analytics-for-managerial-decision-making

Per event is furniture the amount currently budgeted

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Unformatted text preview: n). per event) is furniture the amount currently budgeted for tech support. However, a correct analysis for Pilot less than and fixtures is a sunk cost (it is not relevant to the decision). The total cost of relevant items is only on thethan the $600,000 indicated by Chandra’s proposal. Therefore, the quantitative focuses much less relevant items (following). Even if Chandra is engaged to provide the support analysis suggests that Pilot continue to be incurred (it is not relevant to the decision). The cost After services, building rent will should continue to provide its own tech support in the near future. of all, why spend $600,000ato avoid $415,360 of cost? Once the buildingThe total cost of relevant furniture and fixtures is sunk cost (it is not relevant to the decision). lease matures, the furniture and fixtures are in than of $600,000 indicated by Chandra’s proposal. Therefore, the quantitative items is much less need thereplacement, or if tech support volume drops off, Chandra’s proposal might besuggestsof reconsideration. analysis worthy that Pilot should continue to provide its own tech support in the near future. After all, why spend $600,000 to avoid $415,360 of cost? Once the building lease matures, the furniture and fixtures are in need of replacement, or if tech support volume drops off, Chandra’s proposal might be worthy of reconsideration. * * Direct labor Utilities and maintenance Building rent Phone/computer leasing Annual depreciation of furniture and fixtures $ 315,360 40,000 120,000 60,000 100,000 $ 415,360 2.3 Capacity Considerations in Outsourcing Outsourcing analysis is made more complicated if a business is operating at capacity. If outsourcing will free up capacity to be used on other services or products, then the contribution margin associated with the Considerations products also becomes a relevant item in the decision 2.3 Capacity additional services or in Outsourcing process. In other words,made more complicated to a business is operating at...
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This note was uploaded on 06/07/2013 for the course BA 201 taught by Professor Cuongvu during the Fall '13 term at RMIT Vietnam.

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