3)
In order to determine quality, we need to consider their Cpk values. That is done by
Cpk = min (CpU, CpL)
CpU = (USL – mean)/3σ
CpL = (mean - LSL)/3σ
Then we need to consider their costs of holding the safety stock.
The formula for safety stock with variable demand is
SS = z*σ*sqrt(L)
z = 1.64 for 95% confidence
σ = Std Dev of lead time demand
L = Lead time
Using these formulas the calculated values are
Vendor | A | B | C | D |
Price/unit | 15 | 15.45 | 16.3 | 14.6 |
X_bar | 2.504 | 2.497 | 2.498 | 2.506 |
σ | 0.0125 | 0.0115 | 0.011 | 0.012 |
Leadtime | 18 | 14 | 10 | 20 |
Std Dev | 5 | 5 | 3 | 10 |
USL | 2.55 | |||
LSL | 2.45 | |||
CpU | 1.226667 | 1.536232 | 1.575758 | 1.222222 |
CpL | 1.44 | 1.362319 | 1.454545 | 1.555556 |
Cpk | 1.226667 | 1.362319 | 1.454545 | 1.222222 |
SS | 34.89261 | 30.77239 | 15.60445 | 73.56009 |
Based on these calculation we can see that the highest Cpk and lowest Safety stock requirement is with vendor C. As a result, we will choose vendor C.
3) You are tasked with selecting the suppler for a new part from four possible venders A, B, C, and D. You have data related to quality, price and delivery terms. Assuming each of these three asp...
1.) You are tasked with selecting the suppler for a new part from four possible venders A, B, C, and D. You have data related to quality, price and delivery terms. Assuming each of these three aspects equally weighted by your purchasing organization, which supplier would you choose given the following information? The critical part dimension for the quality data has a specification of 2.5±0.05 cm; and daily demand of 25, with a daily standard deviation of 30 units; 365...