I30-77

Question

The company’s CEO has established the following guidelines for approving new equipment vendors:
 
1. The vendor must have minimum assets of $1.5 million.
 
2. The vendor must purchase electrical components from either ABB or Schneider.
 
3. The vendor must have at least 5 years of experience in the industry.
 
4. The vendor must provide at least two client references from Fortune 500 companies.The company is evaluating four vendors for an upcoming equipment purchase. The table below shows each vendor’s quoted price for the equipment, shipping cost, and the cost of spare parts to be purchased with the equipment.
    Vendor    Equipment Price    Shipping Cost    Spare Parts Cost       Vendor A   $510,000    $10,000    $25,000       Vendor B   $470,000    $30,000    $20,000       Vendor C   $515,000    $15,000    $20,000       Vendor D   $490,000    $20,000    $23,000To ensure compliance with company policy, the team reviewed each vendor against the CEO’s guidelines. The table below summarizes each vendor’s qualifications.
    Vendor    Assets (in $M)    Electrical Supplier   Experience   Fortune 500 Ref.      Vendor A   50    ABB    10 years   3      Vendor B   20   ABB   7 years   1      Vendor C   10   Schneider    5 years   2      Vendor D   12   Rio Motors   8 years   3

Bunuel · Answer

Official Solution:

• Considering both the CEO’s guidelines and total project cost, Vendor A should be selected. 
 
Vendor A and Vendor C are the only vendors that meet all CEO guidelines. Vendor A's total cost is $545,000, while Vendor C's is $550,000.
 
Since Vendor A is both eligible and cheaper, it should be selected. Answer: True.
 
 • Vendor A has the lowest shipping-to-equipment price ratio. 
 
We need the lowest shipping-to-equipment price ratio. A has the lowest shipping cost (numerator) and the second highest equipment price (denominator) after C. So, C is the only contender. A's shipping-to-equipment price ratio is 10,000 / 510,000 ≈ 0.0196. C's shipping-to-equipment price ratio is 15,000 / 515,000 ≈ 0.0291. A's ratio is lower. Answer: True.
 
 • Two vendors do not satisfy the CEO’s electrical supplier requirement. 
 
Only Vendor D uses an unapproved supplier (Rio Motors). Vendors A, B, and C use ABB or Schneider, as required. Answer: False.

Correct answer:

Considering both the CEO’s guidelines and total project cost, Vendor A should be selected.  "True"

Vendor A has the lowest shipping-to-equipment price ratio.  "True"

Two vendors do not satisfy the CEO’s electrical supplier requirement.  "False"

kdipayan · Answer

One of the eligibility criteria is also that "The vendor must provide at least two client references from Fortune 500 companies."
Vendor B provides only 1 reference. Hence B also disqualifies.
Hence, 
Two vendors do not satisfy the CEO’s electrical supplier requirement is True

Bunuel · Answer

Read more carefully. The statement refers only to the electrical supplier requirement, not overall eligibility. Vendor B fails the Fortune 500 references rule, but ABB is an approved supplier. Only Vendor D uses an unapproved supplier, so the statement is False.

Abhi310 · Answer

Bunuel

I marked False for first, as was not able to understand where is the total project cost given. Do we have to consider it based on the left 2 vendors, if thats the case then I think it should be mentioned that budget was XXX or something else. Is just assuming that the lowest should be selected right?? Also I think should if replaced with 'would' might be true.

Bunuel · Answer

Total project cost is right there in the cost table: equipment + shipping + spare parts.

First apply CEO rules: only A and C qualify.
 
Then compare total cost of A and C: A = 545,000 and C = 550,000, so A is cheaper and should be picked. No extra budget assumption.
 
“Should” is fine here, because given those rules and costs, A is the logically correct choice.

nobodyaal · Answer

The whole question does signify the importance of cost in the decision making process of selecting a vendor anywhere. It is not present in the guidelines either. Hence we dont have enough information and it should then be false right? Yes, logically we look at cost for stuff but cost being a constraint or a factor is never mentioned in the query. CEO has 2 choices based on his guidelines, so how can we select one based on cost?

Bunuel · Answer

The statement literally says ‘considering both the CEO’s guidelines  and total project cost .’

SiddhantSarkar · Answer

"Select    True    if it can be concluded from the information provided. Otherwise, select    False   ." - Doesn't this mean that we're looking for data sufficiency? As long as we have enough data to determine the accuracy of the statements, the option we select here should be true right? Whether the statements themselves are true or false are besides the point, similar to data sufficiency questions.

Bunuel · Answer

Select True only if the statement must be true based on the provided info.

If it is contradicted or not provable either way, select False.

I30-77

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Vendor	Equipment Price	Shipping Cost	Spare Parts Cost
Vendor A	$510,000	$10,000	$25,000
Vendor B	$470,000	$30,000	$20,000
Vendor C	$515,000	$15,000	$20,000
Vendor D	$490,000	$20,000	$23,000

Vendor	Assets (in $M)	Electrical Supplier	Experience	Fortune 500 Ref.
Vendor A	50	ABB	10 years	3
Vendor B	20	ABB	7 years	1
Vendor C	10	Schneider	5 years	2
Vendor D	12	Rio Motors	8 years	3

True	False
		Considering both the CEO’s guidelines and total project cost, Vendor A should be selected.
		Vendor A has the lowest shipping-to-equipment price ratio.
		Two vendors do not satisfy the CEO’s electrical supplier requirement.