Rare Earth Magnet & Motor Materials worked example

Field Failure Reserve at 2.88% expected field failure rate: a worked example in rare earth magnet & motor materials

This scenario runs the field failure reserve calculation on the strong side: 2.88% expected field failure rate, with every other input held at its documented default. A motor OEM funds a warranty reserve for a shipment of magnet-driven motors before booking the revenue.

The inputs for this scenario

  • Motors shipped: 5,000 units (unchanged)
  • Warranty claim cost: 180 $/unit (unchanged)
  • Expected field failure rate: 2.88 % (raised for this scenario; the documented default is 2.5)
  • Claims administration overhead: 4,000 $ (unchanged)

Working through the calculation

  • Applying the documented formula (Total reserve = motors shipped x claim cost x failure rate + admin overhead) to the inputs above produces each figure below.
  • At this operating point the engine returns 29,920 $ for total field failure reserve cost, the number this scenario is built around.
  • At this operating point the engine returns 5.98 $ / piece for field failure reserve cost per unit.
  • At this operating point the engine returns 25,920 $ for variable field failure reserve cost.
  • At this operating point the engine returns 4,000 $ for fixed field failure reserve adder.

How this compares with the baseline

  • Against the tool's baseline example, where expected field failure rate sits at 2.5% and the headline result is 26,500 $, this scenario comes in 12.91% above the baseline at 29,920 $.
  • Use it at ship time to set the warranty accrual, or during a reliability review when a new failure-rate estimate lands. 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 field failure reserve cost: 29,920 $ (headline result)
  • Field failure reserve cost per unit: 5.98 $ / piece
  • Variable field failure reserve cost: 25,920 $
  • Fixed field failure reserve adder: 4,000 $

Run it with your numbers

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

Last reviewed 2026-05-12.