Imagine you are trying to award a large contract to one of three following suppl
ID: 3144026 • Letter: I
Question
Imagine you are trying to award a large contract to one of three following suppliers. You’ve gathered the following data based on your experience at dealing with them in the past. Your firm allocated weights based on the importance of the criteria listed in the table: Price (20%), Quality (30%), Delivery (40%) and Customer Service (10%). Apply one of the supplier evaluation tools to select one supplier and to justify your choice. Please note that ppm stands for "parts per million" (i.e., number of defects per million).
Performance criteria
Supplier A
Supplier B
Supplier C
Price / unit
$10.00
$10.50
$9.00
Quality
2000ppm
1500ppm
1000 ppm
Delivery
95% on time
99% on time
98% on time
Customer service
Good
Excellent
Average
Performance criteria
Supplier A
Supplier B
Supplier C
Price / unit
$10.00
$10.50
$9.00
Quality
2000ppm
1500ppm
1000 ppm
Delivery
95% on time
99% on time
98% on time
Customer service
Good
Excellent
Average
Explanation / Answer
Hi,
we can use linear averaging method to decide upon the supplier.
Here weightages given as
quality- 30, price-20,delivery-40,service-10
Now,
for price/unit- since lowest price is 9- lets take that 100%
so for price:
1. supplierA- 9/10= 0.9
2. supplierB- 9/10.5=0.86
3. supplierC- 9/9=1
now, for quality- lowest defect is 1000ppm, lets say thats 100%
1. supplierA- 1000/2000=0.5
2. supplierB- 1500/2000=0.75
3. supplierC- 1000/1000=1
for delivery,
1. supplierA- 0.95
2. supplierB- 0.99
3. supplierC- 0.98
for service- excellent is 100%
1. supplierA- Good- 0.8(approx figure)
2. supplierB- Excellent- 1
3. supplierC- Average- 0.7(approx)
so, we have all the scores, we have to take weighted sum, we get
supplierA=0.20* 90+ 0.30*50+ 0.40*95+0.10*80 =79
supplierC=0.20* 86+ 0.30*75+ 0.40*99+0.10*100 =89.3
supplierC=0.20* 100+ 0.30*100+ 0.40*98+0.10*70 =96.2
Hence SupplierC wins,
Thumbs up if this was helpful, otherwise let me know in comments. Good Day.
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