Managing Supply Chain and Operations 1st Edition by Thomas Foster ,Scott Sampson,Cynthia Wallin,Scott Webb

Exercise 9

A company needs to purchase a machine to fabricate a custom part used in its production process. Two machines from two different suppliers are currently under consideration. The company has gathered the following information related to the machines from the two suppliers:

Hie component cost refers to the cost to replace a component on the machine after a certain number of units have been produced. For example, with Machine A, after 5000 custom parts have been produced, a component costing $200 must be replaced. The company plans to produce 110,000 custom parts annually. Conduct a total cost of ownership for the two machines.