United States and New England

1. What are the advantages of basing a supplier’s overall evaluation on its lowest performance on one of the five dimensions (Quality, Delivery, Cost Management,  54 Part 2 Supply Issues

Technical Support and Wavelength)? What are the disadvantages? Overall, do you think that basing a supplier’s overall evaluation on its lowest performance on one dimension is a good idea or not? Why or why not? 2. Develop importance weights for the five supplier rating dimensions shown in Table 1. Should these weights be equal? Briefly explain the basis for these weights. 3. Develop a weighted-point system for evaluating Heartland & Company bearings suppliers. Please keep in mind that (a) the sum of these five weighted dimensions must add to 100 points, and (b) Heartland & Company has the current goals of developing long-term relationships with suppliers and generating cost reductions. 4. Make a case for paying a price premium that favors a higher overall rated supplier, such as New England Works. Make a case for not granting a price premium for a higher-rated supplier.

Which would you recommend? Why? 5. Assume that Heartland & Company is considering paying a price premium to the more highly rated supplier (New England Works) in this year’s buy of part #B02326620. If the only two suppliers quoting on this part are New England Works and Midwest Bearings, what percentage premium (over the lower price) would you recommend? Justify your response. 6. Should Heartland & Company single source with New England or with Midwest? Or should they divide the business between the two? Briefly explain your rationale. 7. Assume that Heartland & Company has decided to divide the purchase of part #02326620 between New England Works and Midwest Bearings. What percentage would you recommend be bought from each? Briefly explain your rationale. 8. Heartland & Company (a) places a high priority on developing long-term relation- ships with suppliers that meet its goals and (b) pursues an aggressive program of annual cost reduction. If you were Mr. Walsh, what guidance would you give to Olivia regarding how these goals should be treated? Briefly explain your rationale for the guidance you gave.