TLC and WLC Estimation - Research Paper Example

The paper discusses the reason as to why LLC method is not included as an estimation method in the evaluation process. The paper will conclude with a summary of all the major points discussed in the paper. Total Life Cost Total Life Cycle Cost pays attention to all the costs that are incurred during the whole entire life of either a product or a service. This will include all the expenses of the product since the inception of the idea, research, and development of the product, distribution and marketing expenses f the particular product.

In this case, Butler has to consider all the expenses and costs which will be incurred as a result of outsourcing the products due to the increase in demand. He needs to have done all the calculations and determine whether he option of outsourcing will be the better option and hence worth investing in (Stuart2007) . The head of the supply chain management in the company should calculate all the costs involved in the manufacturing of a single unit f the product and present the results together with the proposal to the Senior Leadership Team (SLT).

Whole Life Cost Whole life cost is one method of estimation that evaluates or compares building materials and building components by focusing at the lifespan f the firm, maintenance and running costs and the installation costs of the firm. The supply chain manager of Blue Jay has to take consideration of whole life Cost before submitting his proposal to the Senior Leadership Team (Abdelhalim 2007). Life Cycle Costing (LCC) In this type of estimation method, there is consideration of acquisition, operating and the disposal costs in all instances where there is evaluation of various alternatives.

The supply chain manager of the company (Butler) should not consider LCC method since they have already established the firm and there is no need of establishing another firm. The LCC would only add to the costs of outsourcing and yet they not at all necessary ( Dhillon 1989). There no costs in the operating of the new firm since the operating costs under Life Cycle Costing are incurred during the actual establishment of the firm. Butler should understand that he is not to establish another firm but seek outsourcing services from another firm.

The other reason as to why the LCC method of estimation is not included in the calculation is because the costs are included in Total Life costs and there is no need of repeating since they will only add on the costs of outsourcing. Calculations There is a major difference between total life cost and whole life cost whereby the Whole life cost includes all the contents of total life cost and the entire infrastructure which would support the firm, which would include the management of the firm, training and support.

The two types of estimation methods are best completed and assessed by cross functional teams from both within and outside the company under consideration so that all aspects of the firm, industry or the business can be taken into consideration. Therefore it is necessary for the supply chain manager of the Blue Jay Manufacturing Company to constitute a committee or a team comprising members from both the company and the outsourcing firm so that they can form a cross functional team. The cross functional team would ensure that all the calculations are correct and all the costs are put into consideration so that the best decision can be made.

Total Life Cost Cost Amount in $ Acquisition Costs Cost of Due