CORE Exam Dumps : Supply Management Core Exam

To determine how many units JKL, Inc. needs to buy to justify changing suppliers, the following steps are taken:

Calculate the Cost Savings per Unit:

Current supplier cost per unit: X

New supplier cost per unit: X - $0.03

Savings per unit: $0.03

Determine the Transition Cost:

Transition cost to the new supplier: $12,000

Calculate the Break-Even Point:

The break-even point is when the total savings equal the transition cost.

Savings per unit × Number of units = Transition cost

$0.03 × Number of units = $12,000

Number of units = $12,000 / $0.03

Number of units = 400,000

Therefore, JKL, Inc. needs to buy 400,001 units to justify changing suppliers, as the 400,000 units would only cover the transition cost, and any additional units would result in actual savings.

References:

Cost-benefit analysis in supply chain management.

Break-even analysis principles in procurement decisions.

Planning and negotiating a contract while considering its impact on a supplier is an example of supplier relationship management. This practice involves maintaining a positive and strategic relationship with suppliers, ensuring mutual benefits, and fostering collaboration. By considering the supplier's position, the buying firm can negotiate terms that support a long-term, sustainable partnership.

References:

"Supplier Relationship Management: Unlocking the Hidden Value in Your Supply Base" by Jonathan O'Brien.

ISM guidelines on supplier relationship management.

CIPS resources on strategic supplier management.

The best course of action is to determine with senior management and internal stakeholders the acceptable levels of risk for each product. This collaborative approach ensures that the organization has a clear understanding of its risk tolerance and can develop appropriate strategies to mitigate those risks. It involves assessing the potential impact of risks on the business and aligning risk management strategies with the company's overall objectives. This preparation is crucial for effective negotiations with suppliers, ensuring that all parties are on the same page regarding risk management.

References

Risk Management in Supply Chains by David L. Olson and Desheng Dash Wu

COSO (Committee of Sponsoring Organizations of the Treadway Commission) ERM (Enterprise Risk Management) Framework

ISO 31000 Risk Management Standards