* Initial Cost Calculation: Initially, the product's cost includes labor ($10), overhead ($12.50), and materials ($14). Thus, the total cost is $36.50 per unit.
* Cost Reduction: Supply management reduces the cost of materials from $14 to $12, decreasing the total cost per unit to $34.50.
* Contribution to Profit: The reduction in cost directly translates to an increase in profit per unit. The cost reduction is $2 per unit ($14 - $12).
* Profit Calculation: As the selling price remains $36.50, the new profit per unit after cost reduction is the selling price minus the new total cost ($36.50 - $34.50), which results in an increased profit of $2 per unit.
References
* ISM Glossary of Key Supply Management Terms
* CIPS Cost Management Tools and Techniques

The issue of a supplier not maintaining a steady workforce indicates a failure to assess labor stability during supplier performance evaluations:
* Labor stability: Evaluating the supplier's ability to maintain a steady workforce would have highlighted potential issues affecting continuity and reliability.
* Quality metrics: Important, but this issue pertains to workforce stability.
* Financial stability: While crucial, it does not directly address the problem of workforce fluctuations.
* Business continuity: Broadly relevant, but labor stability is a more specific indicator of the workforce
* issue.
Therefore, the manufacturer likely failed to examine labor stability.
References:
* Supplier performance evaluation best practices.
* Risk management in supply chain literature.

* Context: The agent acted outside their defined area of responsibility due to emergency circumstances (storm damage).
* Agent's Action: The agent repaired the local office because it was unsafe and attempted to contact headquarters but failed due to communication issues.
* Assessment: The agent's decision was necessary and justified given the situation.
* Ratification: Ratifying the action acknowledges the agent's initiative and ensures the foundation's operations and safety are maintained.
* Payment Authorization: Authorizing payment for the repairs ensures the agent is not penalized for making a necessary decision in an emergency.
* Conclusion: This approach maintains the relationship with the agent and shows support for proactive problem-solving under difficult conditions.
References
* Emergency Management and Incident Response by FEMA.
* Contract and Agency Law principles.
* Best practices in supply chain risk management.