The Cost of Reliability: Demonstrating the Financial Benefit of Reliability Testing

• Activity Number: 573
• Type: Contributed
• Date/Time: Wednesday, August 3, 2011 : 2:00 PM to 3:50 PM
• Sponsor: Section on Quality and Productivity
• Author(s): Robert O'Donnell*+
• Companies: Hewlett Packard Laboratories
• Keywords: reliability ; MonteCarlo ; cost ; test

Abstract

The implementation of lean strategies in industry has driven the need to more directly justify the cost of reliability testing. Testing can provide benefits (reduced warranty costs and increased customer satisfaction) but also involves direct costs. Reliability engineers look for ways to demonstrate the financial benefits of product testing by modeling testing as a decision making process. It is a decision making process with uncertainty in the true reliability of the tested product and the costs involved in rectifying problems found; and choices to be made regarding sample size and confidence level. A Monte Carlo simulation based procedure will be presented for demonstrating at a product level the expected financial cost of reduced product reliability. In addition, methods will be described for assigning an economic value to each of a number of reliability tests (targeting different failure modes). These methods can be used to identify an economically optimal sample size for a test as well as comparing the benefit of that optimal test to the benefit (or cost) of not doing the test at all.