Capital Equipment Purchasing

992 Words4 Pages
CAPITAL EQUIPMENT PURCHASING Purpose This case is designed to give students an opportunity to think through the details of a specific capital equipment purchase. Question 1: Outline in step-by-step fashion the actions you suggest James Sampson take in handling this matter. Discuss the significance of each. Comment General Procedure The general steps Sampson should take in handling the purchase from this point forward are identified and discussed briefly below. 1. Make a preliminary evaluation of the proposals as they now exist. Sampson should do this himself, based on the information now available, with any required assistance from engineering and operating personnel. 2. Conduct an economic analysis of each supplier’s proposed equipment, probably utilizing the life cycle costing approach. 3. At this point, Sampson now has a general idea about the strengths and weaknesses of each supplier’s proposal. Before going further, it would be a good idea to talk with several randomly selected customers (buyers of similar equipment) of each of the suppliers to get a reading on their perceptions of the suppliers’ respective performances. 4. If not already done, Sampson should establish and organize a selection team. He must ensure that it includes adequate technical expertise with respect to product design and operation and also manufacturing and quality control activities. 5. As chairman of the team, Sampson should arrange for individual discussions with each of the potential suppliers. The purpose of these discussions is for the team to determine with reasonable certainty the extent to which each supplier understands the technical and business requirements of the undertaking—and has the capability to handle them satisfactorily. Emphasis should be placed on the technical evaluation of the proposed equipment’s operating characteristics and engineering features. 6.

More about Capital Equipment Purchasing

Open Document