Question

1. A Chicago-based manufacturer is looking for someone to handle its shipments to the West Coast. In order to evaluate potential transportation providers, the manufacturer has developed the following criteria.

At a minimum, a shipper must be able to:

• Pick up shipments in 10 hours or less from the time they are notified. (The manufacturer doesn’t have enough space for shipments to sit around at the dock.)
• Deliver shipments in 72 hours or less.

Beyond this, shippers will be evaluated according to cost and the percentage of shipments that arrive undamaged.

Three shippers – Big Ed, Ship-It-All, and Fed.P.S. – have put in bids for the business. The relevant performance information for the shippers is shown in the following chart:

	Big Ed	Ship-It-All	Fed.P.S.
Pickup time	5 hours	10 hours	12 hours
Shipping time	54 hours	72 hours	48 hours
Cost per 100 lb. shipment	$18	$28	$10
% of shipments that arrive undamaged	98%	95%	99%

1. Identify the orders winners and order qualifiers. Are there any firms who can be ruled out based on failing to meet the order qualifiers?        
2. Who is most likely to win the business? Why?
3. What is going on with Fed.P.S.? What does Fed.P.S. need to do in order to compete successfully for the business?
4. Comment on Ship-It-All’s competitive position. Does it meet the minimum requirements? Is it very competitive? Why or why not?

Answer 1

(a)

Order qualifiers are:

• Pickup time (must be <= 10 hrs.)
• Shipping time (must be <= 72 hrs.)

Order winners are:

• Cost of shipment
• Percentage of arrived undamaged shipments.

Fed. P.S. can be ruled out since the pickup time is more than 10 hrs.

(b)

Big Ed. will most likely win in that both the order winners i.e. cost and % undamaged is better than Ship-it-all.

(c)

Fed. P.S. has been able to deliver the order winners best compared to the other two firms. Unfortunately, it does not qualify as it fails to deliver the first order qualifier as per the specification. Since order winners cannot be considered before order qualifiers, Fed P.S. will fail to win the bid.

This company should only work to achieve the target pickup time of 10 hrs. from the present value of 12 hrs. This is will lead it to win the bid given that its position based on the two order winners is the best among the three firms.

(d)

Ship-it-all qualifies for comparison and competition since it has met the two minimum requirements of pickup and shipping time cut-off of 10 hrs. and 72 hrs. respectively.

However, it is not really competitive because of its position based on the order winners since both its cost per shipment figure and percentage undamaged figure is the worst among the three firms.