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ISE310_Assign6_Sanders

ISE310_Assign6_Sanders - Money Spent on MRO each year...

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Money Spent on MRO each year: $150,000,000 Current Year Approximated Spending: Current Year Prob. Of Dropping 25% 75% Second Year Approximated Spending: Second Year Prob. Of Dropping 50% Second Year Prob. Of Remaining the same 50% % Drop this year: 10% % Drop next year: 10% Discount Rate: 20% Parts4u.com's Commission 5% AllMRO.com's Commission 1% + has to pay a 2-year subcription fees $10,000,000 Current year cost with Parts4u.com Spending Cost Expected $150,000,000 $7,500,000 $5,625,000 $135,000,000 $6,750,000 $1,687,500 Total Current Year $7,312,500 Second year cost with Parts4u.com $150,000,000 $7,500,000 $2,812,500 $135,000,000 $6,750,000 $843,750 $135,000,000 $6,750,000 $2,531,250 $121,500,000 $6,075,000 $759,375 Total Second Year $6,946,875 PV of Second Year $5,789,063 Total PV $13,101,563 Current year cost with AllMRO.com Spending Cost Expected $150,000,000 $1,500,000 $1,125,000 $135,000,000 $1,350,000 $337,500 Total Current Year + $10,000,000 $11,462,500 Second year cost with AllMRO.com $150,000,000 $1,500,000 $562,500 $135,000,000 $1,350,000 $168,750 $135,000,000 $1,350,000 $506,250 $121,500,000 $1,215,000 $151,875 Total Second Year $1,389,375 PV of Second Year $1,157,813 Total PV $12,620,313 AIIMRO.com will decrease costs by: $481,250 Unipart should therefore choose AIIMRO.com
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High Volume Cutoff 90000 Spot Prices $2 $4 Last Year's Demand 100000 Current Year Probability of Demand 75% 2nd Year Prob. Of Demand 75% Discount Rate 20% Percent Change Increase Next Year
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