Question

It is important to focus on total cost of ownership (TCO) when selecting a supplier. What does TCO include?

a) Acquisition costs only
b) Acquisition and operational costs
c) Acquisition and disposal costs
d) Acquisition, ownership, and post-ownership costs

Answer 1

TCO includes acquisition, ownership, and post-ownership costs. It encompasses all costs associated with a product over its life cycle which assists organizations in making cost-effective decisions. Option d.

Step-by-step explanation:

When selecting a supplier, it is important to focus on the total cost of ownership (TCO), which encompasses all costs associated with acquiring, owning, and disposing of a product or system over its entire life cycle. Therefore, the correct answer to what TCO includes is option d) Acquisition, ownership, and post-ownership costs. TCO includes a variety of expenses such as the initial acquisition cost, operational costs, maintenance costs, upgrade costs, and eventual disposal costs. Considering TCO allows organizations to make more informed decisions regarding the long-term economic efficiency of supplier choices.