty assistances

This paragraph is part of the logistics of warranty servicing. The bibliographical

reference [32] deals with various issues in this context. In order to assure a correct
warranty attention, the proposed action is basically to acquire a lot of reserves that
allow reparations without delays in the vehicles manufacturing and, simultaneously
during this process, to supply spares to the warranty service from the assembly line in
a reasonable way. According to the mentioned considerations, and together with the
collected data, the experience of warranty / maintenance technicians, the knowledge
of the engineering department and of course using the already developed techniques
in maintenance, is possible not only to elaborate a spare parts purchase plan for
warranty, but also to improve the business process of decision-making as well as to
contribute with improvements actions for engineering and manufacturing.
In general, the decision-making will be the result of a process focused to a final
choice among several alternatives. In our case, in order to lead the company to a fast
and adequate decision-making, every department should know very clear what they
have to do and which the scope of their responsibility is. For our company case, we
have adapted the idea of a warranty management system divided in modules [2],
proposing furthermore, certain interactions among different departments inside the
company.

NO YES
Communicates the
CLIENT Is acepted?
failure to MB.

YES
Are there
LOGISTIC DEPT. spares in
warehouse?

NO
MANUFACTURING DEPT.
NO

Communicates the corresponding dept.

Decides, as a last resort, if the failure Repair under
MANAGEMENT BOARD Transmits the information to AD. the necessary actions in order to
must be repaired under warranty. warranty?
NO facilitate the material to AD.

YES SI
Must the failure be NO
Analizes the Is any material needed
AFTER-SALES DEPT. considered under Determines resources and
initial data. for the repair?
warranty? YES deadlines for the repair.

Figure 7. Proposed warranty management process workflow (part 1 of 2).

These departments share the information, take suitable decisions according to their
responsibilities, and coordinate d activities to a common and profit goal for the whole
company. In order to illustrate such interactions, activities etc., see the workflows in
figures 7 and 8. The considered departments here (including the client) are shown in
table 3.
The process starts when the customer detects a failure in a vehicle and informs
consequently to the company. The communications can be addressed to different
sections of the company, but the most appropriate way is to focus them in only one
communicator as, for example, the Management Board or the Aftersales Department,
who can also detect failures in the course of its maintenance activities. Once the
information reaches the Aftersales Department, they analyse the given information. In
case that the incidence is considered not object of repair under warranty (for example,
when the cause of the failure has been a wrong or bad utilization), they inform to the
Management Board who decides finally if, in spite of this, the incidence is repaired as
warranty.

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 Advanced Maintenance Modelling

Table III: Considered departments

• Logistics Department (LD) • Quality Department (QD)
• Manufacturing Department (MD) • Purchasing Department (PD)
• Management Board (MB) • Engineering Department (ED)
• Aftersales Department (AD) • Customer (C)

If the incidence is discarded as warranty repair, the Management Board should inform
the customer about that. The customer can of course disagree with such consideration.
Therefore, a list of interventions (those not considered firstly as warranty) must be
negotiated between the parts. If the incidence is considered under warranty
conditions, the Aftersales Department must carry out a diagnosis of the incidence,
detecting the problem, analyzing its solution, and determining the resources (staff and
materials) as well as the necessary time for its repair. In reference to the material, the
warranty technicians must identify between the repairable and the non reparable /
consumable materials. The global and general needs are communicated to the
Management Board who addresses the actions to the corresponding department
(Logistics, Manufacturing and / or Purchasing Department), in order finally to
facilitate the material to the Aftersales Department. At that point is when the
Management Board must take the most important decisions in terms of costs and
manufacturing prevision. Once the Aftersales Department has the material (either by
a loan from warehouse, a loan by cannibalization, or acquisition by purchasing), it
communicates to the Management Board (and afterward to the client), its action plan.

YES Sends to MB its

CLIENT Approval.

YES
LOGISTIC DEPT.

NO Is possible to YES Does it affect NO

MANUFACTURING DEPT. obtain it by to the delivery
cannibalization? schedule?

NO YES
YES Decides, as a last resort, if the Is the piece Informs to AD about the Informs the C about
MANAGEMENT BOARD piece is lent. lent? disposition of materials for the the closing of the
repair. incidence.

NO Makes the corresponding Non NO Resolves the

AFTER-SALES DEPT.
Informs to MB and
Conformity Register and sends the incidence and fulfils
C about its Action
failured material to the factory. the Closing Report.
Plan.

NO Makes and manages the Data Base associated

QUALITY DEPT. Is it a systematic Manages the repair whose
to the incidences, needed for its follow-up and
failure? charges impact in AD.
periodical review.

YES
Manages the purchasing whose
PURCHASING DEPT.
charges impact in AD.

