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Outsource Fleet Maintenance

The document compares the costs of maintaining a fleet of vehicles in-house versus outsourcing maintenance over 5 years. Maintaining vehicles in-house results in total costs of $1,515,690 over 5 years, with average costs per vehicle of $472 in year 1 decreasing to $465 in year 5. Outsourcing maintenance results in total costs of $1,519,650, with average costs per vehicle of $459 in year 1 increasing to $475 in year 5. Outsourcing is more cost effective in years 1-2 but maintaining vehicles in-house is slightly cheaper in years 3-5, with an overall differential cost of outsourcing being $3,960 more over the 5 year period.

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Inney Sildalatifa
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39 views

Outsource Fleet Maintenance

The document compares the costs of maintaining a fleet of vehicles in-house versus outsourcing maintenance over 5 years. Maintaining vehicles in-house results in total costs of $1,515,690 over 5 years, with average costs per vehicle of $472 in year 1 decreasing to $465 in year 5. Outsourcing maintenance results in total costs of $1,519,650, with average costs per vehicle of $459 in year 1 increasing to $475 in year 5. Outsourcing is more cost effective in years 1-2 but maintaining vehicles in-house is slightly cheaper in years 3-5, with an overall differential cost of outsourcing being $3,960 more over the 5 year period.

Uploaded by

Inney Sildalatifa
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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Outsource fleet maintenance

PANEL 1.Make Option:Service Vehicle in house

Vehicles per Year


Variable cost /Vehicles supplies

Fixed cost per year


Payroll and Training
Facilities utilities ,Maintanance
Facilities Depreciation
(cost =$900,000 ,30 yr life)
Total costs
less tax effect 34%
Net costs of servicing vehicles in house
Average costs per vihicle

Panel 2.Buy Option:outsource vehicle Service

Vehicle Per Year


Service Cost per vehicles
Total Contractual cost
Facilities Depreciation
Total Operating cost
less:Opportunity Cost:Rental Revenue
Total Cost
Less:Tax Effect 34%
Net cost of Outsourcing vehicles Maintanace
average cost per vehicles

Differential costs to outsource


maintenance

YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5


600 625 650 675 700
470 470 470 470 470
$ 282,000 $ 293,750 $ 305,500 $ 317,250 $ 329,000

$ 102,000 $ 102,000 $ 110,500 $ 110,500 $ 119,000


$ 15,000 $ 15,000 $ 15,000 $ 15,000 $ 15,000

$ 30,000 $ 30,000 $ 30,000 $ 30,000 $ 30,000


$ 429,000 $ 440,750 $ 461,000 $ 472,750 $ 493,000
$ 145,860 $ 149,855 $ 156,740 $ 160,735 $ 167,620
$ 283,140 $ 290,895 $ 304,260 $ 312,015 $ 325,380
$ 472 $ 465 $ 468 $ 462 $ 465

Year 1 Year 2 Year 3 Year 4 Year 5


600 625 650 675 700
$ 870 $ 870 $ 870 $ 870 $ 870
$ 522,000 $ 543,750 $ 565,500 $ 587,250 $ 609,000
$ 30,000 $ 30,000 $ 30,000 $ 30,000 $ 30,000
$ 552,000 $ 573,750 $ 595,500 $ 617,250 $ 639,000
$ 135,000 $ 135,000 $ 135,000 $ 135,000 $ 135,000
$ 417,000 $ 438,750 $ 460,500 $ 482,250 $ 504,000
$ 141,780 $ 149,175 $ 156,570 $ 163,965 $ 171,360
$ 275,220 $ 289,575 $ 303,930 $ 318,285 $ 332,640
$ 459 $ 463 $ 468 $ 472 $ 475

$ 7,920 $ 1,320 $ 330 $ (6,270) $ (7,260)


TOTAL

$ 1,515,690

Total

$ 1,519,650

$ (3,960)

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