Performance Qualifier level (minimum requirements) 99.9% pure 99% pure Order qualifier Conformance quality Are the chemicals pure? 2 days 3 days Delivery speed How quickly can the chemicals be delivered? 3. Reconsider Figure 2.3. Suppose Supplier B improves its conformance quality so that the chemicals it produces are now 99.9% pure. The chart at the top of this page shows cathe new competitive situation: a. (*) Will this be enough to make Supplier B competitive? Which supplier do you think will win the business? b. (**) Managers at Supplier A have determined that if they increase the minimum order size to 80 liters, they can decrease their costs to $18 per liter. Should they do it? Explain your logic. (Hint: There is no single right answer to this problem.) Performance quality Conformance quality $20 per liter Order winners Cost How much do the chemicals cost? A B D Calculating the Value Index for Two Alternative Suppliers $30 per liter 1 2 3 Performance: 1 = "poor" to 5= "excellent" 4 Importance: 1 = "completely unimportant" to 5 = "critical" 5 6 7 8 9 10 Delivery reliability 11 Delivery speed 12 Cost 13 Mix flexibility 14 Volume flexibility 15 Extrabla Importance Supplier 1 5 4 4 5 2 5 3 1 2 3 2 2 3 4 Performance Minimum order size of 50 liters 4. (***) (Microsoft Excel problem) The following figure shows an Excel spreadsheet that calculates the value index for each of two alternative suppliers. Re-create this spreadsheet in Excel. You should develop the spreadsheet so that the results will be recalculated if any of the values in the high- lighted cells are changed. Your formatting does not have to be exactly the same, but the numbers should be. (As a test, see what happens if you change all of the importance scores to 3. Your new value indices for Supplier 1 and Sup- plier 2 should be 72 and 63, respectively.) E Minimum order size of 100 liters 4 3 5 1 Flexibility Can we place small orders for the chemicals? Supplier 2 3 4 Totals: F Value Index Supplier 1 20 20 10 3 = Supplier A = Supplier B 6 4 12 75 G Supplier 2 15 16 8 9 10 2 3 63

3. Reconsider Figure 2.3. Suppose Supplier B improves irs conformance quality so that the chemicals it produces are now 99.9% pure. The chart at the top of this page shows the new competitive situation: a. (") Will this be enough to make Supplier B competitive? Which supplier do you think will win the business? b. () Managers at Supplier A have determined that if they increase the minimum order size to 80 liters, they can decrease their costs to $18 per liter. Should they do it? Explain your logic. (Hint; There is no single right answer to this problem.) 4. (*w) (Microsoft Exed problem) The following figure shows an Excel spreadsheet that calculates the value index for each of two alternative suppliers. Re-create this spreadsheet in Excel. You should develop the spreadheet so that the results will be recalculated if any of the values in the highlighted cells are changed, Your formatting does not have to be exactly the same, but the numbers should be. (As a test, see what happens if you change all of the importance scores to 3. Your new value indices for Supplier 1 and Supplier 2 should be 72 and 63 , respectively.)