Solution Manual for Managing Supply Chain and

Operations An Integrative Approach 1st Edition Foster

Sampson Wallin Webb 0132832402 9780132832403
Download full solution manual at:
https://testbankpack.com/p/solution-manual-for-managing-supply-
chain-and-operations-an-integrative-approach-1st-edition-foster-
sampson-wallin-webb-0132832402-9780132832403/

Download full test bank at:

https://testbankpack.com/p/test-bank-for-managing-supply-chain-
and-operations-an-integrative-approach-1st-edition-foster-
sampson-wallin-webb-0132832402-9780132832403/

Chapter 6 Solutions Manual

Integrative Learning Exercise

Because sourcing is not familiar to all students, this exercise is designed to have them
interview a sourcing professional. This should allow students to have some sense of the
purchasing profession prior to coming to class. Questions are included in the exercise to
structure their interview.
Integrative Experiential Exercise

This exercise is more in-depth in that a team will study a purchasing function within a
company in some depth. Be sure that the teams focus on changes in the purchasing
function and how it has evolved.
Discussion Questions

1. What explains the shift of the procurement function in organizations from a

low-level task to a higher-level strategic focus?
Strategic sourcing managers have demonstrated the ability to drive cost savings for
their firms, affect product and service quality for their customers, and help improve
product and process designs with their suppliers.

©2016 Pearson Education, Inc.

2 Foster/Sampson/Wallin/Webb • Managing Supply Chain and Operations

2. What is strategic sourcing?

Strategic sourcing is defined as the process of planning, evaluating, implementing,
and controlling both highly important and routine sourcing decisions.

3. How does strategic sourcing that embraces the lean philosophy differ from the
traditional approach to sourcing decisions?
Under the lean philosophy, strategic sourcing is required to work with other
departments to ensure that the organization has just enough quality inventory at
just the right time in order to reduce the total cost incurred to the entire
organization. This is different from simply purchasing the lowest cost component
that meets the minimum quality requirements.

4. How must strategic sourcing in a lean supply chain analyze its existing
supplier relationships?
Strategic sourcing must analyze its existing supplier relationships on the basis of
total cost of ownership. This will allow a lean organization to ensure that no matter
the source of purchased components, they result in the lowest total cost to the
organization.

5. The role of purchasing organizations has changed over the years. What has
been the focus of the purchasing organization since 2000?
The focus has been on providing a competitive advantage by driving cost savings for
the firm and providing an uninterrupted supply of materials, as well as developing
collaborative relationships to achieve an integrated supply chain.

6. Researchers who study procurement state that its role in organizations is

moving from a purely tactical function focused on cost savings to becoming a
strategic contributor. In what ways is procurement becoming more strategic-
minded?
Procurement is becoming more strategic-minded regarding managing working
capital, managing risks to business performance, and expanding into new markets
or business lines.

7. Briefly describe how it is possible for a small change in the cost of purchased
goods and services to have a more significant effect on profits than a large
change in sales.
Savings in the purchasing of materials accrues directly to the bottom line (net
profits), whereas changes in sales volumes are highly leveraged by cost of goods
sold and other operating expenses.

©2016 Pearson Education, Inc.

 Chapter 6 Strategic Sourcing 3

8. Briefly identify the types of purchased goods and services that fall into the
direct spend category, the indirect spend category, and the capital spend
category.
The direct spend category includes any material or service that is part of the final
product. The indirect spend category includes all the spending that supports the
operations of a firm, encompassing everything from cafeteria services to spare parts
for factory equipment. Capital spend, as the name implies, includes all spending for
buildings and large equipment, anything that will be depreciated.

9. Briefly define routine items and bottleneck items and contrast the
appropriate purchasing strategy for the two.
A routine item is typically something of low value, purchased in small volumes,
through individual transactions. Many alternative products and services and many
sources of supply are available for this type of spending. The appropriate strategy
for routine items is to simplify the acquisition process. Supply managers can reduce
the amount of time and effort expended on procuring these items by automating the
purchasing process.

A bottleneck item is one in which there are few alternate sources of supply, typically
due to complex specifications requiring complex manufacturing or service
processes, new technology, or untested processes. Although these items may not
have the profit impact of leverage or critical items, the lack of the item has an impact
on operations. The strategy for bottleneck items is to ensure supply continuity while
also working to move the item to another quadrant in the portfolio matrix.

