Total Cost of Ownership Analysis
			Unit Price	Supplier 1	Supplier 2
Requirements (annual forecast units)	15,000		1 to 999 units per order	$505.00	$505.00
Lot size (Q)	1,000		1000 to 2999 units per order	$496.00	$499.00
Weight per engine (lbs)	23		3000+ units per order	$486.00	$489.00
Order processing cost (per order)	$165.00		Tooling cost	$21,000	$25,000
Inventory carrying rate (per year)	28%		Terms (net 30)	3%	1%
Cost of working capital (per year)	5%		Distance (miles)	135	105
Profit margin	22%		Supplier Quality Rating (defects)	3%	2%
Price of finished ATV	$4,000		Supplier Delivery Rating (lateness)	1%	3%
Back-order cost (per unit)	$18.00
Back-order lost sales	50%			Supplier 1	Supplier 2
Late delivery lost sales	50%		Total engine cost
			Cash discount (net 30)
Other Information			Cash discount (early payment)
Truckload (TL>=40,000 lbs)	$0.60	per ton-mile	Tooling cost
Less-than-truckload (LTL)	$1.10	per ton-mile	Transportation cost
Per ton-mile	2,000	lbs per mile	Ordering cost
Days per year	365		Carrying cost
Invoice payment period (days)	30		Quality cost
Discount period (days)	10		Backorder cost
			Lost sales cost
			Total cost
			Lowest cost