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Oftentimes businesses need to consider additional costs beyond simply the price of a good or service when considering between two suppliers of an item. This
Oftentimes businesses need to consider additional costs beyond simply the price of a good or service when considering between two suppliers of an item. This perspective, considering more than just the price of the good or service purchased, is called the Total Cost of Ownership. Companies often should and do consider many more costs than we will consider in the following example. Purple Reign, an apparel manufacturer located in Minneapolis, sources the fabric used for clothes from outside vendors. Recently, Purple Reign has decided to compare pricing on a black roll of fabric used to manufacture 10,000 t-shirts. Purple Reign must decide between a fabric provider located in Bangladesh versus one Jocated in Graniteville, South Carolina. Use the chart below to find a TCO from each provider to help Purple Reign decide which provider should be utilized to provide the black fabric. What is the TCO of the provider that offers Purple Reign the lowest cost to acquire the black fabric? Less than or equal to 3,000 Greater than $3,000 but less than or equal to $3,200 Greater than $3,200 but less than or equal to $3,400 Greater than $3,400 What is the difference in TCO between the Bangladesh and Graniteville, SC provider? Less than or equal to $100 Greater than $100 but less than or equal to $120 Greater than $120 but less than or equal to $140 Greater than $140 Oftentimes businesses need to consider additional costs beyond simply the price of a good or service when considering between two suppliers of an item. This perspective, considering more than just the price of the good or service purchased, is called the Total Cost of Ownership. Companies often should and do consider many more costs than we will consider in the following example. Purple Reign, an apparel manufacturer located in Minneapolis, sources the fabric used for clothes from outside vendors. Recently, Purple Reign has decided to compare pricing on a black roll of fabric used to manufacture 10,000 t-shirts. Purple Reign must decide between a fabric provider located in Bangladesh versus one Jocated in Graniteville, South Carolina. Use the chart below to find a TCO from each provider to help Purple Reign decide which provider should be utilized to provide the black fabric. What is the TCO of the provider that offers Purple Reign the lowest cost to acquire the black fabric? Less than or equal to 3,000 Greater than $3,000 but less than or equal to $3,200 Greater than $3,200 but less than or equal to $3,400 Greater than $3,400 What is the difference in TCO between the Bangladesh and Graniteville, SC provider? Less than or equal to $100 Greater than $100 but less than or equal to $120 Greater than $120 but less than or equal to $140 Greater than $140
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