TOTAL COST OF OWNERSHIP:

The total cost of ownership evaluates difference between purchase price and long term cost.

It comprises of OPERATIONS, MAINTENANCE,DOWNTIME,PRODUCTION ,REMAINING VALUE.

Formula: I+M-R=TCO (Total cost of ownership)

 

Following five factors should follow by Baskin Robbin’s by keeping TCO in mind are highlighted:

 

1.Initial Cost:

The initial cost is self explanatory from the word that it is the price we focus when we see the tag price. Initial cost appears on price tag. The company must focus on the assets and purchasing cost while initial purchase of the material/product/ services. Because this cost comprises all the related cost like maintenance, operations, production, downtime, risks to maintain TCO.

2.Operational Cost:

The cost which Baskin Robbin’s company use to install any machine and any services or software is the operational cost. They must focus while maintaining any operations from their suppliers.

3.Maintenance:

The company must focus on the maintenance of the product/machine and services while purchasing, they must check the quality of the product. Because maintenance cost is the cost that appears later in time and add expenses in our balance sheet, due to this reason sometimes the cost sometimes becomes much higher. So baskin robbin’s must evaluate their maintenance charges also.

4.Production:

This Ice Cream making company should evaluate their production time, production process and labor work by keeping TCO in mind. by evaluating total consumption of their ice creams they must produce their icecreams accordingly. Other wise they may face shortages or poor services. Total cost of ownership (TCO) is the key factor to focus while keeping production level maintained.

5.Risks:

Safety and quality must be main approach. The aim of the company must be savings, improving supplier terms and services and evaluate risk factors. Quality check is the core focus for the company to maintain their class and level in the competitive market.