EBK PRINCIPLES OF OPERATIONS MANAGEMENT
EBK PRINCIPLES OF OPERATIONS MANAGEMENT
11th Edition
ISBN: 9780135175644
Author: Munson
Publisher: VST
Question
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Chapter 2, Problem 10P

a)

Summary Introduction

To determine: The suitable outsourcing provider for logistics services using factor- rating method.

Introduction:

Factor-rating method:

The factor-rating method is a quantitative approach to make a decision from various alternatives such that the decision is beneficial to the firm involved. This method is utilized to decide on new layout, new locations, best supplier, outsourcing providers etc.

a)

Expert Solution
Check Mark

Answer to Problem 10P

Garza should select worldwide delivery.

Explanation of Solution

Given information:

Ratings of Logistics Providers
Criterion Weight Overnight Shipping Worldwide Delivery United Freight
Quality 5 90 80 75
Delivery 3 70 85 70
Cost 2 70 80 95

Weights = 1-5 (5 – Highest)

Ratings = 1-100 (100 – Highest)

Formula to calculate weighted rating:

Weighted Rating = Weight × rating

Formula to calculate weighted average:

Weighted average = Individualweighted ratingIndividual weights

EBK PRINCIPLES OF OPERATIONS MANAGEMENT, Chapter 2, Problem 10P , additional homework tip  1

Excel Formula:

EBK PRINCIPLES OF OPERATIONS MANAGEMENT, Chapter 2, Problem 10P , additional homework tip  2

Calculation for Overnight Shipping:

Calculation of weighted rating:

The weighted rating is calculated by multiplying the individual rating with the weight assigned for each criterion.

Quality:

Weighted Rating for Quality = 5 × 90= 450

The weighted rating for Quality is 450.

Delivery:

Weighted Rating for Delivery = 3 × 70= 210

The weighted rating for Delivery is 210.

Cost:

Weighted Rating for Cost = 2 × 70= 140

The weighted rating for Cost is 140.

Calculation of weighted average:

The weighted average is calculated by dividing the summation of the individual weighted rating by the summation of the individual weights.

Weighted average = 450 + 210 + 1405 + 3 + 2=80010= 80

The weighted average for Overnight shipping is 80.

Calculation for Worldwide delivery:

Calculation of weighted rating:

The weighted rating is calculated by multiplying the individual rating with the weight assigned for each criterion.

Quality:

Weighted Rating for Quality = 5 × 80= 400

The weighted rating for Quality is 400.

Delivery:

Weighted Rating for Delivery = 3 × 85= 255

The weighted rating for Delivery is 255.

Cost:

Weighted Rating for Cost = 2 × 80= 160

The weighted rating for Cost is 160.

Calculation of weighted average:

The weighted average is calculated by dividing the summation of the individual weighted rating by the summation of the individual weights.

Weighted average = 400 + 255 + 1605 + 3 + 2=81510= 81.5

The weighted average for worldwide delivery is 81.5.

Calculation for United Freight:

Calculation of weighted rating:

The weighted rating is calculated by multiplying the individual rating with the weight assigned for each criterion.

Quality:

Weighted Rating for Quality = 5 × 75= 375

The weighted rating for Quality is 375.

Delivery:

Weighted Rating for Delivery = 3 × 70= 210

The weighted rating for Delivery is 210.

Cost:

Weighted Rating for Cost = 2 × 95= 190

The weighted rating for Cost is 190.

Calculation of weighted average:

The weighted average is calculated by dividing the summation of the individual weighted rating by the summation of the individual weights.

Weighted average = 375 + 210 + 1905 + 3 + 2=77510= 77.5

The weighted average for United Freight is 77.5.

The weighted average value for Overnight Shipping is 80. The weighted average value for worldwide delivery is 81.5. The weighted average value for united Freight is 77.5. The weighted average value is more for worldwide delivery (81.5 > 80, 77.5)

Hence, Garza should select worldwide delivery.

b)

Summary Introduction

To determine: The suitable outsourcing provider for logistics services using factor- rating method when the weights are changed.

