Analysis of warranty cost based on reliability

Abstract

A PC-based warranty cost analysis model developed jointly by the author and W. Hodges is presented, and reliability parameters and their fundamental effect as cost drivers are discussed. An example shows how estimated costs for spares, labor, repairs, packaging, transportation, escrow, administration, etc. are integrated into the analysis. Output of the model is a projection of the overall net account balance on a month-by-month basis throughout the warranty period. Examples also show how the model is used to conduct instant trade studies. Data that are routinely generated in the course of RAM modeling and predictions, with results from sparing analysis, were integrated into a mathematical model on a PC. By applying stock-in-trade data and accounting principles, a simple, direct, and powerful tool was developed for warranty cost analysis. The basic concept presented is applicable to various other areas.<>