Problem 9-6 An ana sis of order and shipment data shows that he order fill rate

Question

Problem 9-6 An ana sis of order and shipment data shows that he order fill rate is 96.2% and ABBA collected he follow ng data concerning customer service performance Late delivery-4 percent Damage-1 percent Incorrect documentation-2 percent Assuming these are the critical attributes for perfect orders, how well did ABBA perform? Consider four attributes in your calculation the three attributes given above and the order fill rate given above. (Round your answer to 1 decimal place.) erfect order performance

Explanation / Answer

Order fill rate is given as 96.2% or 0.962

Late delivery is 4% which means the orders on time is 100-4 = 96% or 0.96

Damage is 1% which means good products are 100-1 = 99% or 0.99

Incorrect documentation is 2% which means correct documentation is 100-2 = 98% or 0.98

Important: An organization’s perfect order can be calculated by multiplying all the service and individual performance factors.

Therefore, given three factors above (Late Delivery, Damage, Incorrect documentation)

ABBA’s perfect order performance = 0.96*0.99*0.98 = 0.931 = 93.1%

Now order fill rate is 96.2% and all the orders must be fulfilled. Therefore ABBA’s Perfect order performance is:

0.962*0.931 = 0.895 = 89.5%

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