Executive Summary Assignment

To be completed in Teams

Your objective in this assignment is to understand cost modeling for supplier selection and improvement by walking through the scenario/data described in the case Whirlpool Corporation Global Procurement, which can be found in your course packet. You should submit your assignment in electronic form via Blackboard/Assignment. A sample of Executive Summary can be found at the end of the course syllabus.

Your assignment:  You should submit a one-page, executive summary outlining a framework that could help Whirlpool to identify the main cost drivers of their suppliers. You should submit a single document in Word or PDF. You may use exhibits as appendix for your report beyond the one-page limit (If you present figures or diagrams in the exhibits, you should clearly explain the key idea you want to demonstrate from them. If you want to present a table involving computation, you should provide clear description of the calculation conducted.) Your conclusion should be supported by both quantitative and qualitative analysis. You should also comment on what are the potential gaps in your analysis (e.g., what data might be missing to complete the picture).  Before you start working on the data provided, you may want to review linear regression from Statistics class. You should consider the following questions:

1. What is the purpose of cost modeling and why Whirlpool should care about cost modeling in procurement?

2. Take the compressor data (Exhibit 3) for your analysis.  

a. What are the cost drivers for compressor?

b. How you think the cost drivers are related? You should conduct a correlation analysis using the data to understand how various factors listed in Exhibit 3 are correlated.

c. How would you go about predicting the supplier price of a compressor? This requires that you set up a regression model. You should identify the dependent variable and the independent variable (and explain how you choose the independent variables), run the regression, and may be adjust your choice independent variables based on the regression result. The regression equation gives you a model for prediction.

d. From your regression analysis, which drivers do you think are the most “significant” (in statistical sense) for prediction? And which drivers do you think are the most “important” for prediction?

e. What insights can you derive from your analysis? For example, how would you use your analysis to identify that the supply price for a certain compressor is high than it should be?

3. How you suggest Whirlpool to use your model for supplier evaluation and supplier improvement?

Assessment: Your report will be assessed along the following dimensions

· Appropriate use of concepts in analyzing the aspects described in the above questions

· Clear logic in arguments to support the recommendation

· Readability:

o The report should be self-contained. That is, the reader does not need to refer to a different source to understand the statements in your report.

o An organized discussion flow that allow the reader to follow your thought process. You should summarize your thoughts in sections with a clear structure. An example can be, but not restricted to: 1. Problem Description (describe the problem, the key issues or challenges), 2. Key Aspects and Trade-offs (describe the cost driver that should be considered and how they are related), 3. Rationale of the Modeling Approach (discuss how you conduct the regression and the key observations from the analysis), 4. Recommendation (discuss what would you recommend for supplier assessment and improvement, you should also talk about potential risks involved)

o If you use a second-hand source to support your opinion, you should provide proper references in exhibits to avoid plagiarism.  

o No typos or grammatic mistakes.