Question

Perfect Order Performance Example:

--> Suppose a firm, in discussions with customers, learns that customers identify eight factors that they evaluate for every order they receive from suppliers. The firm then finds that its performance is 95 percent on six of these factors and 92 percent on the other two factors. What is the firm's probable perfect order performance?

Answer 1

The firm's probable perfect order performance is calculated by multiplying the performance rates for eight factors, converting the percentages to decimals, and then combining these values. After doing the math, the firm's perfect order performance is 62.25%.

Step-by-step explanation:

To calculate the perfect order performance for a firm that has identified eight customer-evaluated factors, we need to multiply the performance rates of all eight factors together. In this case, the firm performs at 95% on six factors and 92% on the remaining two factors. A step-by-step calculation would involve multiplying these percentages in decimal form:

• First, convert the percentage performance rates to decimals: 95% becomes 0.95 and 92% becomes 0.92.
• Next, multiply the performance rates for the six factors: 0.95 × 0.95 × 0.95 × 0.95 × 0.95 × 0.95.
• Then, multiply the performance rates for the other two factors: 0.92 × 0.92.
• Finally, combine these calculations together for all eight factors: (0.95^6) × (0.92^2).

Carrying out this multiplication gives us (0.95^6) × (0.92^2) = 0.735 × 0.8464 = 0.6225 or 62.25%. Therefore, the firm's probable perfect order performance is 62.25%.