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Supply Sol
Supply Sol
= 25.14
4) (About coefficient of variation)
Garden Variety Flower Shop (GVFS) would like to source locally to support local
small businesses. It uses about 750 12-inch clay pots a month. There are two
competingsuppliers, Awesome and Bravo, both offer relatively good price and
service. Due to the production capacity limitation, the monthly supply each supplier
can offer various and is listed in the following table.
a) GVFS would like to establish a stable sourcing relationship with one of the
supplier, based on the coefficient of variation analysis of the supply. Which
supplier should GVFS choose?
b) Besides COV value, what other factors GVFS should consider in selecting a
supplier?
Month
Jan
Feb
Mar
Apr
May
Jun
Supplier Awesome
3000
2000
2500
2500
2500
1000
Supplier Bravo
750
1200
900
200
900
1000
Answer:
The following trade-offs are involved in the cases explained below:
a)
GVFS would like to establish a stable sourcing relationship with one of the supplier based on the
coefficient of variation analysis of the supply.
First, compute the coefficient of variation for supplier awesome and supplier bravo thei conclude
based on outcome.
The coefficient of variation for supplier awesome and supplier bravo is,
By using MINITAB software, find coefficient of variation help with the following steps:
1) Import the data.
2) Select Display Descriptive Statistics from Bask Statistics in Stat menu.
3) Select Variables.
Descriptive Statistics:
Supplier Awesome.
Supplier Bravo
Total
Variable
Count
CoefVar
Supplier Awesome
30.63
Supplier Bravo
41.24
From MINITAB output, the coefficient of variation for supplier awesome is 130.63 and supplier
bravo is 141.241
The supplier bravo should GVFS choose due to higher coefficient of variation which is 41.24
than supplier awesome coefficient of variation which is 30.63. .
b)
Besides coefficient of variation value, the standard deviation might be considers in selecting a
supplier.