(b) With reference to case study strategic performance at HTC, discuss how TCO can impact the supplier selection decision and which supplier has more chance of getting higher orders if factor of TCO is a deciding factor among all suppliers

After following the evaluation procedure, supplier A is shortlisted for procurement of complete installation system of the factory. Supplier has quoted the cost of project as per following:

Cost of system	500,000
Transportation	30,000
Installation cost	20,000
Insurance	20,000

The salvage value is 10% of cost of system. Company has estimated the expected costs based on study of technical specification of the project. Company will obtain funds at 15%, straight line method of depreciation is used. Relevant information is as under:

Year	1	2	3	4
Cost
Raw material usage	80000	90000	100000	150000
Electricity	10000	30000	40000	50000
POL	15000	20000	25000	30000
Salary expense	35000	45000	60000	65000
Rent expense	30000	30000	30000	30000
Taxes 30%

Working capital in year 0 is Rs. 50,000 which will increase by 5000 every from year 1 to 4. Calculate the total cost of ownership of the equipment.