Modern Designs is seeking a supplier of copper wire for artistic and cosmetic effects on high-end decorative
Question:
Modern Designs is seeking a supplier of copper wire for artistic and cosmetic effects on high-end decorative consumer products. Considerable research into suppliers has been conducted, and all except four suppliers have been eliminated from consideration. These include Beauty Copper (BC), Copper Inventions (CI), Specialty Wire (SW), and Wire Cosmetics (WC). Based upon the best quote from each for the identical quantity and performance requirements, the prices were, respectively, \($85\),000, \($79\),000, \($105\),000, and \($93\),000. Recognizing that ‘‘lowest first cost’’ is not always the best alternative, Modern Designs has identified other factors, in addition to price, that are desired to retain their leadership position in the international marketplace. Each of the factors has been weighted in terms of its importance. Factors and weights include Price (P)—20%; Quality (Q) of metallurgical properties and consistency of color—30%; Delivery (D) reliability for lean production—25%; Return policy (R)—15%; and Ease (E) of working with the supplier—10%. The Materials Procurement group has researched and provided ratings on a 10-point maximum scale for each factor. These are given in the following table:
Where Factor P = 10*(1 - (Price - Min Price)/Min Price) = 10+ (1 - (Price - \($79\),000)/\($79\),000)
a. Using the weighted factor comparison method, determine the score for each of the potential suppliers.
b. What is the imputed value, in dollars, for the differences in quality, delivery, and reliability between Suppliers BC and CI?
c. Of the ten principles, which one(s) is well illustrated by this problem?
d. Of the systematic economic analysis technique's seven steps, which one(s) is well illustrated by this problem?
Step by Step Answer:
Principles Of Engineering Economic Analysis
ISBN: 9781118163832
6th Edition
Authors: John A. White, Kenneth E. Case, David B. Pratt