10. What are leverage items, and how should they be managed?
A leverage item has the potential to impact profit, typically because they are
associated with a high level of expenditures while also having many qualified
sources of supply. When supply managers must to balance large spending quantities
with a broad choice of suppliers, she should work to maximize the commercial
advantage for the firm by concentrating business with a limited number of suppliers
in order to achieve volume discounts and by promoting competitive bidding
between qualified suppliers.

11. What is the preferred strategy for managing critical items?

The best strategy for critical items is to form alliances with the suppliers.

12. What is spend analysis, and what questions can it help answer?
Spend analysis is a review of a firm’s entire set of purchases and answers the
question: On what is the firm spending its money?

©2016 Pearson Education, Inc.

4 Foster/Sampson/Wallin/Webb • Managing Supply Chain and Operations

13. Identify the purpose and the primary challenge in conducting total cost of
ownership analysis.
Total cost of ownership (TCO) analysis is the process of evaluating the cost of an
item over its entire life, including purchase, maintenance, and final disposition. This
analysis is most useful when there are many suppliers available in the marketplace,
meaning that different items may have different lifetime cost. The primary challenge
in conducting TCO analysis is to be sure you are comparing items with the same
specifications, quality levels, lead-times, warranties, disposition costs, etc. when
comparing TCO. If the items are not identical, the supply manager must account for
that in the TCO analysis.

14. What is cost analysis, and when should it be used?

Cost analysis is the process of analyzing each of the individual cost elements that
make up the final price. Managers should perform cost analysis when price analysis
is impractical or when price analysis alone does not allow a buyer to reach the
conclusion that a price is fair and reasonable.

15. What is should cost modeling, and how does it relate to the supply manager’s
strategic role?
Should cost modeling is the process of determining what a product should cost
based upon its component raw material costs, manufacturing costs, production
overheads, and reasonable profit margins. From a strategic perspective, knowing
approximately what a product should cost enables a supply manager to better
negotiate for a fair price.

Problems

Effect of Strategic Sourcing on the Firm

Economics of Purchasing

1. First we need to calculate the net income of the company before potential material
cost reductions and sales improvements. We can calculate this using Figure 6.1.
Cost of Goods Sold = $1,250,000 + $5,000,000 + $710,000 = $6, 960,000

Net Income = Sales – COGS = $8,000,000 – $6,960,000 = -$1,040,000

Profit Margin = Net Income/Sales = 1,040,000/8,000,000 = 0.66875 = 13.0%

Knowing this information, we can calculate the impacts of the potential changes as
seen in Solved Problem 6.1.

Scenario A: Effects of a 3 percent reduction in materials:

Materials Cost * .03 = $5,000,000 * .03 = $150,000 reduction in materials cost

©2016 Pearson Education, Inc.

 Chapter 6 Strategic Sourcing 5

COGS = 1,250,000 + (5,000,000 – 150,000) + 710,000 = $6,810,000

Net Income = 8,000,000 – 6,810,000 = $1,190,000

Profit Margin = 1,190,000/8000000 = 14.875%

A reduction in materials cost by 3 percent improves the bottom line to

14.875 percent.

Scenario B:Effects of a 15 percent increase in sales:

An increase in sales increases variable cost elements as well; therefore, COGS

must also receive a 15 percent increase.

New COGS = Old COGS * 1.15 = 6,960,000 * 1.15 = $8,004,000

New Sales = Old Sales * 1.15 = 8,000,000 * 1.15 = $9,200,000

Net Income = 9,200,000 – 8,004,000 = $1,196,000

Profit Margin = $1,196,000/9,200,000 = 13%

An increase in sales by 15 percent does not improve the profit margin.

Whereas, the 3 percent reduction in cost improved the profit margin to
14.875 percent.

2. We first need to calculate net income of the company before any potential changes.
Use Figure 6.1 to do so.
COGS = 7,500,000 + 1,500,000 + 500,000 = 9,500,000

Net Income = Sales – COGS = 10,000,000 – 9,500,000 = 500,000

Scenario A: Effects of marketing firm increasing sales by 20 percent

An increase in sales increases variable cost elements as well; therefore, COGS

must also receive a 20 percent increase.

New COGS = Old COGS * 1.2 = 11,400,000

New Sales = Old Sales * 1.2 = 12,000,000

Net Income = 12,000,000 – 11,400,000 = 600,000

An increase in sales by 20 percent increases their net income by $100,000.

