Answer
Permanent set occurs when the internal stress in the wave spring exceeds the yield strength ($\sigma_y$) of the material, causing plastic deformation. This is often diagnosed when the free height of the spring ($H_{free}$) is significantly shorter after the first compression or after a period of service. The maximum stress in a wave spring occurs at the ID or OD of the wave peaks. If the calculated stress $\sigma = \frac{3 \pi P D}{4 N^2 b t^2}$ exceeds the tensile yield of the material (e.g., $210 ksi$ for 17-7PH CH900), the spring will not return to its original height. Engineers use 'preset' operations—compressing the spring to solid during manufacturing—to induce beneficial residual stresses and minimize further set during operation. If a spring fails in the field, a decrease in $H_{free}$ is the primary indicator of over-stressing.