negotiations or to compare with a figure provided by a supplier. Should costing is often used in procurement . The processes in should-cost analysis can be labor-intensive. In a large organization, the engineering department typically arrives at a “should” cost for a product. Often this estimate is achieved by reverse engineering to determine the cost of parts. Then the additional costs of labor, materials, overhead and profit margin are added to that estimate. Should costing can complement strategic sourcing or be used as an alternative method (Rouse, 2012). In strategic sourcing, the traditional means of pricing, a company compares the quotes of at least three competitors for a product. References
6.3 End of Module Review 5 Murphy, P.R. & Knemeyer, A. M. (2015). Contemporary logistics (11ed.). Upper saddle River, New Jersey: Prentice Hill. Rouse, Margaret. (November 15,2012). should costing (should-cost analysis). Retrieved from: Way, Jay. (February 05, 2011). What Is the Importance of a Company's Financial Statements? Retrieved from: - statements-21332.html Teeple, B. (2014). Procurement, Inventory and Costs, JIT, Warehousing, Packaging, Material Handling, Make or Buy. Retrieved from - 16120481-dt-content-rid-100873342_2/courses/2294_9W1_MGMT_440_0001_W000/2- MGMT_440_Module_2.pdf
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