Accounting

Discuss each of the following and reference by using the number that precedes the question

1. If Deere outsources production, what are the costs and benefits of sole sourcing, single sourcing, and multiple sourcing? Bullet, define and briefly discuss each option.

2. What additional information from Deere might help you make the best recommendation? This could be information about how Deere does business, Deere’s costs, etc. or what Deere requires from suppliers. In other words, what relevant information about Deere might be missing from the case for you to make the best recommendation?

3. Consider the following USD/MXN exchange rate situation:
• Based on Superior’s corrected quote in USD… If the exchange rate at the time the contract is signed is 12.175 MXN and the exchange rate at the time of payment/settlement is 12.95 MXN to the Dollar and no provisions are made for exchange rate fluctuations:
a. How would this rate change affect you, the buyer? Discuss and show your numbers.
b. How would this rate change affect the supplier? Discuss and show your numbers.
• Based on Superior’s corrected quote if it were in MXN at the original exchange rate… If the exchange rate at the time the contract is signed is 12.175 MXN and the exchange rate at the time of payment/settlement is 12.95 MXN to the Dollar and no provisions are made for exchange rate fluctuations:
c. How would the new exchange rate affect the buyer at the time of payment? Discuss and show your numbers?
d. How would the new exchange rate affect the supplier at the time of payment? Discuss and show your numbers?

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4. Briefly, how can a forward or futures contract help the participants in these exchanges? Wikipedia might help you answer this question.

5. In this very simplified example, assume that Deere specifies aluminum produced using secondary smelting, a process of extracting the metal from scrap materials. Assume Deere was paying 0.99 USD per pound for aluminum purchased in November 2014. In this example, the price doesn’t include any associated purchasing or logistics costs that include handling, delivery, profit, etc. If Deere were going to negotiate a new base price for aluminum in March 2015, show how the PPI (see page 121 of the PPI March 2015 pdf –green highlighted sections) can be used to assist in a negotiation. Show your calculations to determine a reasonable estimate of the current price Deere can expect to pay.

6. Today, supply chain risk management is considered by many to be a company’s weakest link. Supply chain risk affects mom & pop businesses, as well as global corporations. Supply chain risks can be broken down into systemic, non-systemic, and decision risks.
• Systemic Risk (see PowerPoint class presentation)
• Non-Systemic Risk (see PowerPoint class presentation)
• Decision Risk includes insufficient or erroneous decision support (e.g. inadequate or false information leads to a bad decision).
For this section, please do the following for each risk above:
a. Define systemic risk and discuss in relation to the case – specifically and in general
b. Define non-systemic risk and discuss in relation to the case – specifically and in general
c. Define decision risk and discuss in relation to the case – specifically and in general
d. Review Latin American Briefing, January 2014 and discuss in relation to the case – specifically and in general

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