Mining Vehicle & Underground Equipment worked example

Warranty Reserve at 46% expected claim incidence rate: a worked example in mining vehicle & underground equipment

What does the result look like when expected claim incidence rate reaches 46%? The full calculation is worked below with real intermediate numbers. An OEM provisioning a warranty reserve before delivering a fleet of haul trucks or underground loaders to a mine site.

The inputs for this scenario

  • Machines under active warranty: 12 units (unchanged)
  • Average warranty claim cost per machine: 38,000 $/unit (unchanged)
  • Expected claim incidence rate: 46 % (raised for this scenario; the documented default is 40)
  • Reserve administration setup cost: 9,000 $ (unchanged)

Working through the calculation

  • Applying the documented formula (Total reserve = machines x avg claim cost x incidence % + admin setup) to the inputs above produces each figure below.
  • At this operating point the engine returns 218,760 $ for total warranty reserve cost, the number this scenario is built around.
  • At this operating point the engine returns 18,230 $ / piece for warranty reserve cost per unit.
  • At this operating point the engine returns 209,760 $ for variable warranty reserve cost.
  • At this operating point the engine returns 9,000 $ for fixed warranty reserve adder.

How this compares with the baseline

  • Against the tool's baseline example, where expected claim incidence rate sits at 40% and the headline result is 191,400 $, this scenario comes in 14.29% above the baseline at 218,760 $.
  • A figure at this level is achievable when expected claim incidence rate is genuinely sustained, not just peaked for a shift. It uses a single average claim cost and one incidence rate, so a clustered defect or a few catastrophic claims can blow past the reserve.

Results at a glance

  • Total warranty reserve cost: 218,760 $ (headline result)
  • Warranty reserve cost per unit: 18,230 $ / piece
  • Variable warranty reserve cost: 209,760 $
  • Fixed warranty reserve adder: 9,000 $

Run it with your numbers

  • Every input above is editable in the live Warranty Reserve calculator, which recalculates instantly and can be shared with the inputs intact.

Last reviewed 2026-05-12.