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.