The production manager has asked you to purchase a replacement numerically controlled (NC) plasma-cutting
machine for the metal fabrication shop.
She has provided you with the manufacturer’s number and model
number for two models and indicates that the performance of either machine is perfectly acceptable.
The existing tooling and fixtures will also work with either machine. Footprint and utility requirements are nearly the
same as the old machine and will not require changes to the facility. The equipment will be depreciated over a
ten-year period, which is also the expected service life. An annual service contract is required after the
expiration of the warranty and throughout the remaining service life. You will take advantage of a 2% discount
offered by each supplier for paying cash. You decide to complete a total cost of ownership (TCO) analysis to
help make the purchasing decision.
The two manufacturers have provided the following additional information: (See Attachment)
Submit a MS Excel spreadsheet that calculates the total cost of ownership of each machine. Based on the TCO
calculation, specify which model you recommend purchasing.
Begin your post with the operational definition of the concept, using the text as your primary source. Feel free to
bring in other scholarly sources to add to the operational definition you provide.
Ensure you submit your excel spreadsheet to support your analysis. When you discuss which is the better model,
tell why you feel the model is the best. Focus on why one company is better than the other rather than on the
steps you used to calculate the outcome.
When you present your solution in an excel spreadsheet, complete the calculations required for the assignment
using the computing power of the excel cells. Do not just enter the final values in the cells.
Use a text box for any analysis or text you present in your spreadsheet. Use the Insert / text / text box option
from the ribbon to access a text box. You will get a cursor that allows you to make a text box of any size in the
spreadsheet. If you have questions on how to do this, please send me a memo.
A best practice is to group costs into pre-transaction and post transaction costs; or into acquisition and in-house
costs as per the guidance in the text.