Question: Wanda Lux must select a supplier for a plastic bottle and proprietary dispenser for its new hair shampoo. Three suppliers have placed bids; at Wanda's

Wanda Lux must select a supplier for a plastic bottle and proprietary dispenser for its new hair shampoo. Three suppliers have placed bids; at Wanda's request, all bids are for a shipping quantity (Q) of 20,000 bottles with annual requirements (D) of 40,000 units. Wanda's factory operates 250 days a year. The following 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.

Supplier

Freight Costs

Price/Unit (p)

Annual HoldingCost/Unit (H)

Lead Time(L) (days)

Annual Administrative Costs

Dover Plastics

$4,500

$5.10

$1.02

16

$4,000

Evan & Sons

$4,000

$5.15

$1.03

13

$3,000

Farley, Inc.

$3,000

$5.00

$1.00

19

$5,000

a. Which of the three suppliers will provide the lowest annual cost to Wanda Lux?

Using Farley is the lowest cost alternative, with annual total costs to Wanda Lux of $221040221040.

Beyond costs, however, Wanda has three other criteria considered important in the selection of a supplier. The following table shows all the criteria, their weights, and the scores for all of them except total costs, where a score of 1.0 indicates "poor" and 10 indicates "superior." Because all three suppliers have done business with Wanda Lux before, management will assign a score of "10" to the supplier with the lowest total annual cost, a score of "8.5" for the next lowest cost, and a score of "7.0" for the worst cost of the three.

Rating

Criteria

Weight

Dover

Evan

Farley

1. Total Cost

30

?

?

?

2. Consistent Quality

30

9

8

7

3. On-Time Delivery

20

8

9

8

4. Environment

20

9

8

8

b. Given Wanda's criteria and weighting system, which supplier should Wanda award the contract to? Wanda should award the contract to Evan Farley Dover, whose total weighted score is

enter your response here. (Enter your response as an integer.)

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related General Management Questions!