Certified Professional Public Buyer (CPPB) Practice Test

What is the most appropriate analysis method for deciding between new or used mowers?

1. Historical price analysis

2. Life cycle cost analysis

3. Cost analysis

4. Price analysis

The correct answer is: Life cycle cost analysis

Life cycle cost analysis is the most appropriate method for deciding between new or used mowers because it considers the total costs associated with the purchase and operation of the equipment over its entire lifespan. This includes not only the initial purchase price but also costs related to maintenance, fuel consumption, depreciation, and potential resale value. By evaluating these factors, an organization can make a more informed decision that aligns with its long-term budgetary constraints and operational efficiency. For instance, while a new mower might have a higher upfront cost, it could offer better fuel efficiency and lower maintenance costs compared to a used mower that may require frequent repairs. Historical price analysis focuses on past pricing data, which may not accurately predict future costs or inform decisions involving the longevity and condition of equipment. Similarly, cost analysis generally looks at explicit costs, whereas life cycle cost analysis provides a broader view that incorporates long-term financial implications. Price analysis tends to examine market rates and compare offers but does not account for the ongoing expenses related to ownership, making it less suitable for evaluating new versus used equipment.