Problem 2: Supplier Selection Your sourcing department has received bids from th
ID: 1193332 • Letter: P
Question
Problem 2: Supplier Selection
Your sourcing department has received bids from three suppliers shown below.
PERFORMANCE DIMENSION
IMPORTANCE
Supplier 1
Supplier 2
Supplier 3
On Time Delivery (% on time)
0.50
97%
94%
88%
Excess Capacity (square feet of excess space)
0.40
11k sq. ft.
45k sq. ft.
80k sq. ft.
Cost ($/unit)
0.10
$3.50/unit
$3.75/unit
$2.55/unit
A) Score each supplier‘s bid using the following scale.
On Time Delivery
Excess Capacity
Cost
Range
Score
Range
Score
Range
Score
<90%
1
<25k square feet
1
>$2.99 per unit
1
91%-93%
2
26k-35k square feet
2
$2.50-$2.98 per unit
2
94%-96%
3
36k-75k square feet
3
$2.25-$2.49 per unit
3
97%-98%
4
76k-125k square feet
4
$2.10-2.24 per unit
4
99%+
5
126k+ square feet
5
<$2.10 per unit
5
B) Calculate the weighted average score for each supplier.
C) Which supplier should be selected based on these criteria?
PERFORMANCE DIMENSION
IMPORTANCE
Supplier 1
Supplier 2
Supplier 3
On Time Delivery (% on time)
0.50
97%
94%
88%
Excess Capacity (square feet of excess space)
0.40
11k sq. ft.
45k sq. ft.
80k sq. ft.
Cost ($/unit)
0.10
$3.50/unit
$3.75/unit
$2.55/unit
Explanation / Answer
Criteria
i. Total Score for S1 = 2 + 0.4 + 0.1 = 2.5 ii. Total Score for S2 = 1.5 + 1.2 + 0.1 = 2.8 iii. Total Score for S3 = 0.5 + 1.6 + 0.2 = 2.3
2. S2 (Supplier 2) has the highest score and hence S2 must be selected for this bid.
Total Score (Weighted Average) = Importance x Score 1. Supplier Scores
Criteria
Importance S1 S2 S3 1. On Time Delivery 0.5 Score = 4 Total Score = 4 x 0.5 = 2 Score = 3 Total Score = 3 x 0.5 = 1.5 Score = 1 Total Score = 1 x 0.5 = 0.5 2. Excess Capacity (square feet of excess space) 0.4 Score = 1 Total Score = 1 x 0.4 = 0.4 Score = 3 Total Score = 3 x 0.4 = 1.2 Score = 4 Total Score = 4 x 0.4 = 1.6 Cost ($/unit) 0.10 Score = 1 Total Score = 1 x 1.10 = 0.1 Score = 1 Total Score = 1 x 0.10 = 0.1 Score = 2 Total Score = 2x 0.1 = 0.2Related Questions
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