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Purchasing and Supply Chain Manage...

6th Edition
Robert M. Monczka + 3 others
Publisher: Cengage Learning
ISBN: 9781285869681

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Section
BuyFindarrow_forward

Purchasing and Supply Chain Manage...

6th Edition
Robert M. Monczka + 3 others
Publisher: Cengage Learning
ISBN: 9781285869681
Chapter 11, Problem 11DQ
Textbook Problem
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What are the benefits from measuring the total cost of ownership for a purchased item? Are there any potential disadvantages of this approach? If so, what are they?

Summary Introduction

To determine: The benefits of total cost of ownership and the potential disadvantages of the approach

Introduction: Supply management is the process of managing the suppliers and raw materials or resources that are essential for the organization’s operations.

Explanation of Solution

Discuss the benefits of total cost of ownership:

The present value of the costs that are associated with the service or product that would incur over its life expected is said to be the total cost of ownership. Hence, it helps the firm to make better decisions and reduces the risks associated. Buyer can go beyond bottom-line cost using total cost of ownership...

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