INTE Exam Dumps : Supply Management Integration

DEF, Inc. is in the ramp-up phase of a unique medical device. The device has a two-year life expectancy. The sales forecast for the ramp-up period is as follows:

MonthJulAugSepOctNovDecJanFeb

Unit Sales1001502006001,4002,2004,00010,000

Demand after February is expected to remain at 10,000 units per month for several months, then decrease gradually. The units are small, and thus maintaining an inventory of up to 10,000 units is possible.

There are only three suppliers capable of providing the specialized component critical to this product. The production capacities of these suppliers are as follows:

•Supplier X has a capacity of 500 units per month at a cost of S20 per unit, representing 80% of its total business

•Supplier Y has a capacity of 2,000 units per month at a cost of S2O.5O per unit, representing 50% of its total business

•Supplier Z has a capacity of 20,000 units per month at a cost of $20.70 per unit, representing 10% of its total business

Two of these companies—Supplier X and Supplier Y—are minority businesses.

Given this situation, DEF should contract with

A supply manager is analyzing potential costs associated with the raw materials needed for a new product launch. Tooling costs are known, but the range of forecasts for future sales—and therefore demand for materials-varies widely. Given these circumstances, the supply manager should consider using which of the following?

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?