EBK PRINCIPLES OF OPERATIONS MANAGEMENT
EBK PRINCIPLES OF OPERATIONS MANAGEMENT
10th Edition
ISBN: 8220102744059
Author: HEIZER
Publisher: PEARSON
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Chapter 2, Problem 12P
Summary Introduction

To determine: The range of values for ‘w’ such that Company C is a recommended outsourcing provider 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.

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Rao Technologies, a California-based high-tech manufacturer, is considering outsourcing some of its electronics p roduction. Four firms have responded to its request for bids, andCEO Mohan Rao has started to perform an analysis on the scores his OM team has entered in the table below.                                                                                                                                             Weights are on a scale from 1 through 30, and the outsourcing provider scores are on a scale of 1 through 5. The weight for the labor fac tor is shown as a w because Rao's OM team cannot agree on a value for this weight. For what range of values of w, if any, iscompany C a recommended outsourcing provider, according to the factor-rating method?
Rayyan manufacturing company is trying to decide whether to make-or-buy an accessory item for one of their products. It is projected that this item will sell for $14 each. If the item is outsourced, there is virtually no cost other than the $10 per unit that they would pay their supplier. Internally, they have a choice of making a process to produce the item which requires an investment of $300,000 for design and equipment, but results in a $9 per unit cost. Regardless of whether the item is outsourced or produced internally, there is a 60% chance that they will sell 250,000 units, and a 40% chance that they will sell 150,000 units.
Rao Technologies, a California-based high-tech manufacturer, is considering outsourcing some of its electronics production. Four firms have responded to its request for bids, and CEO Mohan Rao has started to perform an analysis on the scores his OM team has entered in the table below.  Click icon to view the table*   More Info* selection criterion          weight   A  B   C   D  labor                                   w      2  1  3  5  quality procedures             30      3  4  5  1 logistics system                  5        4  3  3  5 price                                   25       3  5 4  4 trust worthiness                  5        4  5  3  4 technology in place            15      4  5  4  3 management team             15      5  5  2  3 Weights are on a scale from 1 through 30, and the outsourcing provider scores are on a scale of 1 through 5. The weight for the labor factor is shown as a w because Rao's OM team cannot agree on a value for this weight.  In the following table,…
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