Analyzes and justifies the

ENGINEERIING DEPT. causes.

Figure 8. Proposed warranty management process workflow (part 2 of 2).

The damaged material is sent to the company where the Quality Department (together
in some cases with Engineering Department) analyzes the failure. If the repair has
been by replacement and the material is identified as repairable, the Quality
Department manages the repair, taking into account the appropriate certification. The
material, once repaired and certificated, will be stored again in warehouse for its use
in the assembly line. In this process, every data about the incidence, damaged

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 38th ESReDA Seminar, Pecs, Hungary, 4-5 May 2010

material, repair etc., gathered by Aftersales, Quality and Engineering Departments are
introduced in a Data Base which is followed-up and reviewed by the Quality
Department.
Once the incidence is solved, Aftersales Department communicates the closure of the
assistance to the Management Board, who transmits this to the client. From the
customer is important to receive a document with the approval of the performed tasks
and the acceptance of the service closure. The Data Base associated to these
incidences and necessary for their follow-up should include, not only those incidences
considered under warranty, but also the data about preventive and corrective
maintenance performed on every vehicle, in order to enable the analysis of, for
example, repetitive or systematic failures among others studies.

4. Application of AHP method to the case study

Once described the scenario of our case study, it is the moment to apply the
methodology also depicted on AHP. This application will be performed in a simply
way and just starting with an important part of the process which is to accomplish the
following three steps:
1. State the objective:
It will be to obtain a Spare Part for the warranty assistance with minimal effects
on the assembly line.
2. Define the criteria:
• Criterion 1: Extra Stock (better if higher is the extra stock).
• Criterion 2: Terms
− Criterion 2.1: Supply Term (better if shorter is the supply time).
− Criterion 2.2: Repair Term (better if shorter is the repair time).
• Criterion 3: Reliability (better if higher is the reliability, or lower is the failure
frequency).
• Criterion 4: Costs
− Criterion 4.1: Supply Cost (better if lower is the supply cost).
− Criterion 4.2: Repair Cost (better if lower is the repair cost).
• Criterion 5: Vehicles amount
− Criterion 5.1: Vehicles still to deliver (better if higher is the amount of
vehicles still to deliver).
− Criterion 5.2: Vehicles under warranty (better if lower is the amount of
vehicles under warranty).
3. Pick the alternatives:
• Spare part is obtained from Warehouse.
• Spare part is obtained by Cannibalization.
• Spare part is obtained by Purchasing.
This information can be arranged in a hierarchical tree or in a chart. In any case, the
information is then synthesized to determine relative rankings of alternatives. Both
qualitative and quantitative criteria can be compared using informed judgments to
derive weights and priorities. In order to define the relative importance of the criteria
it will be used judgments, determining by this way the ranking of the mentioned
criteria. Using pairwise comparisons, the relative importance of one criterion over

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 Advanced Maintenance Modelling

another can be expressed (see figure 9): 1 equal, 3 moderate, 5 strong, 7 very strong,
and 9 extreme.

nt r
ra e
ar d
rm

rm

liv l
t

de stil
t

y
w s un
k

os

os

er
oc

Te

Te

C
ilit

t o es
St

e
y

y
r

r
b

cl

cl
ai

ai
l

l
tra

pp

pp
ia

hi

hi
ep

ep
el
Su

Su

Ve

Ve
Ex

R
E Extra Stock 1/1 3 3 2 4 4 5 5
Ts Supply Term 1/3 1/1 1/2 2 1/3 1/3 1/4 1/4
Tr Repair Term 1/3 2 1/1 2 1/3 1/3 1/4 1/4
F Reliability 1/2 1/2 1/2 1/1 3 3 4 4
Cs Supply Cost 1/4 3 3 1/3 1/1 1/2 1/3 1/3
Cr Repair Cost 1/4 3 3 1/3 2 1/1 1/2 1/2
Vd Vehicles still to deliver 1/5 4 4 1/4 3 2 1/1 1/2
Vw Vehicles under warranty 1/5 4 4 1/4 3 2 2 1/1

Figure 9. Matrix of pairwise comparisons.

In order to turn this matrix (figure 9) into ranking of criteria, in other words, to obtain
a ranking of priorities from a pairwise matrix, Dr. Thomas L. Saaty demonstrated
mathematically that the eigenvector solution was the best approach [14]. Just to solve
the eigenvector, a short computational way to obtain this ranking is to raise the
pairwise matrix to powers that are successively squared each time. The row sums are
then calculated and normalized, and finally, the computer is instructed to stop when
the difference between these sums in two consecutive calculations is smaller than a
prescribed value. The computed eigenvector gives us the relative ranking of our
criteria (table 4).

