About twice a year a switch fails in a company’s network center. Under the maintenance contract,
the switch would be replaced in two hours losing the business $1,000 per hour. The cost of a
spare switch is $3,000 with a 12-hour delivery time and would eliminate downtime costs if
purchased ahead of time. The maintenance contract is $1,500 per year.
Which of the following is true in this scenario?
A.
It is more cost-effective to eliminate the maintenance contract and purchase a replacement
upon failure.
B.
It is more cost-effective to purchase a spare switch prior to an outage and eliminate the
maintenance contract.
C.
It is more cost-effective to keep the maintenance contract instead of purchasing a spare switch
prior to an outage.
D.
It is more cost-effective to purchase a spare switch prior to an outage and keep the
maintenance contract.