Before the product is shipped
At the customer’s location
- The increased cost for material, as a result of an increased safety stock necessary as a result of quality problems.
- The increased cost of inspection at incoming inspection.
- The cost of handling a failure, when the failure occurs at incoming (including administrative costs to return).
- The cost of handling a failure, when the failure occurs in process (including administrative costs to return).
- The cost of field defects.
- The base cost of a service call.
- The installation cost (After the technician arrives, how long does it take to have the part removed, the new part replaced and any testing performed).
- The administrative cost to return the item for repairs. This includes the cost of verifying the failure, issuing orders, packaging etc.
- Throw away cost for items that aren’t repairable.
- The cost of repair of the failed item. Repair costs if the items that failed are usually only covered by a warranty of a duration that is far less than the agreed to MTBF.
- The cost of repair or re-work cost for the product the failed item was assembled on.
- The increased spare parts stock. Spare parts stocking levels are initially set based on projected failure rates but will be adjusted periodically to reflect the actual failure rates.
- The down time and losses that are encountered by the end user.
- The effect on service revenue profitability (since a large part of the basis of establishing the service charges is the projected reliability).
- The effect on future sales, since sales in many cases are based on total cost of ownership or amount of "up" time.
- Less the value of any recoveries provided by warranties or epidemic defects type provisions.