Interdependent Systems in Operations Management: Warranties, Copulas, and the Next Frontier

Abstract

Modern operations are increasingly defined by interdependencies rather than isolated decisions. Smart products combine hardware and software, and supply chains operate under global interdependence, creating new risks and uncertainties. This seminar begins with the well-established field of warranty modelling, where product costs and risks hinge on interactions among hardware, software, and user behaviour. Traditional models often assume independence, underestimating risks and obscuring systemic vulnerabilities. The presented studies provide a useful starting point, as it highlights how system-level costs are shaped by dependencies between failures and common causes. Building on this foundation, the seminar introduces copulas as powerful tools to capture nonlinear, asymmetric, and tail dependencies across diverse contexts. Applications are discussed across multiple domains, from supply chains with correlated disruptions to interdependent manufacturing systems. By connecting warranty research to emerging operational challenges, the seminar develops a vision of system-level, dependence-aware operations management that is adaptive, data-driven, and future-ready.