Please answer Excel data sheet only. Will attach questions for better understanding. Will give thumbs up, Thank you!

For a three-year contract proposed in the case, the relevant savings are the increased revenue and costs of field inspections. Inventory savings are a separate matter. According to your spreadsheet analysis, the payback for the investment is attractive given the data provided by Alex Butt, however, there are a couple of questions. With respect to the field inspection costs of $220, are these costs truly variable? That is, what are the conditions to be met for the savings to be realized in terms of the number of technicians who are already employed? What other factors should be considered with regard to the savings from the inspections?

The three-year contract would involve approximately 6,000 meters, whereas there are apparently 40,000 meters in the NG&E network (e.g., 2,000 meters replaced each year for 20 years), representing 15% of the total. Do you think that the inventory savings benefit would be achieved immediately with the contract award for the Rotary meters?

The real benefit will come from increased revenue realization from the rotary meter. The Alexs analysis is based on the assumptions. How would the savings change under different scenarios? For example, if the meters are used in an industrial facility operating 16 hours per day, 225 days a year with average annual volumes of 250 cubic feet per hour.

What additional dimensions Larry Lin as a director of procurement will need to consider in response to Liz Gates analysis of Covingtons proposal and the $1,700 purchase price?

The analysis presented by Alex Butt does raise legitimate questions regarding NG&Es strategy to use diaphragm meters exclusively in its network for 1,000 CFH capacity meters, which number about 40,000 in total. It would appear that, at least in some circumstances, investments in rotary meters provide an attractive payback. Indeed, if Liz validates the assumptions in Alexs proposal, the potential savings are huge and calls into question why NG&E would use any 1,000 CFH diaphragm meters. Consequently, the real opportunity here is not the three-year contract, but rather a fresh look at the purchasing strategy for 1,000 CFH capacity meters. From a standpoint of purchasing strategy, what questions must be addressed and who should be involved in establishing new guidelines on the technology?

What are the short-term impacts on the cost reduction target of 3 percent of NG&Es spend on meters if the purchase contract is signed with Covington for $1,700 per meter?

Please answer as much as you can. Thank you!

Case Synopsis Liz Gates, senior buyer at Northwest Gas \& Electric Company (NG\&E) in Portland Oregon, was reviewing a proposal from Covington Meters (Covington) for the purchase of 2,000 rotary gas meters with capacity of 1,000 standard cubic feet per hour (CFH). Alex Butt, sales manager at Covington, had provided information in his proposal suggesting that operating costs for their meters provided significant savings over the life of the product. NG\&E had been purchasing diaphragm meters from Becker Meters for several years, at a much lower cost than the Covington product. Liz needs to assess if the total cost of ownership benefits of the Covington rotary meter justifies a higher purchase price. Case Synopsis Liz Gates, senior buyer at Northwest Gas \& Electric Company (NG\&E) in Portland Oregon, was reviewing a proposal from Covington Meters (Covington) for the purchase of 2,000 rotary gas meters with capacity of 1,000 standard cubic feet per hour (CFH). Alex Butt, sales manager at Covington, had provided information in his proposal suggesting that operating costs for their meters provided significant savings over the life of the product. NG\&E had been purchasing diaphragm meters from Becker Meters for several years, at a much lower cost than the Covington product. Liz needs to assess if the total cost of ownership benefits of the Covington rotary meter justifies a higher purchase price