Calculate total cost of renting or purchasing

Assignment Help Business Management
Reference no: EM1342792

This project provides an opportunity for you to help a real-world company make a decision about whether to rent or buy new technology. You will use excel to compare the total 3 year cost of licensing and maintaining new manufacturing software or renting the software from an application service provider.

Dirt Bikes would like to implement new production planning, quality control, and scheduling software for use by 25 members of its manufacturing staff. Management is trying to determine whether to purchase the software from a commercial vendor along with any hardware required to run the software or to use a hosted software solution from an application service provider. You have been asked to help management with this rent vs. buy decision by calculating the total cost of each option over a 3 year period.

The costs of purchasing the software include the initial purchase price of the software (licensing fee of $100,000 paid in the first year), the cost of implementing and customizing the software in the first year ($20,000), one new server to run the software (a first-year purchase of $4,000), one information systems specialist devoting half of his or her time to supporting the software ($55,000 in full time annual salary and benefits with a 3% annual salary increase each year after the first year), user training in the first year (10,000), and the cost of annual software upgrades ($5,000).

The costs of renting hosted software are the rental fees ($2,500 annually per user), implementation and customization costs ($12,000 in the first year), and training ($10,000 in the first year).

1.) Use excel to calculate the total cost of renting or purchasing this software over a 3 year period. Identify the lowest-price alternative that meets Dirt Bike's requirements.

2.) What other factors should Dirt Bikes consider besides cost in determining whether to rent or buy the hardware and software?

Reference no: EM1342792

Questions Cloud

Theory of interest and decision-making concept : Explain the theory of interest and discuss the decision-making concept it applies to in analyzing cost and return on long-term investment.
Decision tree - explain a decision tree : Decision tree - Explain a decision tree and discuss how such a tool can be utilized to improve decision making
Relevant information for decision making : Identify at least three alternatives courses of action management could take with regard to the leftover T-shirts and which costs are sunk in this decision
Improve decision making-using a database to clarify strategy : Prepare a brief report describing what the database information reveals about the current business situation. Which specific business strategies might be pursued to increase room occupancy and revenue?
Calculate total cost of renting or purchasing : What other factors should Dirt Bikes consider besides cost in determining whether to rent or buy the hardware and software
Show the steps in decision maing : Set managerial objectives and what do we want to achieve in the process? This activity may also be called recognizing the problem to solve.
Product to maximize baxters profits : Assume Baxter Manufacturing has 50,000 machine hours available and what would be the optimal production of each product to maximize Baxter's profits
Discuss financing risks and weighted means : Discuss financing risks and weighted means of decision making and show financing risks and weighted means of decision making
Elements that influence consumers decision-making : What are the elements that influence consumers' decision-making and give an example of a product that influences senior men or women?

Reviews

Write a Review

Business Management Questions & Answers

  Caselet on michael porter’s value chain management

The assignment in management is a two part assignment dealing 1.Theory of function of management. 2. Operations and Controlling.

  Mountain man brewing company

Mountain Man Brewing, a family owned business where Chris Prangel, the son of the president joins. Due to increase in the preference for light beer drinkers, Chris Prangel wants to introduce light beer version in Mountain Man. An analysis into the la..

  Mountain man brewing company

Mountain Man Brewing, a family owned business where Chris Prangel, the son of the president joins. An analysis into the launch of Mountain Man Light over the present Mountain Man Lager.

  Analysis of the case using the doing ethics technique

Analysis of the case using the Doing Ethics Technique (DET). Analysis of the ethical issue(s) from the perspective of an ICT professional, using the ACS Code of  Conduct and properly relating clauses from the ACS Code of Conduct to the ethical issue.

  Affiliations and partnerships

Affiliations and partnerships are frequently used to reach a larger local audience? Which options stand to avail for the Hotel manager and what problems do these pose.

  Innovation-friendly regulations

What influence (if any) can organizations exercise to encourage ‘innovation-friendly' regulations?

  Effect of regional and corporate cultural issues

Present your findings as a group powerpoint with an audio file. In addition individually write up your own conclusions as to the effects of regional cultural issues on the corporate organisational culture of this multinational company as it conducts ..

  Structure of business plan

This assignment shows a structure of business plan. The task is to write a business plane about a Diet Shop.

  Identify the purposes of different types of organisations

Identify the purposes of different types of organisations.

  Entrepreneur case study for analysis

Entrepreneur Case Study for Analysis. Analyze Robin Wolaner's suitability to be an entrepreneur

  Forecasting and business analysis

This problem requires you to apply your cross-sectional analysis skills to a real cross-sectional data set with the goal of answering a specific research question.

  Educational instructional leadership

Prepare a major handout on the key principles of instructional leadership

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd