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

Team Members Paul S. Cobian-Organizer Mynor Piedrasanta-Techie Spencer Lee-Summarizer California State Polytechnic University, Pomona

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

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.

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.

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.

Challenger Comparison Dell EUACHP EUAC 0Total 1-$32, $58, $9, $20, $2, $8, $1, $4, $1, $2, $ $ $267.30$ $105.21$ $134.30$1, $312.22$1, $618.63$1, $1,047.29$1, $1,601.99$ $2,294.64$ $3, $ HP Wins!

Sensitivity Analysis HP vs. Dell Maintenance CostChoose $100HP $300HP $500HP $750HP $1,000HP ProductivityChoose 5%HP 10%HP 11%HP 12%Dell 15%Dell 25%Dell Hourly SalaryChoose $15.00HP $18.00HP $20.00HP $25.00HP $35.00HP HP Wins

Defender vs. Hp Defender EUACHP EUAC 0Total 1-$5, $58, $6, $20, $7, $8, $7, $4, $8, $2, $9, $ $9,897.14$ $10,704.27$ $11,592.21$1, $12,583.38$1, $13,704.74$1, $14,988.72$1, $16,474.32$ $18,208.38$ $20, $ HP Wins

Sensitivity Analysis HP vs. Defender Maintenance CostChoose $100HP $300HP $500HP $750HP $1,000HP ProductivityChoose 5%HP 10%HP 15%HP 20%HP 25%HP 30%HP Hourly SalaryChoose $15.00HP $18.00HP $20.00HP $25.00HP $35.00HP HP Wins

Overall Analysis HP Computer Best Option Better alternative (EUAC + Sensitivity) High productivity offsets high cost