Practical Management Science
6th Edition
ISBN: 9781337406659
Author: WINSTON, Wayne L.
Publisher: Cengage,
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A company is considering three vendors for purchasing a CRM system: Delphi Inc., CRM International, and Murray Analytics. The costs of the system are expected to depend on the length of time required to implement the system, which depends on such factors as the amount of customization required, integration with legacy systems, resistance to change, and so on. Each vendor has different expertise in handling these things, which affect the cost. The costs (in millions of $) are shown below for short, medium, and long implementation durations. Use the Excel template Decision Analysis to identify what vendor to select.
| Decision Alternative | Short | Medium | Long |
| Delphi Inc. | $3.50 | $5.00 | $7.20 |
| CRM International | $4.25 | $4.95 | $6.55 |
| Murray Analytics | $4.00 | $4.70 | $6.90 |
Fill in the table below for maximum and minimum costs under each alternative. Carry out an analysis considering costs as negative numbers. Round your answers to the nearest cent.
| Decision Alternative | Maximum | Minimum |
| Delphi Inc. | $ | $ |
| CRM International | $ | $ |
| Murray Analytics | $ | $ |
Calculate the amounts foregone by not adopting the optimal course of action for each possible implementation duration. Determine the maximum opportunity cost for each alternative. Fill in the table below. If your answer is zero, enter "0". Round your answers to the nearest cent.
| Opportunity Loss Matrix | Future events | |||
| Decision Alternative | Short | Medium | Long | Maximum |
| Delphi Inc. | $ | $ | $ | $ |
| CRM International | $ | $ | $ | $ |
| Murray Analytics | $ | $ | $ | $ |
Conduct a decision analysis to evaluate the choice of a vendor.
The aggressive strategy (maximax) is to choose the
The conservative strategy (maximin) is to choose the
The opportunity loss strategy is to choose the
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