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An original equipment manufacturer announced that a popular type of equipment is up for bid and an Life Cycle Cost (LLC) approach is mandatory. The firm publicizes that an LLC model to select the winning bid is based on the Cost per unit = (unit price + unit qualifying and stocking cost)/bid MTBF The equipment qualifying and stocking cost of $11,000 per unit is the total cost for storage, transportation from central inventory, mobilization at the factory floor, setup and final disposal. Each bidder supplied the following information: Bidder Unit Price Bid MTBF 1 $100,000 800 2 $125,000 615 3 $117,500 917 Which bidder should win the contract? Discuss the merits of this sort of analysis.

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