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A Belt working in a supply chain environment has to make a decision to change suppliers of critical raw materials for a new product upgrade. The purchasing manager is depending on the Belt's effort requiring that the average cost of an internal critical raw material component be less than or equal to $3,800 in order to stay within budget. Using a sample of 38 first article components, a Mean of the new product upgrade price of $3,680, and a Standard Deviation of $120 was estimated. In order to increase the Long Term Z value to 5, what is the maximum long term variation in pricing the Belt can accept for his upgraded critical raw material component?
Suggested Answer: C
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24 comments · newest first
IL
Iluminada
3 days ago
I’d go with option B, $12.
BE
Beata
8 days ago
I feel pressured by the numbers.
SA
Samira
13 days ago
I think it’s about understanding Z values.
BE
Bernadine
19 days ago
This question is tricky.
MA
Madelyn
24 days ago
I’d go with $12 too, fits the budget.
FR
Franklyn
29 days ago
I agree, $6 is too low.
GI
Giuseppe
1 month ago
$24 seems too high for variation.
DA
Danilo
1 month ago
I feel like $12 makes sense.
MA
Marisha
1 month ago
I think it's about understanding Z values.
LA
Lavonne
2 months ago
This question is tricky.
LA
Lauran
2 months ago
Totally agree, $12 makes sense for stability!
RO
Rodolfo
2 months ago
Wait, can we really accept $48? That seems high!
MA
Marla
2 months ago
$6 seems too low for a long-term Z value of 5.
KI
Kimbery
2 months ago
I think the max variation should be $12.
NU
Nu
3 months ago
The average price is $3,680, so that's good!
CA
Carol
3 months ago
Not sure about this, $48 seems way too high for long-term pricing.
RH
Rhea
3 months ago
Definitely leaning towards option B, $12 is the sweet spot!
AA
Aaron
3 months ago
Wait, how do we even get to a Z value of 5? Sounds tricky.
AS
Ashanti
3 months ago
I think the max variation should be $12. Seems reasonable!
AL
Alaine
3 months ago
The average cost is $3,680, so we need to keep it under $3,800.
SK
Skye
4 months ago
I feel like I should be able to figure this out, but I can't recall the exact formula for determining the maximum variation. Is it based on the standard deviation?
CO
Cordelia
4 months ago
I think the Z value of 5 is really high, which might mean we can only accept a very small variation. But I'm not clear on how to calculate that.
TH
Thora
4 months ago
This feels similar to a practice question we did on supplier cost analysis. I think we need to calculate the acceptable variation based on the Z value.
EL
Eliseo
5 months ago
I remember something about Z-scores and how they relate to standard deviations, but I'm not sure how to apply it here.