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A Benefit of Using TCO Analysis to Evaluate an Information

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A benefit of using TCO analysis to evaluate an information technology investment is that it is able to incorporate intangible and "soft" factors such as benefits and complexity costs.


Definitions:

Safety Stock

An additional quantity of an item held in the inventory to reduce the risk that the item will be out of stock.

Lead Time

The amount of time that elapses between the initiation and completion of a process.

Economic Production Quantity

A model that determines the optimal quantity of a product to produce, minimizing total holding and setup costs.

Setup Time

The time required to prepare a machine or process for production.

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