Question: Majda Lux must select a supplier for a plastic bottle and proprietary dispenser for its new hair shampoo. Three suppliers have placed bids; at Majda's
Majda Lux must select a supplier for a plastic bottle and proprietary dispenser for its new hair shampoo.
Three suppliers have placed bids; at Majda's request, all bids are for a shipping quantity of bottles
with annual requirements of units. Majda's factory operates days a year. The first table shows
each supplier's price, estimated annual freight costs, and current lead times; management has added
estimates for holding costs and administrative oversight costs for each supplier.
Beyond costs, however, Majda has three other criteria considered important in the selection of a supplier.
The second table shows all the criteria, their weights, and the scores for all of them except total costs,
where a score of indicates "poor" and indicates "superior." Because all three suppliers have done
business with Majda Lux before, management will assign a score of to the supplier with the lowest
total annual cost, a score of for the next lowest cost, and a score of for the worst cost of the
three.
a Which of the three suppliers will provide the lowest annual cost to Majda Lux?
b Given Majda's criteria and weighting system, which supplier should Majda award the contract to
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