Case 10 Essay example

1244 Words Jul 10th, 2013 5 Pages
Case Study # 10 Denver Health Network: ABC Analysis
1. Estimate the base (initial) cost of each alternative. Here, you just need to put in the appropriate RED input from the information in the case study. The answers will be spit out. Which alternative has the lower total cost? Why?
Alternative 2 has the lowest total per a procedure cost. Operating costs of Alternative 1 is $86.15, which is lower than Alternative 2 of $92.15Alternative 2 is higher in operation al cost because there is six dollars in extra costs assessed with travel and set up costs. When the other costs, which include capital and maintance, are incorporated, Alternative 2 becomes the lower cost with an annual cost of$ 251,160 and Alternative 1 is $ 268,260.
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• Alternative 2- o Per a procedure Capital cost increases, as it is a shorter life span to pay off or gain a return on the ultrasounds, with a shorter life span of 3 years with lower amount of capital costs the increase is not as substantial as Alternative1 but still increase by approximately $7.75 per total cost procedure.
• In short term of 3 years I would Pick Alternative 2 as it is still the lowest cost and does not a substantial increase in cost from the base case.

Long run- 7 years
• Alternative 1- o The per a procedure Capital cost decrease as the life span increase as more procedures will be allocated through the life span resulting in a decrease in total per a procedure costs. Alternative 1 decreases approximately $7.35 from base case.
• Alternative 2- o The per a procedure Capital cost decrease as the life span increase as more procedures will be allocated through the life span resulting in a decrease in total per a procedure costs. Alternative 2 decrease by 3.36 from initial base case.

• In the long term of 7 years I would pick Alternative 1. Although it is still a little higher in cost the cost

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