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Sourcing Decisions in a Supply Chain - Total cost of ownership

4 important questions on Sourcing Decisions in a Supply Chain - Total cost of ownership

What is the TCO (Total cost of ownership)?

all supply chain costs of sourcing a good or service from a particular supplier and can be considered in three "buckets" - acquisition, ownership and post-ownership costs.

What are acquisition costs?

all costs associated with the purchase of material from a supplier till it reaches the buyer and is ready for use.

What are ownership costs?

all cost associated with the purchased part from when it arrives till it is a finished product, like inventory, warehousing, manufacturing or conversion costs (transport to buyer).

What are post-ownership costs?

all costs incurred by the firm afther the finished product has reached the end customer, like warranty (garantie), environmental, product liability and reputational costs.

The question on the page originate from the summary of the following study material:

Supply Chain Management Strategy, Planning, and Operation | 9780133800203 | Sunil Chopra, et al

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