ESSAY: Capital Purchase Justification

The purpose of this assignment is to provide justification of acapital purchase using decision-making skills, research, and data.

You are responsible for finding replacement capital pieces for theradiology department. You have just been notified that the MRI scannermachines are obsolete and need to be replaced. Compare and contrastdifferent vendors and ROI using the “Vendor InformationSheet” resource.

Part One
1.Before analyzing the “Vendor Information Sheet,”what essential “items” should you consider beforepurchasing an item?
2.Using the “Vendor InformationSheet,” determine what a reasonable ROI is?
3.What arethe minimum quality standards? Is there additional training requiredto operate the equipment?
4.Choose the vendor that fits theneed of the hospital and has the best ROI. Justify your chosencapital purchase.

Part Two

After comparing vendors, write a 250-500 word justification for thecapital purchase to your vice president. Address the following:
1.Why would this be a good investment for the hospital?
2.What are the operating costs you took into consideration?Explain.
3.What facility considerations are involved regardingthis new piece of equipment? Explain.
4.What is a reasonableROI? What are the minimum quality standards?
5.What trainingoptions would need to occur?
6.Cite a minimum of threereferences to support your rationale.

ANSWER

Capital Purchase Justification

Prior to analyzing the vendor information sheet, it is essential to put into consideration some factors. One of the factors to consider is the budget of the organization. Some information relating to a particular vendor might be lucrative owing to the quality of machinery that they will provide. However, the budget of the institution might not support the purchase of the machine and consequently the company might have to forego quality. Another item to consider is efficiency. As identified, the current MRI machine is absolute and the institution should consider the efficiency of the machines provided by the two vendors. Prior to going through the vendor information sheet,..

 A reasonable Return on Investment (ROI) is the measure that is used to evaluate the performance of a particular investment while comparing to other investments in the same field and seeking to address the same matter (Sonnenreich, Albanese & Stout, 2006). In this particular case, the reasonable ROI is achieved by estimating the option that accounts for the total amount of money that the company is willing to offer for the MRI machine, concentrates on the amount of time to re-pay the interest and the actual amount of …

The minimum quality standards involve the measures taken by the hospital and the medical practitioners to ensure that the machine operates in the manner expected. Moreover, there are strict measures incorporated to ensure that the machine is not tampered with and through this there is assurance of a well-functioning MRI scanner and consequently better resolution of health…

As identified, the company is purchasing a new MRI machine because the previous one is old and obsolete. With changes in technology, new machines have been introduced in the contemporary environment and that have different operating procedures (Murdoch et al., 2007). It is essential to introduce training on the use of these new machines to ensure that there is proper administration …

After reviewing the two company bids, it is essential to note the most reasonable investment for the company is going with Vendor A. Vendor A has the total cost of the investment being 3650000 dollars while for the second vendor, vendor B the total cost amounting to 4400000 dollars. Considering this statement, it is possible to identify the fact that the vendors are very different and this is owing to the fact that if the institution is to choose vendor B, it will incur an additional cost of almost a…

Despite the fact that the institution will save money, it is essential to look at other factors that the company will have to consider to understand whether the investment is worth it and comprehend the opportunity cost of choosing vendor A over vendor B. With Relation to the additional warranty, the cost is the same in the long run despite the fact that the period for the warranty is extended for vendor B. Multiplying the 150000 dollars per year warranty for a period of 5 years shows the amount spent on the warranty is a total of 750,000 dollars. The same applied for vendor B where there is a single year warranty of 75000 dollars and multiplying this by 10 years that..

Another factor to consider is the amount spent on software updates. The amount spent on software updates also remains the same and arithmetic has it that for company A, the amount spent is 50,000 dollars for a single year for a period of 5 years. Carrying out the multiplication the total amount is 250,000 dollars. For the other vendor, the amount offered is 25000 dollars and …

A review of this quite important and the only lucrative aspect of vendor B is the fact that there is an extended amount of time where the vendor will have an obligation to assist the institution in software updates and warranty matters. However, it is essential to note that the general amount charged by vendor B is extreme and the extra amount used to pay this vendor…

A reasonable ROI is one that does not stretch out an institution and ensures that an institution receives the amount of money that it had injected and consequently a general profit eventually (Phillips, 2012). It is essential to note that in this case the first option is the best one for there is minimal wasting of money. Training options that can be incorporated in this case involves seminars and…

References

Phillips, J. J. (2012). Return on investment in training and performance improvement programs. London: Routledge.

Murdoch, W., Polasky, S., Wilson, K. A., Possingham, H. P., Kareiva, P., & Shaw, R. (2007).      Maximizing return on investment. Conservation, 139(3-4),          375-388.

Sonnenreich, W., Albanese, J., & Stout, B. (2006). Return on security investment (ROSI)-a          practical quantitative model. Journal of Research and practice in Information          Technology, 38(1), 45.