Practical Operations Management
Practical Operations Management
2nd Edition
ISBN: 9781939297136
Author: Simpson
Publisher: HERCHER PUBLISHING,INCORPORATED
Question
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Chapter 9, Problem 24P

a.

Summary Introduction

Interpretation:

The company that has the lowest bid and the total cost of that bid.

Concept Introduction:

Under linear averaging method score of each tender will be result of sum of individual score in each category multiplied by corresponding category weight.

a.

Expert Solution
Check Mark

Explanation of Solution

Given information:

A tender invitation for a consulting project was sent and four companies have done the bidding as below-

    Junior consultant hourly rate ($)Hours provided by junior consultants (hr)Senior consultant hourly rate ($)Hours provided by senior consultants (hr)
    Company A301015010
    Company B35152506
    Company C40203002
    Company D40202004

Based on the bid provided four companies, total cost for all consulting hours is calculated as below-

    Junior consultant hourly rate ($)Hours provided by junior consultants (hr)Senior consultant hourly rate ($)Hours provided by senior consultants (hr)Total bid cost($)
    Company A301015010(30×10+150×10)=1800
    Company B35152506(35×15+250×6)=2025
    Company C40203002(40×20+300×2)=1400
    Company D40202004(40×20+200×4)=1600

Thus it is clear that the lowest bid is from company C and the bid amount is $1400 .

b.

Summary Introduction

Interpretation:

The company that will take the fewest hours to complete the work and the hours is may take.

Concept Introduction:

Under linear averaging method score of each tender will be result of sum of individual score in each category multiplied by corresponding category weight.

b.

Expert Solution
Check Mark

Explanation of Solution

Given information:

A tender invitation for a consulting project was sent and four companies have done the bidding as below-

    Junior consultant hourly rate ($)Hours provided by junior consultants (hr)Senior consultant hourly rate ($)Hours provided by senior consultants (hr)
    Company A301015010
    Company B35152506
    Company C40203002
    Company D40202004

Based on the bid provided four companies, total consulting hours is calculated as below-

    Junior consultant hourly rate ($)Hours provided by junior consultants (hr)Senior consultant hourly rate ($)Hours provided by senior consultants (hr)Total consulting hours
    Company A30101501010+10=20
    Company B3515250615+6=21
    Company C4020300220+2=22
    Company D4020200420+4=24

Thus it is clear that the company A will take least time of 20 hours to complete the work.

c.

Summary Introduction

Interpretation:

Price score and quality score of the bid based on stated specification.

Concept Introduction:

Under linear averaging method score of each tender will be result of sum of individual score in each category multiplied by corresponding category weight.

c.

Expert Solution
Check Mark

Explanation of Solution

Given information:

A tender invitation for a consulting project was sent and four companies have done the bidding as below-

    Junior consultant hourly rate ($)Hours provided by junior consultants (hr)Senior consultant hourly rate ($)Hours provided by senior consultants (hr)
    Company A301015010
    Company B35152506
    Company C40203002
    Company D40202004

For calculation of price score, each company is awarded 100 points initially and then penalized 1 point for every $25 their price exceeds the lowest bid.

For calculation of quality score, the proportion of hours provided by senior consultant is multiplied by 100 (rounded to the nearest integer).

Based on the bid provided four companies, total cost for all consulting hours is calculated as below-

    Junior consultant hourly rate ($)Hours provided by junior consultants (hr)Senior consultant hourly rate ($)Hours provided by senior consultants (hr)Total bid cost($)
    Company A301015010(30×10+150×10)=1800
    Company B35152506(35×15+250×6)=2025
    Company C40203002(40×20+300×2)=1400
    Company D40202004(40×20+200×4)=1600

Thus it is clear that the lowest bid is from company C and the bid amount is $1400 .

For calculation of price score, each company is awarded 100 points initially and then penalized 1 point for every $25 their price exceeds the lowest bid. The price score is calculated as below-

    Total bid cost($)Difference with lowest bid($)Penalty for price score Price score
    Company A180040040025=16(10016)=84
    Company B202562562525=25(10025)=75
    Company C140000100
    Company D160020020025=8(1008)=92

For calculation of quality score, the proportion of hours provided by senior consultant is multiplied by 100 (rounded to the nearest integer).

    Hours provided by junior consultants (hr)Hours provided by senior consultants (hr)Proportion of hours provided by senior consultantQuality score
    Company A10101010=11×100=100
    Company B156615=0.40.4×100=40
    Company C202220=0.10.1×100=10
    Company D204420=0.20.2×100=20

Hence company B has worst price score of 75 and company C has worst quality score of 10 .

d.

Summary Introduction

Interpretation:

The company that would win the bid based 70% weightage of price and 30% weightage of quality.

Concept Introduction:

Under linear averaging method score of each tender will be result of sum of individual score in each category multiplied by corresponding category weight.

d.

Expert Solution
Check Mark

Explanation of Solution

Given information:

A tender invitation for a consulting project was sent and four companies have done the bidding as below-

    Junior consultant hourly rate ($)Hours provided by junior consultants (hr)Senior consultant hourly rate ($)Hours provided by senior consultants (hr)
    Company A301015010
    Company B35152506
    Company C40203002
    Company D40202004

For calculation of price score, each company is awarded 100 points initially and then penalized 1 point for every $25 their price exceeds the lowest bid.

For calculation of quality score, the proportion of hours provided by senior consultant is multiplied by 100 (rounded to the nearest integer).

For finalizing the contract 70% weightage is given to price score and 30% weightage is given to quality score. Based on the bid provided four companies and method used for calculation of price score and quality, below table is calculated:

    Price scoreQuality scoreWeighted average score
    Company A84100(84×0.70+100×0.30)=88.8
    Company B7540(75×0.70+40×0.30)=64.5
    Company C10010(100×0.70+10×0.30)=73
    Company D9220(92×0.70+20×0.30)=70.4

Hence, company A has highest weighted average score and should be awarded with the contract.

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