Q1: What could be the reasons for the unfavorable evaluation of PV technologies by Greg Morgan? a) The bid prices of the competitor’s products especially BJ Solar’s were significantly lower than PVT’s. b) Solenergy was committed to a renewed focus on expense control and the upfront cost differential was significant c) An enhanced maintenance schedule, coupled with a proactive quality control program designed to identify potential performances issues before they occurred, should compensate for the inferior performance characteristics of the less costly inverters. d) The enhanced oversight and expanded maintenance schedule would raise operating cost, the lower net ownership costs argued in favor of selecting the lowest cost product.
Q2: Evaluate alternative course of action available to PVT to gain favorable evaluation by Solenergy for the Barstow Project:
The four alternative course of action available to PVT
Offer to extend the original warranty at internal cost from 10 to 20 years
In the first scenario PVT would extend the product warranty to 20 years, Solenergy would contractually prepay the warranty premium annually at the rate of 18% of the purchase price of each inverter. PVT would perform warranty services as necessary throughout the year and submit an invoice monthly of actual internal costs for parts, labor and service calls to Solenergy for its recordkeeping purposes. At the end, PVT would true up the prepayment and issue either a refund in the event of an overpayment or an invoice in the event of an underpayment. PVT offered a standard 10 year unlimited hour usage warranty. PVT also offered an extended warranty. Written in 5 year increments at an additional cost, a condition of this extension option was that it must be exercised prior to the expiration of the standard warranty. Those marketing and sales executives who were inclined to accept Solenergy’s high acquisition cost evaluation favored this alternative because they believed...
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