A supply manager for an electronics manufacturer is asked to source packaging for the company's...

To determine the most cost-effective packaging option, we need to consider both the cost per packaging unit and the projected breakage ratio. Here are the calculations:

For 0.50 mm packaging:

Cost per unit: $1.00

Breakage ratio: 0.50%

Effective cost considering breakage: $1.00 * (1 + 0.005) = $1.005

For 0.60 mm packaging:

Cost per unit: $0.80

Breakage ratio: 0.75%

Effective cost considering breakage: $0.80 * (1 + 0.0075) = $0.806

Comparing $1.005 to $0.806, the 0.60 mm packaging is more cost-effective. Therefore, the supply manager should recommend the 0.60 mm packaging.

References

Supply Chain Management principles regarding cost analysis.

Basic breakage and cost calculations used in supply chain decision-making.