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Best in Market Pricing

What is Best in Market Pricing ?. An extension of parametric modeling for negotiating lowest pricing for a statement of work consisting of many items assessing a supplier's market position in absence of competitive bids A mathematical model which simulates the competitive bid process

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Best in Market Pricing

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Presentation Transcript

    1. Best in Market Pricing

    2. What is Best in Market Pricing ?

    3. Why is Best in Market Pricing Needed ?

    4. Mathematical equations used to predict the prices of parts as a function of one or more of their attributes. An Extension of Parametric Models

    5. How Are Parametric Models Developed ? Samples of price data are drawn from a population Prices are regressed against part attributes to identify equations that explain the pricing variation Equations are used to predict the prices of remaining parts Boeing does not have visibility of a suppliers cost data, nor is it particularly concerned with this (at least at a final procurement level). What is important is the price of the hardware compared to other like hardware. If you have a list of prices for a certain group of parts listed in order of lowest price to highest, you do not have any indication of which part is a better value. Parametrics enables the normalization of these prices on a common scale of the technical characteristics shared by the parts which allows the determination of which parts are a better value than another. Boeing does not have visibility of a suppliers cost data, nor is it particularly concerned with this (at least at a final procurement level). What is important is the price of the hardware compared to other like hardware. If you have a list of prices for a certain group of parts listed in order of lowest price to highest, you do not have any indication of which part is a better value. Parametrics enables the normalization of these prices on a common scale of the technical characteristics shared by the parts which allows the determination of which parts are a better value than another.

    6. Parametrics Used to Predict Market Prices

    7. Best in Market Pricing Sets the Negotiation Range

    8. Similar to Best-in-Class (BIC) Method

    12. How Best in Market Price is Determined

    13. Normal Distribution is Assumed for Predictions

    15. Forming Similar Mega-Parts

    16. Distribution of Total Market $s.

    18. Basics behind Order Statistics

    19. Applying Order Statistics to Best in Market Pricing

    20. Applying Order Statistics to Best in Market Pricing

    21. Distribution of Lowest $s in Sample

    23. Comparison of Lowest $s to Normal Distribution

    24. Computing Negotiation Range for Lowest $...

    25. Computing Negotiation Range for Lowest $...

    26. Computing Negotiation Range for Lowest $...

    27. Applying Best in Market Pricing

    28. An Example Statement of Work

    29. Verify Estimates of Cost Passengers

    30. A Single Part Number Case Study

    31. Analyzing the Resulting RFIs for Outliers

    32. Comparison of RFI Data to Parametrics

    33. Important Best in Market Price Considerations

    34. Best in Market Price Summary

    35. QUESTIONS & ANSWERS This presentation covers a lot of ground and is intended as a primer on the statistical foundation underlying parametric analysis. A good analyst will have to do their own more in-depth study of regression model building. Even so, are there any questions about any of the concepts or examples used in this presentation? Do you feel like you generally understand what makes parametrics work? This presentation covers a lot of ground and is intended as a primer on the statistical foundation underlying parametric analysis. A good analyst will have to do their own more in-depth study of regression model building. Even so, are there any questions about any of the concepts or examples used in this presentation? Do you feel like you generally understand what makes parametrics work?

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