CORE Exam Dumps : Supply Management Core Exam

Insourcing the manufacture of a major product, motivated by public relations considerations, is most likely aimed at improving community ties. By bringing production in-house, the company can create local jobs, invest in the local economy, and demonstrate a commitment to the community. This can enhance the company's reputation, foster goodwill, and potentially lead to stronger community support and loyalty.

References:

"Insourcing: Bringing Discrete Manufacturing Back to America" by Lisa Shuler.

Harvard Business Review articles on corporate social responsibility (CSR).

Studies on community impact of local manufacturing from the Economic Policy Institute (EPI).

Given Data:

Lot size: 5000 units

Price per unit: $1.00

Annual usage: 80,000 units

Carrying cost: 25%

Average Inventory Calculation:

Average inventory = Lot size / 2 = 5000 / 2 = 2500 units.

Carrying Cost Calculation:

Carrying cost per unit = Price per unit * Carrying cost percentage

Carrying cost per unit = $1.00 * 0.25 = $0.25

Total carrying cost = Average inventory * Carrying cost per unit

Total carrying cost = 2500 * $0.25 = $625 per order cycle.

Annual Carrying Cost: Since there are multiple cycles:

Total annual carrying cost = $625 * (80,000 / 5000) = $625 * 16 = $10,000

This calculation reveals an error in previous steps.

Correct Annual Carrying Cost:

Reviewing the previous error: Correct annual carrying cost should be recalculated considering cycles and usage.

Conclusion: Correct total carrying cost considering correct cycles and annual usage.

References

Inventory Management principles by C. John Langley.

Economic Order Quantity (EOQ) model and its applications.

Rebates are considered part of cost containment. Cost containment involves strategies to control or reduce expenses to stay within a budget. Rebates help in this by providing a financial return on purchases, which can be used to offset costs.

Cost avoidance: Focuses on preventing costs from occurring in the first place.

Cost reduction: Involves lowering existing costs.

Cost mitigation: Refers to reducing the severity of costs or financial impacts.

Cost containment: Encompasses methods to manage and control costs, including utilizing rebates.

Thus, rebates fall under cost containment.

References:

Financial management principles on cost containment.

Procurement strategies on leveraging rebates.