Cost-benefit modelling for reliability growth

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Decisions during the reliability growth development process of engineering equipment involve trade-offs between cost and risk. However slight, there exists a chance an item of equipment will not function as planned during its specified life. Consequently the producer can incur a financial penalty. To date, reliability growth research has focussed on the development of models to estimate the rate of failure from test data. Such models are used to support decisions about the effectiveness of options to improve reliability. The extension of reliability growth models to incorporate financial costs associated with 'unreliability' is much neglected. In this paper, we extend a Bayesian reliability growth model to include cost analysis. The rationale of the stochastic process underpinning the growth model and the cost structures are described. The ways in which this model can be used to support cost-benefit analysis during product development are discussed and illustrated through a simple case.
Original languageEnglish
Pages (from-to)1234-1241
Number of pages7
JournalJournal of the Operational Research Society
Issue number12
Publication statusPublished - 1 Aug 2003


  • reliability
  • cost-benefit analysis
  • stochastics
  • statistics
  • management theory


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