Introduction:

Factor-rating method:

The factor-rating method is a quantitative approach to make a decision from various alternatives such that the decision is beneficial to the firm involved. This method is utilized to decide on new layout, new locations, best supplier, outsourcing providers etc.

b)

Expert Solution
Check Mark

Answer to Problem 10P

There is No Change.

Explanation of Solution

Given information:

Ratings of Logistics Providers
Criterion Weight Overnight Shipping Worldwide Delivery United Freight
Quality 10 90 80 75
Delivery 6 70 85 70
Cost 4 70 80 95

Weights = 1-10 (10 – Highest)

Ratings = 1-100 (100 – Highest)

Formula to calculate weighted rating:

Weighted Rating = Weight × rating

Formula to calculate weighted average:

Weighted average = Individualweighted ratingIndividual weights

EBK PRINCIPLES OF OPERATIONS MANAGEMENT, Chapter 2, Problem 10P , additional homework tip  3

Excel Formula:

EBK PRINCIPLES OF OPERATIONS MANAGEMENT, Chapter 2, Problem 10P , additional homework tip  4

Calculation for Overnight Shipping:

Calculation of weighted rating:

The weighted rating is calculated by multiplying the individual rating with the weight assigned for each criterion.

Quality:

Weighted Rating for Quality = 10 × 90= 900

The weighted rating for Quality is 900.

Delivery:

Weighted Rating for Delivery = 6 × 70= 420

The weighted rating for Delivery is 420.

Cost:

Weighted Rating for Cost = 4 × 70= 280

The weighted rating for Cost is 280.

Calculation of weighted average:

The weighted average is calculated by dividing the summation of the individual weighted rating by the summation of the individual weights.

Weighted average = 900 + 420 + 28010 + 6 + 4=160020= 80

The weighted average for Overnight shipping is 80.

Calculation for Worldwide delivery:

Calculation of weighted rating:

The weighted rating is calculated by multiplying the individual rating with the weight assigned for each criterion.

Quality:

Weighted Rating for Quality = 10 × 80= 800

The weighted rating for Quality is 800.

Delivery:

Weighted Rating for Delivery = 6 × 85= 510

The weighted rating for Delivery is 510.

Cost:

Weighted Rating for Cost = 4 × 80= 320

The weighted rating for Cost is 320.

Calculation of weighted average:

The weighted average is calculated by dividing the summation of the individual weighted rating by the summation of the individual weights.

Weighted average = 800 + 510 + 32010 + 6 + 4=163020= 81.5

The weighted average for worldwide delivery is 81.5.

Calculation for United Freight:

Calculation of weighted rating:

The weighted rating is calculated by multiplying the individual rating with the weight assigned for each criterion.

Quality:

Weighted Rating for Quality = 10 × 75= 750

The weighted rating for Quality is 750.

Delivery:

Weighted Rating for Delivery = 6 × 70= 420

The weighted rating for Delivery is 420.

Cost:

Weighted Rating for Cost = 4 × 95= 380

The weighted rating for Cost is 380.

Calculation of weighted average:

The weighted average is calculated by dividing the summation of the individual weighted rating by the summation of the individual weights.

Weighted average = 750 + 420 + 38010 + 6 + 4=155020= 77.5

The weighted average for United Freight is 77.5.

The weighted average value for Overnight Shipping is 80. The weighted average value for worldwide delivery is 81.5. The weighted average value for united Freight is 77.5. The weighted average value is more for worldwide delivery (81.5 > 80, 77.5)

There is no change in the result because there is no change made to the ratings. The weights were doubled without changes to any other parameter. Hence, there is no change in the conclusion attained in part (a).

Hence, there is No change.

c)

Summary Introduction

To determine: The suitable outsourcing provider for logistics services using factor- rating method when there is 10% increase in Overnight Shipping ratings.

Introduction:

Factor-rating method:

The factor-rating method is a quantitative approach to make a decision from various alternatives such that the decision is beneficial to the firm involved. This method is utilized to decide on new layout, new locations, best supplier, outsourcing providers etc.

c)

Expert Solution
Check Mark

Answer to Problem 10P

The best outsourcing provider is Overnight Shipping.

