Economic Analysis Team Project

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Economic Analysis Team Project
Replacement Analysis (Team 3)
Repair or Replace Old Computers
California State Polytechnic University, Pomona
Winter Quarter, 2008
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Team Members

• Paul S. Cobian -Organizer
• Mynor Piedrasanta -Techie
• Spencer Lee -Summarizer

California State Polytechnic University, Pomona
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Replacement Analysis

• Equipment Retained or replaced?
• Defender
• Challenger
• Reasons
• -Obsolescence
• -Depletion
• -Deterioration
• Analysis Technique 3
• Compare EUAC
• Defender remaining useful life
• Challenger minimum cost life

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Defender

• 50 Computers
• No salvage value
• Annual Maintenance 5,000
• Increasing by 750 annually

• Productivity 50 per computer (decreasing 5
  annually)
• Labor costs 18 per hour with 3 annual increase.

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Challenger 1 (Dell Vostro)

• 896 per computer
• 1.6 Ghz
• 512 MB RAM
• 80 GB Hard drive
• Software 33 per computer increases 5 per year

• Productivity 350 per computer Decreasing by 5
• Maintenance first 3 years free, 50 per computer
  w/ 10 incr. annually
• Labor costs 18/hr with 3 annual incr.

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Challenger 2 (HP xw4600)

• 1545 per computer
• Duo core 2.33 Ghz
• 1 GB RAM
• 250 GB Hard drive
• Software 33 per computer increases 5 per year

• Productivity 525 per computer Decreasing by 5
• Maintenance first 3 years free, 50 per computer
  w/ 10 increase per year
• Labor costs 18 per hour with 3 annual
  increase.

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Challenger Comparison
HP Wins!
  Dell EUAC HP EUAC
0 Total Total
1 -32,534.00 -58,830.00
2 -9,813.33 -20,783.13
3 -2,559.73 -8,108.24
4 -1,112.14 -4,478.32
5 -1,563.48 -2,814.05
6 -701.41 -947.24
7 -267.30 192.48
8 -105.21 880.80
9 -134.30 1,265.06
10 -312.22 1,427.78
11 -618.63 1,415.22
12 -1,047.29 1,251.56
13 -1,601.99 946.21
14 -2,294.64 497.70
15 -3,144.41 -104.22
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Sensitivity AnalysisHP vs. Dell
Maintenance Cost Choose
100 HP
300 HP
500 HP
750 HP
1,000 HP
Productivity Choose
5 HP
10 HP
11 HP
12 Dell
15 Dell
25 Dell
Hourly Salary Choose
15.00 HP
18.00 HP
20.00 HP
25.00 HP
35.00 HP
HP Wins
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Defender vs. Hp
HP Wins
  Defender EUAC HP EUAC
0 Total Total
1 -5,900.00 -58,830.00
2 -6,520.70 -20,783.13
3 -7,148.01 -8,108.24
4 -7,789.43 -4,478.32
5 -8,453.91 -2,814.05
6 -9,152.18 -947.24
7 -9,897.14 192.48
8 -10,704.27 880.80
9 -11,592.21 1,265.06
10 -12,583.38 1,427.78
11 -13,704.74 1,415.22
12 -14,988.72 1,251.56
13 -16,474.32 946.21
14 -18,208.38 497.70
15 -20,247.13 -104.22
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Sensitivity AnalysisHP vs. Defender
Maintenance Cost Choose
100 HP
300 HP
500 HP
750 HP
1,000 HP
Productivity Choose
5 HP
10 HP
15 HP
20 HP
25 HP
30 HP
Hourly Salary Choose
15.00 HP
18.00 HP
20.00 HP
25.00 HP
35.00 HP
HP Wins
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Overall Analysis

• HP Computer Best Option
• Better alternative (EUAC Sensitivity)
• High productivity offsets high cost