Target Reliability Tool Example
This example appears in the Life Data Analysis Reference book.
Deciding on a reliability goal/target involves trade-offs. This is because higher reliability typically correlates with higher production costs, lower warranty costs, higher market share and higher unit sales price. This example illustrates how to use the Target Reliability tool in Weibull++ to estimate the target reliability for a product based on financial considerations.
Determining Reliability Based on Costs
The following table provides information for a particular product regarding market share, sales prices, cost of production and costs due to failure.
The first row in the table indicates the probability of failure during the warranty period. For example, in the best case scenario, the expected probability of failure will be 1% (i.e., the reliability will be 99%). Under this reliability, the expected market share is 80%, average unit sale price is $2.10, average cost per unit to produce is $1.50 and other costs per failure is $0.50.
The assumed maximum market potential is 1,000,000 units and the initial investment is $10,000.
Enter the given information in the Target Reliability tool in Weibull++ and click the Plot icon on the control panel. Next, click the Analysis Details button on the control panel to generate a report of the analysis. The following report shows the cost models.
The following figure shows the Cost vs. Reliability plot of the cost models. The green vertical line on the plot represents the estimated reliability value that will minimize costs. In this example, this reliability value is estimated to be 96.7% at the end of the warranty period.
The following figures show the Profit vs. Reliability plot and the R3OI vs. Reliability plot. In the R3OI plot, the initial investment is set to $10,000.