Math "Stumper" - What is a 1% incremental improvement in AVAILABILITY/RELIABILITY WORTH?
Posted on 2016-08-13
I have a challenging situation to determine what a 1% improvement would mean from a value perspective and I need help from an EE Pro who is very mathematically oriented.
Here is the Scenario: We have a piece of complex equipment that is used in remote locations. We have a 95% reliability/availability rating on this Asset. What we are considering is what would be the incremental value in going to a 96% or a 97% reliability level? For purposes of solving this, consider each field asset costs $1M and requires $30K / yr. for maintenance. The intangible value of being "more competitive" in our market is certainly an intangible and hard to measure. But for actual value recognition (and add any assumptions you would like that can explain how to approach this mathematical problem), what formula should be used or explanation of considerations should be put forth.
Your help and assistance is appreciated. Thank you in advance,