I. Reliability Management
B. Reliability program management
4. Product Lifecycle Engineering (Understand)
Describe the impact various lifecycle stages (concept/design, introduction, growth, maturity, decline) have on reliability, and the cost issues (product maintenance, life expectation, software defect phase containment, etc.) associate with those stages.
The creation and use of a product or system evolves over time from the initial idea to eventual retirement. Each stage of the lifecycle includes reliability considerations along with the many other constraints informing decisions and actions.
Additional References
Software Defect Phase Containment (article)
Life cycle cost analysis and reliability (article)
Software Defect Phase Containment (article)
Life Cycle Cost Analysis for a Reliability Engineer (webinar recording)
Quick Quiz
1-1. Two systems are built to perform the same function. What factors should be considered in comparing the financial effects of reliability over the designed operating time of the two systems?
I. failure rates
II. operating life of each system
III. cost of each system (including repair, replacement, and loss)
(A) I only
(B) I and III only
(C) II and III only
(D) I, II, and III
(D) I, II, and III
Consider all the elements that lead to a financial gain or loss. The available answers include failure rates and operating life of each system, which, permits the calculation of the expected number of failures, and multiplied by the cost of a failure provides the cost of failures.
Another financial element is the cost of maintaining the system, including preventative and corrective maintenance costs, which impact the overall financial performance of a system. Maintenance costs tend to focus on avoiding system failures or returning the system to service after a failure.
1-9. A new production machine is to be introduced into a production line. The new machine and associated costs will require an investment of $120,000. However, maintenance costs for the production line operating with the new machine are expected to decrease from $42,000/year to $20,000/year. If administrative overhead is 21%, the profit coefficient is 7%, and the present worth is subject to 4% discounting, which of the following techniques would you not use to determine the cost effectiveness of the new production machine, amortized over its 7 years of expected useful life?
(A) internal rate of return analysis
(B) return on investment analysis
(C) return on rate of expansion analysis
(D) discounted cash flow analysis
(C) return on rate of expansion analysis
An analysis of the rate of expansion plans for the production line may include marketing, demand, distribution, warehousing, capacity and flexibility, and may include one of the other three listed analysis approaches, yet does not address the question of the new equipment being a good investment using only the given data. Plus I made up the analysis name.
Discounted Cash Flow (DCF) analysis is the most likely analysis to conduct in this case. DCF adjusts the future cash flow changes adjusted for the time value of money. Given the discount rate it means that $100 today is worth 4% less a year from now.
Net Present Value (NPV) is the difference between the present value of cash inflows and the present value of cash outflows.
Internal Rate of Return (IRR) analysis is a metric useful for capital budgeting and is the discount rate. The analysis adjusts the IRR until the net present value of all cash flows equal to zero. This permits comparing different investment options or projects and the one with the highest IRR is then considered the best investment.
Return on Investment (ROI) analysis is a performance measure useful to understand the efficiency of an investment or to compare the efficiency of two or more investment options. ROI measures the amount of return relative to the investment’s cost. The ROI is the ratio of the benefit or return (calculated as the gain from the investment minus the cost of the investment) divided by the cost of the investment. ROI may or may not include the consideration of the time value of money by using NPV adjusted values.
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