please attempt all questions from 1st picture and attempt question 2, 4 and 6 from the second picture.

o QUESTION 1 A Direct-spend buyer achieves a reduction of the Landed cost of a material by a combination of Accepting a small increase above the previous-year price of the product Negotiating lower transportation fees Getting lower customs duties choosing a supplier from a country that has more favourable trade agreements with the buyer's country Is this Cost avoidance or Cost reduction? (highlight one) Is this traceable" within the organization? Yes No highlight one) O I QUESTION 2 1 What would you consider "hard" cost reduction for direct spend in the PC manufacturing industry? b. How are these goals generally established? 2 What information should Cecelia include in her proposal for Emma? 3. Are there additional expenses that will be incurred to implement a cost-savings plan for indirect spending? If so, what are these costs and how can Cecelia propose a budget-neutral solution? If not, what changes need to be made in order to implement this new strategy? 4. What do you think are the strongest arguments that Cecelia can present to gain support for greater transparency in reporting of indirect cost reduction and avoidance by both senior management and budget holders? 5 What is the best way to manage savings and avoidance on the indirects? Should the budget holders be allowed to retain the savings for use as they desire? Should savings be removed from the budgets entirely? Using the example scenario, (a) Provide the pros and cons of tracking and reporting both reductions and avoidance, versus just cost reductions. Use the example here to illustrate your points; and (b) Develop the calculations for what would be counted as savings versus avoidance Example scenario: One of your MRO suppliers has approached you with solid evidence that its costs have nisen and market prices for MRO have also risen You investigate this and find out that it is true. For safety supplies, the costs have risen on average 5%. The supplier wants a 5% price increase. .6 b. Assume that you can negotiate with the supplier so that it only raises prices by 3%. If you would have spent USD 1 million with them before the price increase. what cost avoidance would you report? What cost reduction would you report? What cost avoidance and reduction would you report if you were able to switch to different items with the same functionality and reduce the proposed 5% increase to a 2% decrease on USD 1 million? C Assume that your company does not report any cost-avoidance savings. You negotiate with your supplier for only a 3% increase this year. Next year the supplier will reduce the price back to the price you are paying this year. What would count towards cost reduction and cost avoidance this year and next year? Is there anything wrong with delaying the price reduction until next year? Please explain why this is or is not questionable