Track 2 Session 4
2:40 to 3:50 p.m. Wednesday April 11, 2007

Risk Management of Warranty Contracts in Machine Building Industry

Recently, the increasing customer demand for longer and more extensive warranties has caused additional expenses to the machine building industry. Several risks arise from this situation especially because new warranty types are required such as Reliability-Improvement-Warranties (RIW). In order to control these risks, it is necessary to quantify them first through the calculation of the warranty cost probability function. Therefore deterministic as well as stochastic input elements need to be considered. In this presentation, Weibull Analysis and Failure Modes Effects and Criticality Analysis (FMECA) are used for the reliability evaluation. The system's cost estimation applies the Monte Carlo Simulation approach. Once quantified, the risks are reduced through two approaches: bid optimization using a sensitivity analysis and efficient machine optimization during the life cycle based on the FMECA. The presentation concludes with a critical reflection on the calculation accuracy and demonstrates the applicability of the procedure by its usage in a machine tool manufacturing company.

Key Words: Reliability Analysis, Life Cycle Costing, Reliability Improvement Warranty, Warranty Cost, Risk Management