BER EXAMPLE

Part – P1

BER   -   Beyond Economical Repair

That is, the actual cost of repairing part P1 is more than the cost of replacing P1 from the market.

OEM = Original Equipment Manufacturer

OEM Price = $ 10,000

BER Repair Threshold (%) = 70%

That is If the cost of repairing part P1 is more than $ 7000 ($10 000 * 70% = $7000) it is considered BER ie Beyond Economical Repair.

BER Responsibility: If BER is $7000 ($10 000 * 70% = $7000) who will have the responsibility of bearing the BER cost of  $3000 ($10000 cost of replacement of part P1 - $7000 = $3000)

MRO with limit   -   If BER is $7000 out of which upto $1000 will be born by the MRO.

Mark-up – BER Threshold is 70%,

Therefore BER cost is $7000

Actual cost of repairing part P1 is $9000 in which case $2000 ($9000  - $7000) will be a loss to the MRO to cover such loss, the MRO fixes a markup % on the BER Threshold %.