CASE 1SELECTING NEW YOKOHAMA’S NEW CONTROL SYSTEM

Adelita Rizky // 1306385993

Farida Hasna’ Annuha // 1306386125

Ni Putu Eka Evayanti // 1306385841

OVERVIEW

Yokohama Electric Utility Organization is an organization that has a computer system

which controlling the electrical power supply system to the city. This organization wants

to upgrade its computer system into the new one. This upgrade process has several

alternative vendors.

Current Vendor (V0)

To upgrade the computer network, this vendor offers $1.500.000 and needs 24 months for its installation. There would be a complete power outage about every 4 months during the upgrade process. And the operating and maintaining cost of current system is $500.000 per year.

Vendor 1 (V1)

This vendor offers $1.200.000 for installation the new system and $250.000 for engineers to assist the upgrade. it require 18 months to complete the installation process. The operating and maintaining cost of the system would be $200.000 per year.

Vendor 2 (V2)

For installation the new system this vendor offers $1.800.000 and also for accomplish this work they need accompany from the firm engineers with estimated cost of $275.000. It needs 16 months to complete the installation. The operating and maintaining cost of the system would be $350.000 per year.

From the alternatives above, the organization should choose one of the best alternatives. That fulfills the criteria. The criteria are total cost that goes with estimated 10 year period operation and maintenance.

We also need to find the other things that company need to take as a consideration in making this decision.

ANALYSIS

VENDOR 1

VENDOR 2

WE RECOMMEND TO CHOOSE

VENDOR 1

WHY?

• Vendor 1 vs. Vendor 2

• Vendor 1 is cheaper (low cost) than Vendor 2. Which is vendor 1 total cost is $3.900.000 and vendor 2 is $5.774.999. So, based on that we suggest that Yokohama Organization better choose vendor 1 to save likely $1.874.999 amount of money.

• Vendor 1 vs. Current Vendor

We compare vendor 1 to the current vendor. The current vendor have expensive operation and maintenance cost because the machine is old (15 years). And also the current machine will having power outage about every 4 months during the upgrade process.

factors that will affect the decision making of choosing the new

vendor

•Operating Costs •Annual Savings

•Revenue Enhancement •Replacement Analysis •Risk and Uncertainty