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1 - Determine the TCO of this contract for three years. (Show all excel work and formulas)

2 - How would you approach the supplier about reducing the TCO for computers over the life of this contract (describe your negotiation strategy)?

Exhibit 11.14 TCO Calculation for One Purchase Option COST ELEMENTS COST MEASURES Purchase Price (Step 1): Equipment (Step 2) Supplier quote: $1,200 per PC (Steps 3 and 4) Software License A Supplier quote: $300 per PC Software License B Supplier quote: $100 per PC Software License C Supplier quote: $50 per PC Acquisition Cost: Sourcing 2 FTE @ $85K and $170K for 2 months Administration 1 PO @ $150, 12 invoices @ $40 each Usage Costs: Installation Equipment Support Network Support Warranty Opportunity CostLost Productivity End of Life: Salvage Value $700 per PC (PC move, install, network) $120 per month per PC-supplier quote $100 per monthsupplier quote $120 per PC for a 3-year warranty Downtime 15 hours per PC per year @ $30 per hour $36 per PC Exhibit 11.14 TCO Calculation for One Purchase Option COST ELEMENTS COST MEASURES Purchase Price (Step 1): Equipment (Step 2) Supplier quote: $1,200 per PC (Steps 3 and 4) Software License A Supplier quote: $300 per PC Software License B Supplier quote: $100 per PC Software License C Supplier quote: $50 per PC Acquisition Cost: Sourcing 2 FTE @ $85K and $170K for 2 months Administration 1 PO @ $150, 12 invoices @ $40 each Usage Costs: Installation Equipment Support Network Support Warranty Opportunity CostLost Productivity End of Life: Salvage Value $700 per PC (PC move, install, network) $120 per month per PC-supplier quote $100 per monthsupplier quote $120 per PC for a 3-year warranty Downtime 15 hours per PC per year @ $30 per hour $36 per PC

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