Reference no: EM131267538
Problem Set 1 -
General Situation: Your international firm has decided to do a major procurement of a multi-million dollar automations system that will be used as an integral component in the production of small autos. This will be a turn-key operation in which the winning vendor will operate the system for 10 years before it will then be put up for a re-compete. It is now soliciting bids from automation firms that would like to win the procurement. In exploring this procurement with potential vendors during an open session, several of the vendors requested that your firm provide some more definitive information of how their bids will be evaluated. You have already shared the basic information processing and transmission requirements that the new automation system must be able to support. However, the bidding vendors would like specifics of how their proposals will be evaluated.
Model: In response to their request you advise that you will be using a systems approach to evaluate the proposals, specifically using the Multi-Factor Evaluation Process. The four primary criteria will be Technical, Networking, Cost, and Management. Technical will be evaluated based on the sub-criteria of Hardware, Software, Time Trials, and System Integration. Cost will be based on the Initial One-time Cost and the annual cost to run the system for the next 10 years; Networking will be based on Speed and Accuracy; lastly, management will be based on Experience, Responsiveness and Professionalism.
Criteria and Sub-criteria weights: You elect to keep the weights proprietary. This is to add some uncertainty to the procurement and also to keep them from gaming the system.
Proposals: Two system integration vendors elect to bid on your proposal. You organize a source selection evaluation board (SSEB) to evaluate the two proposals.
Their scores on the respective sub-criteria are shown below along with the weights for each criteria and sub-criteria.
Criteria Weightsare: Technical (.3); Cost (.3); System (.2); Management (.2)
Sub-criteria Weightsare: Technical - Hardware (.2); Software (.3); Integration of components (.2); Time Trials (.3)
Cost - One Time Purchase (.4) ; Annual cost for each of the 10 years (.6)
System - Speed (.4); Accuracy (.3); Reliability (.3);
Management - Experience (.3); Responsiveness (.4); Professionalism (.3)
Requirements:
(a) Use the MFEP to evaluate the two proposals using the scores provided to you from the SSEB (below);
(b) Advise and explain whether or not it is a robust or sensitive solution; and (c) if it is a sensitive solution, then what qualitative factors would you recommend be considered before a final decision is made. Ensure that you show all work so that if you make a math error, you can receive partial credit for your work (i.e. ensure that you have an audit trail with steps so that I can see what you have done clearly).
Scores from the SSEB Vendor A Vendor B
Hardware 90 80
Software 80 80
Systems Integration 80 90
Time Trials 80 90
One time purchase cost 80 90
Annual Cost 90 95
Speed 70 80
Accuracy 80 80
Reliability 90 85
Experience 95 90
Responsiveness 95 90
Professionalism 80 90
Problem Set 2 -
Current Situation: You are the CEO of Cadbury Mondelez. You have 9 % of the soft drink market. However, you are in a tough market with the duopoly of Pepsi and Coca-Cola. The stockholders are restless as your current soft drinks seem to be losing ground. You need a new successful product within 4 years or face a strategic decision by Kraft which could divest the soft drink business. You ask your best R&D engineers for proposals that will reverse this negative trend. You have only enough resources in the firm to field only one of the following received proposals:
Proposal A: This involves developing a completely new, innovative soft drink that would take two years to field the new product at a cost of $500m. The best estimate for the probability of success against Pepsi and Cokefor this product is .6. It is assumed that if this product is fielded it will meet all the Strategic and Financial objectives of the firm. However, the consequence of failure is estimated to be .8 due to the complexity and high cost of development.
Proposal B: This involves a slightly less aggressive development and the most advanced chemistry currently available. It would only take one year to field the product and it has an estimated probability of success of .5. The consequence of failure is estimated to be .6.
Proposal C: This is a modest proposal using available chemistry and development similar to Coke. It would also take two years to field; the probability of failure is .6. The consequence of failure is estimated at .65
Which proposal would you choose using risk management methods and why? Show all work.
Problem Set 3 -
In a firm management and labor are engaged in intense negotiations. Labor has threatened a long and costly strike if their demands are not met by 12:00 Friday evening on December 5th. The strike has the potential to do long, lasting damage to the company as well as to reduce profits by 20% in this year alone. Also, giving in to Labor's demands will result in major increases in expenses resulting in a 10% reduction in annual revenue going forward. Concerning labor, members of the union will see their wages cut in half as they would only be drawing on the labor strike fund. Also of note is that this labor strike fund could also be totally depleted if the strike drags on more than one month. However, if Labor caves, it sacrifices a major loss of face among the rank and file, as well as the loss of leverage in future negotiations.
What would be the best way to resolve this dilemma? Cite the Game Theory used and show all work.
Problem Set 4 -
Solve the following Lanchester Problem for a Red and Blue firm:
Initial Blue workers = 7000; Initial Red workers = 4000; E = 1.2
a. Who should win and with what number of surviving workers?
b. What must the value of E be for the other side to win? (Show all work).