Scenario B: Effects of a procurement manager decreasing material cost by 6 percent

Materials Cost of $7,500,000 * 0.06 = $450,000 reduction in materials cost

©2016 Pearson Education, Inc.

6 Foster/Sampson/Wallin/Webb • Managing Supply Chain and Operations

New COGS = (7,500,000 – 450,000) + 1,500,000 + 500,000 = 9,050,000

Net Income = 10,000,000 – 9,050,000 = 950,000

Decreasing materials cost by 6 percent will lead to a $450,000 increase in net

income. With this data, it is clear that a procurement manager should be
assigned before a marketing firm is hired.

3. The two suppliers in question offer different prices and different payment windows
for the same part. We need to put the two options into the same terms by
performing a price analysis as shown in Solved Problem 6.2.
• Number of days earlier Supplier A must be paid than Supplier B (longest days to
pay – shortest days to pay)
o 90 days – 30 days = 60 days
• Daily cost of capital
o Cost of Capital/days in a year = .20/365 = .000548
• Opportunity cost = # of days * daily cost of capital * purchase price of A
o 60 * 0.000548 * $100 = $3.288
• Effective price for Supplier A (in like terms as B)
o $100.00 + $3.288 = 103.288
This means that when the two suppliers are compared on equivalent term, Supplier
A’s part is $2.212 less expensive ($105.5 – $103.288) than Supplier B’s part in spite
of the shorter payment window.

Strategic Cost Management

4. Using Solved Problem 6.2 we can perform a price analysis to determine from which
supplier we should purchase.
• Number of days earlier Supplier A must be paid than Supplier B (longest days to
pay – shortest days to pay)
o 60 days – 30 days = 30 days
• Daily cost of capital
o Cost of Capital/days in a year = 0.06/365 = 0.000164
• Opportunity cost = # of days * daily cost of capital * purchase price of A
o 30 * 0.000164 * 55.00 = $0.271
• Effective price for Supplier A (in like terms as B)
o $55.00 + $0.271 = $55.271
This means that in spite of the shorter payment window, Supplier A is still the better
choice by 7.9 cents.

5. When performing a price analysis between three companies, two separate price
analyses will be required (A-C, B-C)
A-C

• Number of days earlier Supplier A must be paid than Supplier C

©2016 Pearson Education, Inc.

 Chapter 6 Strategic Sourcing 7

o 120 days – 30 days = 90 days

• Daily cost of capital
o Cost of Capital/days in a year = 0.15/365 = 0.000411
• Opportunity cost = # of days * daily cost of capital * purchase price of A
o 90 * 0.000411 * 70.00 = $2.589
• Effective price for Supplier A (in like terms as C)
o $70.00 + $2.589 = $72.589
B-C

• Number of days earlier Supplier B must be paid than Supplier C

o 120 days – 90 days = 30 days
• Daily cost of capital
o Cost of Capital/days in a year = 0.15/365 = 0.000411
• Opportunity cost = # of days * daily cost of capital * purchase price of A
o 30 * 0.000411 * 71.00 = $0.875
• Effective price for Supplier A (in like terms as B)
o $71.00 + $0.875= $71.875
Supplier A = $72.589
Supplier B = $71.875
Supplier C = $72.00
Therefore, we know that the least expensive supplier option is Supplier B.

Total Cost of Ownership

6. Every total cost of ownership analysis can be different as there are different
variables for each scenario. The formula for this copier scenario can be seen below:
Total Cost of Ownership for a Copier = Installation & Setup + Cost per copy * Annual
copies * Useful life

Copier I = 5,000 + (0.1 * 300,000 * 3) = $95,000

Copier II = 6,000 + (.095 * 300,000 * 3) = $91,500

Although the initial setup and installation costs for Copier II are higher, the total
cost of ownership is less expensive for Copier II.

7. Every total cost of ownership analysis can be different as there are different
variables for each scenario. The formula for this food processing motor scenario can
be seen below:
Total Cost of Ownership Annually for a Motor = (Annual operating hours/Useful life
* Price per motor) + (Annual operating hours * Energy Cost per hour)

Supplier A = (8,760/584 * $1,000) + (8,760 * 0.25) = $17,190.00 to supply and use

their motors for a year

©2016 Pearson Education, Inc.

