Cost assignment

Week8CostAssignment.docx

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You are the IT manager of a start-up company. Your team has recently built a new Web service that requires a hosting environment comprised of multiple servers. Based on predicted usage estimates, your team produces the following chart illustrating the anticipated number of concurrent users over a typical 24 hour period.

You ask your team to perform an up-front and on-going cost comparison with the following assumptions:

 the purchase cost of one physical server is $14,000

 the leasing cost of one virtual server from a cloud provider is $2,000 per month

 the on-premise physical server and the leased virtual server can each support 8,000 concurrent users

 to support the maximum number of predicted concurrent users, three servers will be required

Based on these assumptions and based on approximate usage values from the preceding graph, the estimated concurrent usage over an average 24 hour period results in the following values for the number of virtual severs required:

 10 hours with 1 virtual server

 4 hours with 2 virtual servers

 10 hours with 3 virtual servers