Question 8.8. (TCOs 1 and 2) Answer the following questions concerning lowering

Question

Question 8.8. (TCOs 1 and 2) Answer the following questions concerning lowering the total cost of ownership. (1) Discuss how a “quality cost” can affect the cost of ownership. (10 Points) (2) Discuss how “downtime cost” can affect the total cost of ownership. (10 Points) (3) Discuss how “conversion cost” can affect the total cost of ownership. (10 Points) (Points : 30)

Question 9.9. (TCO 6) Answer the following questions concerning negotiation techniques (tactics): (1) Discuss how “keeping the initiative” is a negotiation technique. (10 points) (2) Discuss how “never give anything away” is used as a negotiation technique. (10 points) (3) Discuss how “separating people from the problem” is a negotiation technique. (10 points) (Points : 30)

Explanation / Answer

8.8) Quality Cost and its effect on TCO – Quality cost contributes to cost relate to maintaining quality output in the line and production cost goes up and all these costs related to quality goes into manufacturing cost and service cost etc. All these quality associated costs directly affect the TCO.

Downtime cost: When the line is not working because of a maintenance problem, increase the cost of overtime and increase production cost.Downtime costs increase the cost production in TCO.

Conversion Cost: This contributes to cost relate to rework on defect products in the production line and all these costs related to conversion through rework goes into manufacturing and service costs. And all these conversion costs directly affects the TCO.

9.9) “keeping the initiative”

A good negotiator keeps the initiatives going during negotiating. Maintaining communications are very important and keep the ball rolling gives room for another party to come up with options. This also gives time to the vendor to explore innovative ideas and discuss the feasibilities internally come up with the proposal.

“never give anything away”

“never give anything away” is followed in good negotiations. Never give anything away without getting something in return. Get the sense, what they can offer and start with some gain from the vendor /supplier. Give some overview of your position to other party and he can benefit in that.

“Separating the people from the problem”

This approach is very important and it involves recognizing that every negotiation can be divided into two primary elements:a. the relationship shared by the people involved in the negotiation and b. the problem being addressed by the negotiators. The relationship part plays very important role and has a major impact on the way people perceive the problem, on the emotions they have, and also it influences the way they communicate with each other. The problem is the objective dilemma that the parties are trying to solve through negotiation.

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