A large on-line shopping company is investigating a new logistics provider to de

Question

A large on-line shopping company is investigating a new logistics provider to deliver customer orders. They conducted a trial run of three transportation companies. They calculated efficiencies for each of the firms based on degree of lateness based on time allocated for delivery. Results are shown in the tables below. The first table is for deliveries with a time allocation of two days or less. The second table is for deliveries with a time allocation of more than two days.

Assuming costs are comparable, what is your recommendation to the firm?

Company

Degree of lateness (two day delivery or less)

Acme

.04

.10

.02

.03

.02

Ajax

.15

.11

.07

.09

.12

Ace

.06

.03

.04

.05

.04

Company

Degree of lateness (more than two day delivery)

Acme

.03

.05

.09

.1

.08

Ajax

.05

.06

.04

.03

.02

Ace

0.04

0.07

0.12

0.12

0.09

Company

Degree of lateness (two day delivery or less)

Acme

.04

.10

.02

.03

.02

Ajax

.15

.11

.07

.09

.12

Ace

.06

.03

.04

.05

.04

Explanation / Answer

In case of delivery time, 2 days or less than 2 days, the average lateness and its standard deviation are given above.

Delivery Time more than 2 days.

The above values of Mean and standard deviation is for delivery time of more than 2 days.

There are 2 cases for the decision making:

Case 1:

If the no. of deliveries for type 1(delivery time less than or equal to 2days ) is greater than the no. of deliveries for type 2( the delivery time is more than 2 days)

In this case "Ace" is the best option.

Because: Even though Ajax has a much less average lateness, the deviation is too high i.e., performance won't be consistent. While Ace has an average lateness of 0.44 but the standard deviation is really low. The performance is consistent for Ace.

Case 1:

If the no. of deliveries for type 1(delivery time less than or equal to 2days ) is less than the no. of deliveries for type 2( the delivery time is more than 2 days)

In this case, Ajax is the best option.

Because:

It has the lowest average time in both the situations and the standard deviation is lowest in the 2nd situation.

Company Degree of lateness (two day delivery or less) Average lateness Standard deviation trial 1 trial 2 trial 3 trial 4 trial 5 Acme 0.04 0.1 0.02 0.03 0.02 0.042 0.033 Ajax 0.15 0.11 0.07 0.09 0.12 0.108 0.030 Ace 0.06 0.03 0.04 0.05 0.04 0.044 0.011

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