Fergie Bean, Inc. is considering outsourcing its turtle shell business. They hav
ID: 1148934 • Letter: F
Question
Fergie Bean, Inc. is considering outsourcing its turtle shell business. They have received bids from four firms, and CEO Fergie Bean has started to perform an analysis on the scores his operations management team has compiled in the following chart:
Ratings of Outsource Providers
Factor
Weight
A
B
C
D
Labor
d
5
4
3
5
Quality procedures
30
2
3
5
1
Logistics system
5
3
4
3
5
Price
25
5
3
4
4
Trustworthiness
5
3
2
3
5
Technology in place
15
2
5
4
4
Management team
15
5
4
2
1
Weights are on scale from 1 to 30 (least to best), and the outsource providers on a scale of 1 to 5 with 5 being the best. The weight for labor is shown as a d because the team could not agree on a weighted value for labor.
a. For what weight of d (if any) is provider C the best choice?
b. Which firm would be the best choice if d is
*5:
*10:
*25:
c. Identify at what d value (if any), B would be the best choice.
Ratings of Outsource Providers
Factor
Weight
A
B
C
D
Labor
d
5
4
3
5
Quality procedures
30
2
3
5
1
Logistics system
5
3
4
3
5
Price
25
5
3
4
4
Trustworthiness
5
3
2
3
5
Technology in place
15
2
5
4
4
Management team
15
5
4
2
1
Explanation / Answer
Let's Find the weight of values of variable for each alternative
A=weight × preferences
V(A)=.320+5d
V(B)=330+4d
V(C)=370+3d
V(D)=255+5d
For C to be better than other alternatives
370+3d>320+5d
25>d ( d <25)
370+3d>330+4d
40>d(d<40)
370+3d>255+5d
d<57.5
Hence d should be almost 25 for being better than all other alternatives
Best choice of firm
If d=5
V(A)=345, V(B)=350, V(C)=385, V(D)=280
If d=10
V(A)=V(B)=370,V(C)=400 ,V(D)=305
If d=25
V(A)=445, V(B)=430, V(C)=445 ,V(D)=380
For D to be the best choice we need
330+4d>320+5d,
d<10
330+4d>370+3d
d>40
330+4d>255+5d
75>d
Hence no d value exist that make B better than any of these alternatives at one time.
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