Machine life cycle cost estimation via Monte-Carlo simulation

Abstract

Recently an increasing number of customers demands more extensive warranties from the machine building industry. In order to control and maintain the arising costs from the seller's point of view, the paper in hand presents a generic and comprehensive approach to estimate the distribution function of machine warranty cost. Based on the estimation of the failure rate distribution certain life cycle cost elements are quantified either deterministically or stochastically depending on their characteristic. The Monte-Carlo simulation is used for the flexible consideration of the entire system and the estimation of risk figures such as the Value-at-Risk.