A distribution company is considering three different alternatives to satisfy their customer's demands. Their options are to rent a ready distribution center (D01), Rent and mobilize a center (D02), or outsourcing (OS). The estimate for each method is shown. The lifetime for D01, D02, and OS are 3, 6, and 2 respectively. MARR is 0.04 per year. and the percentage of change for all of the cases are 0 % Note: all units are in thousand $ D01 D02 OS First Cost, $ -136 -973 0 Annual Operation Cost,$ -92 -59 -123 Salvage Value,$ 28 333 0 a: Calculate the Fw of D01? b) Calculate FW for D02 c )What is the FW for outsourcing? d: Which alternative will be selected? f: Draw the cash flow for all of these three alternatives. If contract value with subcontractor increases by 15 % every year calculate FW for Outsourcing. Is there any change in your previous decision on the basis of the new condition? If yes, which Alternative will be selected? Briefly explain it.
A distribution company is considering three different alternatives to satisfy their customer's demands. Their options are to rent a ready distribution center (D01), Rent and mobilize a center (D02), or outsourcing (OS). The estimate for each method is shown. The lifetime for D01, D02, and OS are 3, 6, and 2 respectively. MARR is 0.04 per year. and the percentage of change for all of the cases are 0 %
Note: all units are in thousand $
|
D01 |
D02 |
OS |
|
|
First Cost, $ |
-136 |
-973 |
0 |
|
Annual Operation Cost,$ |
-92 |
-59 |
-123 |
|
Salvage Value,$ |
28 |
333 |
0 |
a: Calculate the Fw of D01?
b) Calculate FW for D02
c )What is the FW for outsourcing?
d: Which alternative will be selected?
f: Draw the
If contract value with subcontractor increases by 15 % every year calculate FW for Outsourcing.
Is there any change in your previous decision on the basis of the new condition?
If yes, which Alternative will be selected? Briefly explain it.
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