Port, Crane & Terminal Equipment worked example

Warranty Reserve at 25% claim incidence rate: a worked example in port, crane & terminal equipment

This worked example runs the warranty reserve numbers for a tougher week than the baseline: 25% claim incidence rate instead of the typical 35%. Estimate the warranty reserve required to cover repair claims on delivered port cranes and terminal handling equipment over the guarantee period.

The inputs for this scenario

  • Cranes under warranty: 8 units (held at the documented default)
  • Average claim cost per crane: 45,000 $/crane (held at the documented default)
  • Claim incidence rate: 25 % (the input this scenario stresses; the baseline uses 35)
  • Reserve administration setup: 12,000 $ (held at the documented default)

Working through the calculation

  • The calculation starts from the formula this tool documents: Total reserve = cranes x avg claim cost x claim incidence % + admin setup.
  • Total warranty reserve cost works out to 102,000 $ at these inputs, and this is the headline figure for the scenario.
  • Warranty reserve cost per unit works out to 12,750 $ / piece at these inputs.
  • Variable warranty reserve cost works out to 90,000 $ at these inputs.
  • Fixed warranty reserve adder works out to 12,000 $ at these inputs.

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 26.09% below the baseline at 102,000 $.
  • 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. A result at this level usually justifies acting on the stressed input before touching anything else, because every other figure in the table is downstream of it.

Results at a glance

  • Total warranty reserve cost: 102,000 $ (headline result)
  • Warranty reserve cost per unit: 12,750 $ / piece
  • Variable warranty reserve cost: 90,000 $
  • Fixed warranty reserve adder: 12,000 $

Run it with your numbers

  • To rerun this with your own numbers, open the live Warranty Reserve calculator, set claim incidence rate to your actual value, and adjust the remaining inputs to match your operation.

Last reviewed 2026-05-12.