Table IV: Ranking of the defined criteria

Ranking Order Criteria Eigenvalues
1 Extra Stock 0,2797
2 Reliability 0,1777
3 Vehicles under warranty 0,1338
4 Vehicles still to deliver 0,1162
5 Repair Cost 0,0854
6 Repair Term 0,0732
7 Supply Cost 0,0705
8 Supply Term 0,0636

In terms of the alternatives, a pairwise comparison determines the preference of each

alternative over another (figure 10).
As mentioned earlier, AHP can combine both qualitative and quantitative
information. Particularly in our study case, it has been here applied a qualitative point
of view, trying to describe a generic context which has considered:
• a high extra stock, reliability, as well as a high amount of vehicles still to be
delivered;
• a short term in the supply and/or the repair of a piece; and
• a low cost in the supply and/or the repair of a piece, as well as a low amount of
vehicles under warranty.

13
 38th ESReDA Seminar, Pecs, Hungary, 4-5 May 2010

n
io

io
at

at
es

es
ng

ng
liz

liz
e

e
Extrastock Supply Cost

lu

lu
os

os
i

i
ba

ba
as

as
a

a
nv

nv
eh

eh
ni

ni

h
rc

rc
ge

ge
ar

ar
n

an
Ca

Pu
Pu
W

W
Ei

Ei
C
Warehose 1,0000 3,0000 3,0000 0,5936 Warehose 1,0000 0,5000 0,3333 0,1571
Cannibalization 0,3333 1,0000 2,0000 0,2493 Cannibalization 2,0000 1,0000 0,3333 0,2493
Purchasing 0,3333 0,5000 1,0000 0,1571 Purchasing 3,0000 3,0000 1,0000 0,5936

n
io

io
at

at
es

es
ng

ng
liz

liz
e

e
Supply Term Repair Cost

lu

lu
os

os
i

i
ba

ba
as

as
a

a
nv

nv
eh

eh
ni

ni

h
rc

rc
ge

ge
ar

ar

an
Ca

Pu
Pu
W

W
Ei

Ei
C
Warehose 1,0000 2,0000 0,3333 0,2493 Warehose 1,0000 3,0000 3,0000 0,5936
Cannibalization 0,5000 1,0000 0,3333 0,1571 Cannibalization 0,3333 1,0000 2,0000 0,2493
Purchasing 3,0000 3,0000 1,0000 0,5936 Purchasing 0,3333 0,5000 1,0000 0,1571
n

n
io

io
at

at
es

es
Vehicles still
ng

ng
liz

liz
e

e
Repair Term
lu

lu
os

os
i

i
ba

ba
as

as
a

a
to deliver
nv

nv
eh

eh
ni

ni

h
rc

rc
ge

ge
ar

ar

an
Ca

Pu
Pu
W

W
Ei

Ei
C
Warehose 1,0000 0,3333 2,0000 0,2493 Warehose 1,0000 3,0000 3,0000 0,5936
Cannibalization 3,0000 1,0000 3,0000 0,5936 Cannibalization 0,3333 1,0000 2,0000 0,2493
Purchasing 0,5000 0,3333 1,0000 0,1571 Purchasing 0,3333 0,5000 1,0000 0,1571
n

n
io

io
at

at
es

es
Vehicles under
ng

ng
liz

liz
e

e
Reliability
lu

lu
os

os
i

i
ba

ba
as

as
a

a
warranty
nv

nv
eh

eh
ni

ni

h
rc

rc
ge

ge
ar

ar

an
Ca

Pu
Pu
W

W
Ei

Ei
C
Warehose 1,0000 0,3333 2,0000 0,2493 Warehose 1,0000 3,0000 3,0000 0,5936
Cannibalization 3,0000 1,0000 3,0000 0,5936 Cannibalization 0,3333 1,0000 0,5000 0,1571
Purchasing 0,5000 0,3333 1,0000 0,1571 Purchasing 0,3333 2,0000 1,0000 0,2493

Figure 10. Eigenvalues of the defined alternatives.

With the above mentioned context, and computing the eigenvector, this determines
the relative ranking of alternatives under each criterion (figure 11).

Objective: OBTAINING A SPARE PART

Criteria:
nt r
ra e
ar nd
rm

liv ll
t
m

y
t

de sti
k

os

os

er

w u
oc

er
Te

C
lit

rC

to es

es
rT
St

ly

ly
bi

cl

cl
ai

ai
a

pp

pp
ia

hi

hi
tr

ep

ep
el
Su

Su
Ex

Ve

Ve
R

Aternatives: WAREHOUSE 1 2 2 2 3 1 1 1
CANNIBALIZATION 2 3 1 1 2 2 2 3
PURCHASING 3 1 3 3 1 3 3 2

Best situation of each criterion: High Short Short High Low Low High Low

Figure 11. Ranking of alternatives under each criterion.

