Question
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
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
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