Reference no: EM132253737

In June 2002, Linda Wang, procurement specialist for Pegasus Technologies, Phoenix, Arizona, and three teammates were responsible for recommending which of four potential suppliers should receive a purchase order for the next year’s requirement of 8-inch touch-screen color LCD panels. The panels were expected to be of exceptional quality, with extra high resolution. Pegasus was recognized as a leading manufacturer of several lines of handheld pallet style computers. The touch-screen capability enables a user to work with the computer without a mouse or keyboard. The latest in this line of products was the PT 9000, a high-quality computer with a 3-gigahertz processor, 200 megabyte hard-drive, and an optional removable DVD writer. The PT 9000 was designed for industry use in harsh climates. In its nearly three years of operation, Pegasus had grown from a single product manufacturer with annual sales of around $250,000 to a multiproduct $5 billion firm. The company has always had a reputation for high quality. Funds have never been compromised where research and development is concerned. Pegasus intended to buy the touch-screen from one of the four potential suppliers. It was estimated that the demand for the next year would be in the region of 1 million monitors. Forecasts indicated that this demand was expected to grow at an annual rate of 20 percent over the next three years. In order to maintain a uniform quality, the company policy was to use a single source of supply as far as possible. In determining the supplier for the touch-screen, Linda was assisted by the following persons, who brought a varied line of expertise to the source-selection team: •Arno Berg, the senior engineer, had been with the company for fourteen years and currently was its R&D chief. He held an engineering degree from a Norwegian university and an M.B.A. from the University of San Diego. •Kevin Rice, financial analyst, had recently joined Pegasus after moving from Los Angeles, where he worked for three years with Pasadena Financial Corporation. He held an M.B.A. from UCLA. •John Harper, quality assurance, had been with the company for eight years. He had an engineering degree from MIT and had a reputation for being a very tough man when quality was in question.

The responsibilities of the team included:

1. Identifying potential suppliers.

2. Preparing a brief comparative statement of the key suppliers.

3. Developing a brief analysis of each potential supplier.

4. Recommending the supplier with whom the order should be placed. This recommendation was to be made to a corporate-level review board.