# Tissue360 - Fall/Winter 2016 - 38

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Insight Technology
International LLC
Contact Hiroki Nanko
TEL +1-404-550-2573
hnanko@iti-america.com

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probability of failure that is used to make a
cost decision of whether stocking the part
is cheaper than the downtime cost of not
stocking it.
Once developed, the cost model requires
only the following data inputs to provide
1. Unit cost to purchase
2. MTBF in number of years
3. Number of running units.
STOCK EXAMPLE:
1. Unit cost to purchase = \$16,567
2. MTBF in number of years = 8
3. Number of running units = 8.
* Time value of money (10 percent
interest rate)
* Probability of failure = 50 percent
* Probability of success = 50 percent
* Number of years for population to
reach 50 percent probability of failure =
1.52 years (Y+)
* Probability of NO failure in any one
year = .63446343
* Probability of failure in any one
year = .36553657
* The odds of failure in any one year =
1 to 2.735704392.
Note that not until "Y+" the time
elapsed does the population exceed a 50
percent probability of failure. Therefore,
the cost model is as follows:
C = Time value of money LESS the unit
cost of the part
C = \$2,589 (Weighted cost to stock
the part)
Contribution of areas where the part is
to be spared (\$888/ hr.):
Downtime cost = \$63,936.
Should the part be stocked? YES
Lead time to not stock: 0.1 days
2.9 hours.
NON-STOCK EXAMPLE:
1. Unit cost to purchase = \$14,000
2. MTBF in number of years = 61.8
3. Number of running units = 1.
* Time value of money (10 percent
interest rate)
* Probability of failure = 50 percent
* Probability of success = 50 percent
* Number of years for population to
reach 50 percent probability of failure =
61.8 years (Y+)

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www.tappi.org

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http://www.iti-america.com http://www.arnoldcompany.com http://www.arnoldcompany.com http://www.tappi.org

Setpoint
Tissue Industry News
PrimeService for Modern Tissue Machines
Making the Most of Opportunity in Tissue?
Reducing MRO Inventory Using RCM Principles
Vacuum Blower Saves 40-50 Percent Tissue Dewatering Costs
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Tissue360 - Fall/Winter 2016 - Setpoint
Tissue360 - Fall/Winter 2016 - 7
Tissue360 - Fall/Winter 2016 - 8
Tissue360 - Fall/Winter 2016 - Tissue Industry News
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Tissue360 - Fall/Winter 2016 - PrimeService for Modern Tissue Machines
Tissue360 - Fall/Winter 2016 - 25
Tissue360 - Fall/Winter 2016 - 26
Tissue360 - Fall/Winter 2016 - 27
Tissue360 - Fall/Winter 2016 - 28
Tissue360 - Fall/Winter 2016 - Making the Most of Opportunity in Tissue?
Tissue360 - Fall/Winter 2016 - 30
Tissue360 - Fall/Winter 2016 - 31
Tissue360 - Fall/Winter 2016 - 32
Tissue360 - Fall/Winter 2016 - 33
Tissue360 - Fall/Winter 2016 - 34
Tissue360 - Fall/Winter 2016 - Reducing MRO Inventory Using RCM Principles
Tissue360 - Fall/Winter 2016 - 36
Tissue360 - Fall/Winter 2016 - 37
Tissue360 - Fall/Winter 2016 - 38
Tissue360 - Fall/Winter 2016 - 39
Tissue360 - Fall/Winter 2016 - 40
Tissue360 - Fall/Winter 2016 - Vacuum Blower Saves 40-50 Percent Tissue Dewatering Costs
Tissue360 - Fall/Winter 2016 - 42
Tissue360 - Fall/Winter 2016 - cover3
Tissue360 - Fall/Winter 2016 - cover4
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