Failure Costs

Cost Involved in Machine Failure Analysis

While analysing the machine failure we are concerned with the following costs :

• Purchase cost of machine or equipment capital investment.
• Depreciation or salvage value or scrap value.
• Running costs including maintenance, Repair and Operating (MRO) costs
• Failure costs and damage costs.

In the above four, the first three are inevitable, but the failure costs can be prevented by better maintenance policies. On critical examination, we can notice that the first three costs depend on age of the machine. These costs vary with the running age as follows :

• Purchase cost of machine or equipment is considered to be independent of age of machine. However the interest on the investment is assumed to be lost.
• Resale value or salvage value or scrap value of the machine decreases with the running age of the machine. As the machine grows old, its resale value comes down. This decrease depends on actual or expected condition of the machine.
• Running cost or operating cost or maintenance cost of the machine is due to its minor failures or preventive maintenance or operating costs, etc. These will increase on the machine as the age grows. This is assumed to be increasing due to the wear and tear on the moving parts of the machine.

The above costs are shown graphically on a hypothetical machine here below. Summing, the above three costs, we can notice that the average total cost decreases for certain period and then increases. The age when the graph shows its minimum costs will be optimum age of replacing the machine.