Explanation of Solution

Given information:

Ratings of Logistics Providers
Criterion Weight Overnight Shipping Worldwide Delivery United Freight
Quality 10 90 80 75
Delivery 6 70 85 70
Cost 4 70 80 95

Weights = 1-10 (10 – Highest)

Ratings = 1-100 (100 – Highest)

Formula to calculate weighted rating:

Weighted Rating = Weight × rating

Formula to calculate weighted average:

Weighted average = Individualweighted ratingIndividual weights

Formula to calculate 10% of Overnight Shipping ratings:

10% of overnight shipping = overnight shipping rating × 10100

Formula to calculate New Overnight Shipping rating:

New overnight shipping rating = 10% of overnight shipping rating + overnight shipping rating

EBK PRINCIPLES OF OPERATIONS MANAGEMENT, Chapter 2, Problem 10P , additional homework tip  5

Excel Formula:

EBK PRINCIPLES OF OPERATIONS MANAGEMENT, Chapter 2, Problem 10P , additional homework tip  6

Calculation of 10 % of Overnight Shipping ratings:

Quality:

10% of Quality = 90 × 10100=9

The 10% value of Quality is 9.

Delivery:

10% of Delivery = 70 × 10100=7

The 10% value of delivery is 7.

Cost:

10% of cost = 70 × 10100=7

The 10% value of cost is 7.

Calculation of New Overnight Shipping ratings:

Quality:

New Quality overnight shipping rating = 9 + 90= 99

The new quality overnight shipping rating is 99.

Delivery:

New Delivery overnight shipping rating = 7 + 70= 77

The new delivery overnight shipping rating is 77.

Cost:

New cost overnight shipping rating = 7 + 70= 77

The new cost overnight shipping rating is 77.

Calculation for Overnight Shipping:

Calculation of weighted rating:

The weighted rating is calculated by multiplying the individual rating with the weight assigned for each criterion.

Quality:

Weighted Rating for Quality = 5 × 99= 495

The weighted rating for Quality is 495.

Delivery:

Weighted Rating for Delivery = 3 × 77= 231

The weighted rating for Delivery is 231.

Cost:

Weighted Rating for Cost = 2 × 77= 154

The weighted rating for Cost is 154.

Calculation of weighted average:

The weighted average is calculated by dividing the summation of the individual weighted rating by the summation of the individual weights.

Weighted average = 495 + 231 + 1545 + 3 + 2=88010= 88

The weighted average for Overnight shipping is 88.

Calculation for Worldwide delivery:

Calculation of weighted rating:

The weighted rating is calculated by multiplying the individual rating with the weight assigned for each criterion.

Quality:

Weighted Rating for Quality = 5 × 80= 400

The weighted rating for Quality is 400.

Delivery:

Weighted Rating for Delivery = 3 × 85= 255

The weighted rating for Delivery is 255.

Cost:

Weighted Rating for Cost = 2 × 80= 160

The weighted rating for Cost is 160.

Calculation of weighted average:

The weighted average is calculated by dividing the summation of the individual weighted rating by the summation of the individual weights.

Weighted average = 400 + 255 + 1605 + 3 + 2=81510= 81.5

The weighted average for worldwide delivery is 81.5.

Calculation for United Freight:

Calculation of weighted rating:

The weighted rating is calculated by multiplying the individual rating with the weight assigned for each criterion.

Quality:

Weighted Rating for Quality = 5 × 75= 375

The weighted rating for Quality is 375.

Delivery:

Weighted Rating for Delivery = 3 × 70= 210

The weighted rating for Delivery is 210.

Cost:

Weighted Rating for Cost = 2 × 95= 190

The weighted rating for Cost is 190.

Calculation of weighted average:

The weighted average is calculated by dividing the summation of the individual weighted rating by the summation of the individual weights.

Weighted average = 375 + 210 + 1905 + 3 + 2=77510= 77.5

The weighted average for United Freight is 77.5.

The weighted average value for Overnight Shipping is 88. The weighted average value for worldwide delivery is 81.5. The weighted average value for united Freight is 77.5. The weighted average value is more for Overnight Shipping (88 > 81.5, 77.5)

Hence, Garza should select Overnight Shipping.

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