ISM CORE Exam With Confidence Using Practice Dumps

To determine the most cost-effective packaging option, we need to consider both the cost per packaging unit and the projected breakage ratio. Here are the calculations:

For 0.50 mm packaging:

Cost per unit: $1.00

Breakage ratio: 0.50%

Effective cost considering breakage: $1.00 * (1 + 0.005) = $1.005

For 0.60 mm packaging:

Cost per unit: $0.80

Breakage ratio: 0.75%

Effective cost considering breakage: $0.80 * (1 + 0.0075) = $0.806

Comparing $1.005 to $0.806, the 0.60 mm packaging is more cost-effective. Therefore, the supply manager should recommend the 0.60 mm packaging.

References

Supply Chain Management principles regarding cost analysis.

Basic breakage and cost calculations used in supply chain decision-making.

Initial Situation: The operations team at DEF Inc. established specifications for a new piece of equipment.

Finding Suppliers: The supply manager discovers that the specified features are outside normal equipment standards and require costly custom modifications.

Cost Concern: These modifications will significantly increase the cost, exceeding the budget by 2.5 times.

Review Specifications: The supply manager should first review the specifications with the operations team to determine if all requested features are essential or if adjustments can be made to align with standard offerings.

Align with Market Availability: Ensuring that specifications are realistic and align with what is commonly available can help manage costs and meet budget constraints.

References

ISM. (n.d.). Cost Management and Control in Procurement.

CIPS. (n.d.). Effective Specification Management.

Requesting and Testing Samples from All Possible Supplier Manufacturing Locations: This would have ensured that DEF Inc. tested the quality of products from the actual production facility, not just the sample facility.

Requesting Larger Samples: While this might help, it doesn't address the issue of different production environments potentially affecting quality.

Requiring Assurance from Supplier: This is important but not sufficient by itself. The assurance doesn't substitute for actual testing from the correct facility.

Stricter Quality Controls at Receiving Dock: This is a reactive measure and doesn't prevent the problem from occurring in the first place.

References

Monczka, R. M., Handfield, R. B., Giunipero, L. C., & Patterson, J. L. (2016). Purchasing and Supply Chain Management. Cengage Learning.

Burt, D. N., Petcavage, S. D., & Pinkerton, R. L. (2010). Supply Management. McGraw-Hill Education.