Multiplying in terms of eigenvalues, the relative ranking of alternatives and the

relative ranking of criteria, we can obtain the highest ranked alternative under the
described context (tables 5, 6 and 7).
Therefore, the best decision under the above described context is to obtain the spare
parts from the warehouse, the second option for the manager is to obtain the piece by
cannibalization, and finally, the worst decision would be to obtain the spare parts by
purchasing. In summary, the analytic hierarchy process provides a logical framework
to determine the benefits of each alternative. Other deductions are possible to obtain
from the numerical results. In this particular example, the executive manager can
check the influence, for instance, of purchasing additional units, which would change

14
 Advanced Maintenance Modelling

the weight of the criterion extra stock but also the supply term and the supply cost, or
performing the repair of the failed piece although it would has a longer repair term. In
other words, this tool allow us to use it as a sensitivity analysis, showing how
projected choices can change with qualitatively or quantitatively variations in the
input of key assumptions on which the decision-making is based, and showing in
some way a criticality analysis of the issue.

Table V: Obtaining of the highest ranked alternative (Matrix 1)

nt r
ra de
rm

liv l
t

de stil
t

y
w s un
k

os

os

er
er
oc

Te

rC
rT

lit

to e s
St

e
ly

bi

ly

ar
cl

cl
ai

ai
tra

pp

pp
ia

hi

hi
ep

ep
el

Su

Ve
Su

Ve
Ex

R
Warehose 0,5936 0,2493 0,2493 0,2493 0,1571 0,5936 0,5936 0,5936
Cannibalization 0,2493 0,1571 0,5936 0,5936 0,2493 0,2493 0,2493 0,1571
Purchasing 0,1571 0,5936 0,1571 0,1571 0,5936 0,1571 0,1571 0,2493

Table VI: Obtaining of the highest ranked alternative (Matrix 2)

Criteria Eigenvalues
Extra Stock 0,0316
Supply Term 0,0812
Repair Term 0,0935
Reliability 0,2322
Supply Cost 0,0959
Repair Cost 0,1163
Vehicles still to deliver 0,1624
Vehicles under warranty 0,1870

Table VII: Obtaining of the highest ranked alternative (Result)

Warehose 0,4117
[Matrix 1] x [Matrix 2] = Cannibalization 0,3367
Purchasing 0,2516

Although costs have been here included, in many complex decisions, costs should be
set aside until the benefits of the alternatives are evaluated. Otherwise it could happen
that the general costs of the warranty program were too high, taking not care about its
benefits. In other words, discussing costs together with benefits can sometimes bring
forth many political and emotional results. Dealing with benefits and costs can
include for instance the use of graphics where benefits and costs of each alternative
are represented together, choosing that alternative with lowest cost and highest
benefit. Other ways are for example to apply benefit to cost ratios, linear
programming, or to analyse separately benefit and cost in different hierarchical trees,
and then combining the results.

5. Conclusions
Day after day, today’s companies must face up to a lot of different problems related
to management. Such management depends on multiple variables, which some of

15
 38th ESReDA Seminar, Pecs, Hungary, 4-5 May 2010

them do not stay yet on the main decisions of executives. Consequently, many
choices are done paying no attention to a collective decision-making inside a business
and among the different departments of a company. Costs, deadlines, reliability,
inventory, business policies, etc… all together conform a wide range of variables with
them many executive managers have to make efforts in order to understand and to
explain their decision-making in organizations usually with many interactions.
Therefore, this paper has tried to bring an easy decision tool to the field of the
management, which seems frequently hard to deal with and to comprehend. As we
have seen, AHP can be used for complex decisions, being possible the inclusion of
many levels of criteria and subcriteria. AHP allows to be applied in a wide variety of
applications as strategic planning, resource allocation, source selection,
business/public policy, program selection, and much more. Particularly, in this paper
has been described a case study and a specific context in order to apply as mentioned,
an AHP method in a simply way to a generic failed piece which requires a spare part.
Nevertheless, the executive manager, who has the responsibility to take the decision,
can have in mind other boundary conditions as for example when the complete fleet
of vehicles has been already delivered (then, the cannibalization is no more possible,
but the whole stock in warehouse can be available for the aftersales assistances) or,
giving a special treatment to those items with lowest reliability at the end of the first
year of functioning.
This work intends to be a starting point for further research related to the criticality
analysis, where some key aspects have been presented along the case study in order to
take proper decisions for leading correctly the company to a successful goal. For that
purpose, it is needed also to pay special attention to that business environment around
those ones who must make selections, choices or decisions among alternatives,
considering as a very important aspect the experience given by the technical staff for
maintenance and after-sales.

Acknowledgements
The author would like to thank the reviewers of the paper, for their contributions to
the quality of this work.

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