CASE STUDY

ABC is a manufacturer of home stereo systems. The company sells the products online in the
domestic market. ABC buys a premium speaker, which is an important component of the
systems, from a supplier. There are two delivery options for this component.

Option 1 Option 2

Weekly LTL delivery Twice per month FTL delivery

200 units 400 units

Cost: $2,400 per delivery Cost: $2,900 per delivery

Question 1: If you were a logistics manager of ABC, which delivery option would you
recommend for the purchased component?

Question 2: What other logistics issues and costs must ABC take into consideration when
making the transportation decision?

ABC is using three carriers for outbound transportation. The director wants to evaluate the
performance of the three carriers and collected data for the following metrics during the last
year.

Performance criteria Carrier 1 Carrier 2 Carrier 3

On-time delivery 99.5% 98.7% 98.2%

Loads with damage claims 0.9% 1.6% 0.4%

Customer satisfaction ratings 4.6 4.2 3.9

Billing accuracy 99.3% 99.6% 98.2%

Loads rejected 1.3% 2.1% 0.9%

1
The director asked his logistics manager to develop a scorecard to help compare the carriers
on these metrics. The logistics manager came up with the following chart:

Performance Weight Performance Potential score Actual score

criteria factor evaluation
On-time delivery 30 > 98.5% = 5 150
96.01 − 98.5% = 4
93 − 96% = 2
< 93% = 0
Loads with 30 < 0.5% = 5 150
damage claims 0.5 − 1% = 4
1.01 − 2% = 2
> 2% = 0
Customer 20 > 4.5 = 5 100
satisfaction ratings 4.01 − 4.5 = 4
3−4=2
<3=0
Billing accuracy 10 > 99% = 5 50
97.01 − 99% = 4
95 − 97% = 2
< 95% = 0
Loads rejected 10 < 1% = 5 50
1% − 2% = 4
2.01 − 3% = 2
> 3% = 0
Total score 500

Question 3: Calculate the performance score for each of the three carriers.
Question 4: Which carrier would you recommend that the director consider for elimination?
Why?
Question 5: If the director decides to keep all three carriers, what should each of them work
to improve?