8 Foster/Sampson/Wallin/Webb • Managing Supply Chain and Operations

Supplier B = (8,760/438 * $800) + (8,760 * 0.255) = $18,233.80 to supply and use

their motors for a year

Although the purchasing price of Supplier A’s motors is higher, the useful life is
longer requiring fewer replacements per year in addition to lower energy
consumption. The net result is that it will be less expensive to use Supplier A than
Supplier B for our food processing motors annually.

8. Every total cost of ownership analysis can be different as there are different
variables for each scenario. Assuming the company uses the machine for its entire
useful life, the formula for this custom part production machine can be seen below:
Total Cost of Ownership Annually for a Machine = [Machine Price + (Annual
production * Machine life/Component life * Component cost)]/Machine Life

Machine A = [7,500 + (110,000 * 3/5000 * 200)]/3 = $6,900.00 per year

Machine B = [8,000 + (110,000 * 4/5500 * 185)]/4 = $5,700.00 per year

This means that assuming each machine is used its entire useful life, the annual total
cost of ownership for Machine B is $1,200 less expensive than Machine A. It should
be noted that if the company believes they will only use the machine for two or
three years, a slightly different calculation would need to be performed.

Costs/Unit Dayton Mexico (outsource) Indonesia (outsource)

(insource)
Price 125.00 106.25 98.00
Shipping Cost 3.75 7.00
Additional Inventory Carrying 0.50 2.00
Cost
Additional Overhead (125 * 0.1) = 12.50 (125 * 0.15) = 18.75
Cost of Lower Quality 1.00 1.25
Estimated Total Cost $125.00 $124.00 $127.00

Total Cost of Ownership and Outsourcing

9. Using Solved Problem 6.4, we can calculate the total cost of outsourcing motor
manufacturing.
According to the above analysis, producing the motors in Mexico would result in a
$1.00 savings per motor. However, because of the closeness in cost, other factors
and risks should be taken into consideration before making a decision.

Case: Hazeltonn Industries

Question

©2016 Pearson Education, Inc.

 Chapter 6 Strategic Sourcing 9

Cathy needed a report by next Tuesday that outlined in general terms how procurement
could assist in improving the company’s competitive position. Describe what
procurement’s role might be in new product development, and provide a detailed analysis
of the effect of a 30 percent increase in sales versus an 8 percent reduction in material
costs.

Answer

Purchased goods and services make up 50 percent to 90 percent of a firm’s cost of goods
sold. With the responsibility for such a large percentage of cost of goods sold, a
procurement organization and its supply managers have a tremendous opportunity to
affect the profitability of a firm. That effect can be seen in the cost of purchased products
and services, the quality of purchased goods and services, and the cost built into the
product or service during development and design.
The first, and most obvious, impact a sourcing manager has on profitability is
through the cost of purchased products and services. In fact, a small change in the cost of
purchased products and services can have a more significant impact on profits than a large
change in sales.
A procurement organization with strategic sourcing in mind is also focused on the
quality of goods and services. Sourcing materials and services with higher levels of quality
can affect profitability. The manufacturer may also see an impact on profitability from
improved quality conformance when defect rates drop and there is less waste due to faulty
parts.
Sourcing materials
or services with
improved quality

Higher perceived Higher Lower

value prices transformation and
defect costs
Increased market Increased
share revenues

Higher profitability

It is estimated that 85 percent of an item or service’s cost is determined in the

design stage. And as noted previously, purchased goods and services make up more than
50 percent of a firm’s cost of goods sold. Therefore, in order for a supply manager to
maximize the impact he or she can have on the cost and quality of the materials and service
procured, the manager must be involved in the design and development process.
Armed with knowledge of supplier capabilities, supply managers who are involved
in new product design can contribute in many ways. They can suggest component parts
that are already used in another product within the firm, or find a lower cost/higher
quality component during the design stage. Supply managers can also facilitate early

©2016 Pearson Education, Inc.

10 Foster/Sampson/Wallin/Webb • Managing Supply Chain and Operations

supplier involvement in the design process, which has been found to help reduce cost,
reduce concept-to-customer development time, improve quality, and provide innovative
technologies that can help capture market share.

Increase sales 30 percent versus decrease costs 8 percent

Increasing base sales of $9,000,000 by 30 percent will result in an increase in profits of

$162,000 but will not change the profit margin of 6 percent (See the following figure).

