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Amazon applies Lean accounting principles to its supply chain. Requirements: Calculate the Total Cost of Ownership (TCO) for Amazon's fulfillment centers, where initial costs were
- Amazon applies Lean accounting principles to its supply chain.
- Requirements:
- Calculate the Total Cost of Ownership (TCO) for Amazon's fulfillment centers, where initial costs were $50,000,000, annual maintenance costs are $2,000,000, and the lifespan is projected to be 20 years.
- Recommend strategies to minimize TCO.
- Explain the importance of managing TCO in Lean supply chain practices at Amazon.
- Present a table showing the breakdown of TCO components and potential savings.
Metric | Calculation | Value |
Total Cost of Ownership (TCO) | Initial Costs + (Annual Maintenance × Lifespan) | $50,000,000 + ($2,000,000 × 20 years) |
Target TCO Reduction | Reduced Initial Costs + (Reduced Maintenance × Same Lifespan) | $X |
Financial Impact | Cost savings and improved profitability | $Y |
Impact on Balance Sheet | Improved asset management and liquidity | $Z |
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