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Decision Analysis Exercise

Decision Analysis Exercise.

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Decision Analysis Exercise

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  1. Decision Analysis Exercise Your decision is whether or not to conduct a final system level factory test on a ground based radar or repair/replace the bad units in the field. The production line has been restarted to make 500 additional radars. Historically, the failure rate in the field has been 4% for units delivered without the final system level test. The cost to perform the final system test is $10,000 per radar. Unfortunately, test procedures require some disassembly and each radar tested will have to undergo some amount of rework. The cost to reassemble/reinstall each radar that passes the test has averaged $2,000. The cost to repair a radar which has failed final factory test is $23,000. Once in the field the total cost associated with repairing a defective radar is $350,000 per radar. Should you conduct 100% testing on the radars in the factory or accept the 4% failure in the field? Assume the customer is concerned with low cost.

  2. Evaluate Subcontractor Risks Evaluate Risk Handling Options Program Requirements Assess Risks Establish Cost Schedule/ Perf Impacts Manage Risks Evaluate Subcontractor Risks Identify Key Procurements Needed Prepare Request For Proposals (RFP’s) Negotiate Risk Abatement Items Into Contract Select Sub- contractors Conduct Workshops Identify Potential Subcontractors

  3. Risk Analysis in the SupplierSelection Process • Provides Good Way to Discriminate Between Suppliers When Several Are Technically Acceptable • Prevents “Low Ball” Cost Proposal from Being Sure Selection • Provides Structural Guide for Product Manager to Keep from Overlooking Potential Problem Areas • Provides Risk-Issue Profile of Winning Supplier for Management and Contract Negotiation Purposes • F-16 SPO Has Complemented Risk Analysis Aspect of Source Selections Presented to Them • Suppliers Feel They Have Been Thoroughly and Fairly Evaluated • Provides Substantial Source Selection Justification in the Event of a Protest

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