You are the CEO of a well reputed electronics firm and have been wondering about your current computing system. There is a strong evidence that the current computers are not well suited for certain departments and the employees have complained about the lagging speed. While looking over the internet, you came across 3 suppliers providing computing solutions for big firms. Without wasting any time, you call these suppliers and get their quotations. Your research yielded 3 cost categories, acquisition & procurement, operating & maintenance costs and End-of-life management costs.

a) Below is a table that consists of all the costs that you encountered in the quotes. Your first job is to allocate these costs in the 3 categories that you found in your research , for each supplier (A, B & C). [Think like a management accountant]

Costs

Administrative Costs, Contract Management, Removing and consolidating equipment, Software licenses, Hardware and spare parts, Software and hardware upgrades, Energy use, Training for IT and staff, Insurance, Retooling to accommodate new hardware and software, Sanitizing hardware and other storage media, Recycling or Outsourcing fee, Shipping, IT support like Database Management,

b) You have received these 3 initial quotes. Using Total Cost of Ownership and your cost classification in the previous problem, find the best alternative amongst the 3 suppliers. Remember, some costs are one time and some costs are recurring. Pay attention to the categories (Acquisition and procurement, operating and maintenance cost, End-of-life Management). Show all the calculations required.

Supplier A

Costs

Quantity

Amount

Administrative Costs

Not Applicable

$ 499.99

Contract Management

Not Applicable

$ 1874.49

Hardware and spare parts

2000

$ 559.99

Removing and consolidating equipment

2000

$ 189.99

Software licenses

2000

$ 124.49

Software and hardware upgrades

2000

$ 49.99

Energy use

Not Applicable

$ 15000

Training for IT and staff

Not Applicable

$ 14499.99

Sanitizing hardware and other storage media

2000

$ 19.99

Insurance

2000

$ 15.99

Retooling to accommodate new hardware and software

2000

$ 159.99

Recycling or Outsourcing fee

Not Applicable

$ 4999.99

Shipping

Not Applicable

$ 5649.99

IT support like Database Management

2000

$ 49.99

Supplier B

Costs

Quantity

Amount

Administrative Costs

Not Applicable

Free

Contract Management

Not Applicable

$ 1574.99

Hardware and spare parts

2000

$ 459.99

Removing and consolidating equipment

2000

$ 219.99

Software licenses

2000

$ 122.49

Software and hardware upgrades

2000

$ 54.99

Energy use

Not Applicable

$ 14500

Training for IT and staff

Not Applicable

$ 13999.99

Sanitizing hardware and other storage media

2000

$ 29.99

Insurance

2000

$ 15.99

Retooling to accommodate new hardware and software

2000

$ 149.99

Recycling or Outsourcing fee

Not Applicable

$ 6999.99

Shipping

Not Applicable

$ 4599.99

IT support like Database Management

2000

$ 69.99

Supplier C

Costs

Quantity

Amount

Administrative Costs

Not Applicable

$ 999.99

Contract Management

Not Applicable

$ 1299.99

Hardware and spare parts

2000

$ 749.99

Removing and consolidating equipment

2000

$ 154.49

Software licenses

2000

$ 114.49

Software and hardware upgrades

2000

$ 74.99

Energy use

Not Applicable

$ 15500

Training for IT and staff

Not Applicable

$ 17999.99

Sanitizing hardware and other storage media

2000

$ 9.99

Insurance

2000

$ 15.99

Retooling to accommodate new hardware and software

2000

$ 129.99

Recycling or Outsourcing fee

Not Applicable

$ 3994.99

Shipping

Not Applicable

$ 8949.99

IT support like Database Management

2000

$ 49.99

2000 are units and values in $ are cost per unit