Port, Crane & Terminal Equipment worked example

Warranty Reserve at 40% claim incidence rate: a worked example in port, crane & terminal equipment

This scenario runs the warranty reserve calculation on the strong side: 40% claim incidence rate, with every other input held at its documented default. An OEM provisioning a balance-sheet reserve before shipping a fleet of ship-to-shore and yard cranes to a container terminal.

The inputs for this scenario

  • Cranes under warranty: 8 units (unchanged)
  • Average claim cost per crane: 45,000 $/crane (unchanged)
  • Claim incidence rate: 40 % (raised for this scenario; the documented default is 35)
  • Reserve administration setup: 12,000 $ (unchanged)

Working through the calculation

  • Applying the documented formula (Total reserve = cranes x avg claim cost x claim incidence % + admin setup) to the inputs above produces each figure below.
  • At this operating point the engine returns 156,000 $ for total warranty reserve cost, the number this scenario is built around.
  • At this operating point the engine returns 19,500 $ / piece for warranty reserve cost per unit.
  • At this operating point the engine returns 144,000 $ for variable warranty reserve cost.
  • At this operating point the engine returns 12,000 $ for fixed warranty reserve adder.

How this compares with the baseline

  • Against the tool's baseline example, where claim incidence rate sits at 35% and the headline result is 138,000 $, this scenario comes in 13.04% above the baseline at 156,000 $.
  • Use it at contract quoting and at each financial period-close to accrue and true-up the warranty liability for cranes still inside their warranty term. Treat this as a target state: the delta against the baseline quantifies what the improvement is worth before you commit to chasing it.

Results at a glance

  • Total warranty reserve cost: 156,000 $ (headline result)
  • Warranty reserve cost per unit: 19,500 $ / piece
  • Variable warranty reserve cost: 144,000 $
  • Fixed warranty reserve adder: 12,000 $

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.