Explain how the five stages of the buying decision process might be applied in the following situations 1)The new task buying of a conveyor belt for a soft drink bottling plant; and 2)The straight re-buy of maintenance services for that conveyor belt.
1. Define problem: Belt is worn. A broken belt will shutdown the production line.
2. Identify Alternatives: a. XYZ Company has a belt for x dollars with an expected life of 5 years. b. ABC Company has a belt for 1.5x dollars with an expected life of 7 years. c. GHI Company has a belt for 1.8x dollars with an expected life of 9 years.
3. Analyze, Rank and Decide Between Alternatives. Use NPV or IRR analysis ot determine most economic alternative.
4. Buy Belt and Install.
5. Follow Up. Determine if the belt is working correctly and meeting manufactures specifications.