Mars Incorporated Online Procurement Case Study Solution
Cost Minimizing Function:
The attached excel work sheet is showing the calculations of the function process to which I have performed the liner modeling in order to find the cost minimization model, whose benchmark has been provided in the case. After generating and filling the cells of different variables; the liner modeling through using the solver function has been applied in excel, which concluded that the minimal costs for the procurement of the materials would be around 4,639 United States dollars. The decision variable is depending upon the unit cost that would be determined by the optimal combination of bids. The objective function is:
Objective Function = 1000 x1 + 2500 x2 + 4000 x3 + 800 x4 + 1500 x5 + 2500 x6 + 400 x7 + 750 x8 + 1200 x9 + 100 x10 + 100 x11 + 50 x12
Bid Winners using Optimization Function:
As portrayed beforehand that the offers were detailed for this bartering. The first was that on account of a tie, the main bidder would be considered as the victor. This necessity could be met by the administration, by recognizing the particular amounts that every bidder of the organization is happy to supply through the advancement issue. For instance, let’s suppose that there are two providers. The principal provider has presented an offer of $120 for things A, B and C and the subsequent provider has presented an offer of $ 50 for thing A.
Hence, in view of the victor assurance criteria, the principal provider would be picked. The purpose behind this would be that all the three things would be provided by this provider. Alongside this, another straightforward strategy to recognize who presented the main offer is to put a particular numeric time stamp on each of the offer.
Mars Type Combinatorial Auction:
Truly, the combinatorial closeout can be worked without the utilization of advancement. The explanation is its proficient application that grants numerous things that have advantageous qualities to be sold simultaneously, and licenses bidders to make offers on various blends. It is the best framework to date, that can be utilized to accomplish the acquirement objectives of the organization and invigorate every merchant offering.
Combinatorial closeout of Mars is the blend of various classes of sale and furthermore incorporates the standard invert sale and round sequenced sell off. It benefits both the counter parties, for example the buyer and the provider, and it additionally reacts in improving the financial effectiveness. In any case, there is a vast variety of issues, including the figuring and time skylines to be looked by the association.
The computational difficulties being faced by the organization incorporate the getting of offers when all is said in done frame, and not in the joined structure. The subsequent issue is related with the administration of Mars,which is the constrained time frame to choose among all offers. In any case, it is simple here on account of just 12 offers, yet it can make a serious issue if there is an occurrence of commercialization.
Conclusion:
After analyzing all the costs and benefit analysis of the case; it has been concluded that the company is competing in highly competitive market, in which the presence of customers is based on their loyalty towards the product. The loyalty factor is based on the good quality at low price.If the quality of the provided product will delight the customer, then they will create the buzz for the product as well as for the company.
But in this case study, it has been found that the competitors are gaining 5 percent saving through online procurement process, which is saving the cost for competitor’s ultimately high profits and more expansion strategies are observed. By using this online procurement auction, the competitors are gaining the pricing advantage over their competitor’s pricing strategies. So, the company should consider reducing its material cost by implementing the online procurement process for purchasing the materials in order to manufacture wine cases to fulfill the demands of their loyal customers……….
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