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Problem Statement - Shop Floor Machine 1 • Project background • The existing machine has been on the floor shop for several years now, and its maintenance cost is forecasted to increase dramatically each year over the next 5 years • The Division Manager and the Procurement Specialist have sourced quotes for three brand new machines as listed in the following slides Cost to keep the existing machine running for another 5 years Item Cost Maintenance cost - year 1 $20,000 Maintenance cost - year 2 $27,000 Maintenance cost - year 3 $34,000 Maintenance cost - year 4 $41,000 Maintenance cost - year 5 $48,000 Salvage value -$5,000 Total Cost $165,000 Problem Statement - Shop Floor Machine 2 Quote 1 - Company A Item Cost Purchase price - lump sum $115,000 Maintenance cost - year 1 $1,800 Maintenance cost - year 2 $2,000 Maintenance cost - year 3 $2,200 Maintenance cost - year 4 $2,400 Maintenance cost - year 5 $2,600 Salvage value -$10,000 Total cost $116,000 Quote 2 - Company B Item Cost Purchase price - $2,000 monthly financing $120,000 Maintenance cost - year 1 $2,000 Maintenance cost - year 2 $3,000 Maintenance cost - year 3 $4,000 Maintenance cost - year 4 $5,000 Maintenance cost - year 5 $6,000 Salvage value -$10,000 Total cost $130,000 Problem Statement # 1 - Shop Floor Machine 3 Quote 3 - Company C Item Cost Purchase price - lump sum $50,000 Purchase price - $1,100 monthly financing $66,000 Maintenance cost - year 1 $2,500 Maintenance cost - year 2 $3,000 Maintenance cost - year 3 $3,500 Maintenance cost - year 4 $4,000 Maintenance cost - year 5 $4,500 Salvage value -$10,000 Total cost $123,500 Expectations A. Develop commercial Evaluation for the 3 Quotes against the current machine cost B. Provide a summary on the commercial outcome (Suppliers Ranking) C. Provide your recommendation to move forward

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