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Warranty Saving
This was added to the economic analysis because money is being lost as a result of the depot not
taking advantage of warranties for irreparable items in the warehouse due to missing and
inaccurate information. With the use of AITs, more information can be stored on tags and
ultimately, more warranties can be used thereby creating savings for the depot.
Once again a base is calculated using current methods for comparison against the same method
using AITs. Defective Items/Yr. is the number of returns per year. The % Under Warranty and
the % Irreparable are assumptions. Currently, these values are unknown and more accurate
percentages here may significantly change the results. The Items Under Warranty & Irreparable
row can be calculated by multiplying Defective Items/Yr., % Under Warranty, and %
Irreparable. Again the Average Item Value and % Items Returned to the Supplier is an
assumption and a more accurate value here could make a difference. However, the RFID and 2D
Barcodes+RFID solutions are based on 99% readability meaning that if the correct data is read
correctly, then the product will be identified correspondingly. The Items Returned to Supplier
row can be calculated by multiplying Items Under Warranty & Irreparable by % Items Returned
to the Supplier. Thus Items Not Returned is the difference between Items Returned to Supplier
and Items Under Warranty & Irreparable. Multiplying the Average Item Value row by Items
Not Returned row returns the average Loss Due to Irreparable Defective Items Under Warranty.
Savings are then calculated by subtracting the cost of holding onto defective items when using an
AIT from the cost of holding onto defective items using the current paper-based process.
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