CORE Exam Dumps : Supply Management Core Exam

Current Situation: Supplier A has provided reliable and high-quality components to FGH, Inc. for many years.

Price Increase Notification: Supplier A informs FGH of a significant anticipated price increase due to building a new production facility.

Negotiation Directive: FGH's supply manager is directed to negotiate a new contract only if Supplier A agrees to maintain current pricing.

Preparation for Negotiation: Determining if the parts can be produced elsewhere provides the supply manager with leverage in negotiations. This research will show whether FGH has alternative sources or if Supplier A holds a monopoly on the components.

Negotiation Leverage: Knowing that there are alternative suppliers can strengthen FGH's negotiating position, possibly leading to more favorable terms or at least a better understanding of the market.

References

ISM. (n.d.). Strategic Sourcing and Supplier Selection.

CIPS. (n.d.). Effective Negotiation Strategies in Procurement.

Item cost: $0.76

Packaging for shipment: $0.02

Shipping from Indonesia: $0.14

Duty: $0.03

Customs clearance: $0.10

Storage at buyer’s warehouse: $0.09

Shipment from warehouse to plant: $0.06

Calculate the total landed cost per unit: Sum of all the costs.

Total Landed Cost = $0.76 + $0.02 + $0.14 + $0.03 + $0.10 + $0.09 + $0.06 = $1.20

References

CIPS. (n.d.). Understanding Total Landed Cost in Procurement.

ISM. (n.d.). Calculating Total Landed Cost for Procurement Decisions.

Given Data:

Unit price: $0.40

Annual usage: 80,000 units

Carrying cost: 25%

Minimum order quantity: 20,000 units

Total Purchase Cost:

Unit price multiplied by annual usage: $0.40 * 80,000 = $32,000

Additional Costs:

As the item price is fixed and includes delivery (DDP Incoterms® 2020), there are no additional duties or transportation costs.

Carrying Cost Calculation:

For the minimum order quantity, the carrying cost is not a factor because the question specifies a fixed price per unit delivered.

Conclusion: The total cost of purchasing 80,000 units per year at $0.40 each is $32,000.

References

Incoterms® 2020 by International Chamber of Commerce (ICC).

Supply Chain Management: Strategy, Planning, and Operation by Sunil Chopra.

The Handbook of Logistics and Distribution Management by Alan Rushton, Phil Croucher, and Peter Baker.