Estimating the maintenance and repair cost in life cycle cost calculation : a case of automobile ownership

The maintenance and repair cost of durable goods has traditionally been hidden from consumers and yet has been non-negligible part of Life Cycle Cost(LCC) computation.Predicting the maintenance and repair cost is difficult because many of these durable goods do not have constant failure rates.For some dirable products,it is often the case that we have at least a rough idea as to their reliability.In this study we propose and illustrate a method to convert that knowledge to monetary cost using automabile ownership as an example.In our method,we first estimate a statistical model from the widely available reliability data.Then we predict the reliability from the model.Finally we convert the predicted reliability to cost figure using the data from the U.S.Comsumer Expenditure Survey.The proposed statistical model takes care of the possible bias introduced by partially missing reliability data likely to be caused by lower sales volume of some automobiles and higher response rates from owners of unreliable vehicles.Conversion to cost figure is done on the thirteen popular automobiles whose cost of repairs in major mechanical systems are well documented.We then calculate the LCC of these model cars and discuss the importance of maintenance and repair cost in the LCC