An electric motor is used to power an assembly line. The motor runs continuously at various speeds and after a certain number of hours must be replaced. A food-processing company that uses motors of this type is considering whether to purchase the motors from supplier A or supplier B. Information related to the different costs and useful life of the motors supplied by the two suppliers is as follows:

Assume that the food-processing company operates 365 days a year, 24 hours a day, for a total of 8760 hours of operation annually. Conduct a total cost of ownership analysis for the motors.

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Supplier A Supplier B $1000 $800 Price per motor Useful life (hours) Energy cost per hour 584 438 S0.25 $0.255