Problem 2: Supplier Selection

| November 24, 2016

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

$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?

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