ISM INTE Exam With Confidence Using Practice Dumps

A supply manager learns that parts used in manufacturing are arriving scratched and must be polished before use, thereby hampering production. Sending the parts back to the supplier is not an option, as they are needed to meet increased demand. Which of the following will be MOST helpful in resolving this problem?

Which of the following refers to the practice of buying a commodity on the open market for immediate delivery?

A manufacturing firm redesigns its premier product to benefit from material standardization. The change will entail re-tooling costs. The firm conducts a cost benefit analysis on four possible options. Option 1 is to make no change at all. Options 2, 3, and 4 represent different re-tooling configurations involving different materials:

Option 1Option 2Option 3Option 4

Re-tooling Costs (Year 1)$0$800,000$1,000,000$1,200,000

Material Costs

Year 151,000,000$700,000$650,000$600,000

Year 2$1,100,000$750,000$700,000$650,000

Year 3SI,200,000$800,000$750,000$700,000

Year 451,300,000$850,000$800,000$750,000

Year 551,400,000$900,000$850,000$800,000

Total$6,000,000$4,000,000$3,750,000$3,500,000

Labor Costs

Year 1$1,000,000$700,000$650,000$600,000

Year 2$1,100,000$770,000$715,000S660,000

Year 3$1,210,000$847,000$786,500$726,000

Year 4$1,331,000$931,700$865,150$798,600

Year 5$1,464,100$1,024,870$951,665$878,460

Total$6,105,100$4,273,570$3,968,315$3,663,060

In addition to this, there will be a cost of $3.5 million in lost production during Year 1, should any of the re-tooling options (2, 3, or 4) be selected.

The firm wants to rank the options in order of financial preference, from the best option to the worst. Based on this information, how should the four options be ranked?