Decreasing materials costs by 8 percent will result in an increase of profits of $480,000 and
will increase the profit margin from 6 percent to 11.33 percent (See the figure below).

©2016 Pearson Education, Inc.

Another random document with
no related content on Scribd:
1.E.6. You may convert to and distribute this work in any binary,
compressed, marked up, nonproprietary or proprietary form,
including any word processing or hypertext form. However, if you
provide access to or distribute copies of a Project Gutenberg™ work
in a format other than “Plain Vanilla ASCII” or other format used in
the official version posted on the official Project Gutenberg™ website
(www.gutenberg.org), you must, at no additional cost, fee or expense
to the user, provide a copy, a means of exporting a copy, or a means
of obtaining a copy upon request, of the work in its original “Plain
Vanilla ASCII” or other form. Any alternate format must include the
full Project Gutenberg™ License as specified in paragraph 1.E.1.

1.E.7. Do not charge a fee for access to, viewing, displaying,

performing, copying or distributing any Project Gutenberg™ works
unless you comply with paragraph 1.E.8 or 1.E.9.

1.E.8. You may charge a reasonable fee for copies of or providing

access to or distributing Project Gutenberg™ electronic works
provided that:

• You pay a royalty fee of 20% of the gross profits you derive from
the use of Project Gutenberg™ works calculated using the
method you already use to calculate your applicable taxes. The
fee is owed to the owner of the Project Gutenberg™ trademark,
but he has agreed to donate royalties under this paragraph to
the Project Gutenberg Literary Archive Foundation. Royalty
payments must be paid within 60 days following each date on
which you prepare (or are legally required to prepare) your
periodic tax returns. Royalty payments should be clearly marked
as such and sent to the Project Gutenberg Literary Archive
Foundation at the address specified in Section 4, “Information
about donations to the Project Gutenberg Literary Archive
Foundation.”

• You provide a full refund of any money paid by a user who

notifies you in writing (or by e-mail) within 30 days of receipt that
s/he does not agree to the terms of the full Project Gutenberg™
 License. You must require such a user to return or destroy all
copies of the works possessed in a physical medium and
discontinue all use of and all access to other copies of Project
Gutenberg™ works.

• You provide, in accordance with paragraph 1.F.3, a full refund of

any money paid for a work or a replacement copy, if a defect in
the electronic work is discovered and reported to you within 90
days of receipt of the work.

• You comply with all other terms of this agreement for free
distribution of Project Gutenberg™ works.

1.E.9. If you wish to charge a fee or distribute a Project Gutenberg™

electronic work or group of works on different terms than are set
forth in this agreement, you must obtain permission in writing from
the Project Gutenberg Literary Archive Foundation, the manager of
the Project Gutenberg™ trademark. Contact the Foundation as set
forth in Section 3 below.

1.F.

1.F.1. Project Gutenberg volunteers and employees expend

considerable effort to identify, do copyright research on, transcribe
and proofread works not protected by U.S. copyright law in creating
the Project Gutenberg™ collection. Despite these efforts, Project
Gutenberg™ electronic works, and the medium on which they may
be stored, may contain “Defects,” such as, but not limited to,
incomplete, inaccurate or corrupt data, transcription errors, a
copyright or other intellectual property infringement, a defective or
damaged disk or other medium, a computer virus, or computer
codes that damage or cannot be read by your equipment.

1.F.2. LIMITED WARRANTY, DISCLAIMER OF DAMAGES - Except

for the “Right of Replacement or Refund” described in paragraph
1.F.3, the Project Gutenberg Literary Archive Foundation, the owner
of the Project Gutenberg™ trademark, and any other party
distributing a Project Gutenberg™ electronic work under this
agreement, disclaim all liability to you for damages, costs and
expenses, including legal fees. YOU AGREE THAT YOU HAVE NO
REMEDIES FOR NEGLIGENCE, STRICT LIABILITY, BREACH OF
WARRANTY OR BREACH OF CONTRACT EXCEPT THOSE
PROVIDED IN PARAGRAPH 1.F.3. YOU AGREE THAT THE
FOUNDATION, THE TRADEMARK OWNER, AND ANY
DISTRIBUTOR UNDER THIS AGREEMENT WILL NOT BE LIABLE
TO YOU FOR ACTUAL, DIRECT, INDIRECT, CONSEQUENTIAL,
PUNITIVE OR INCIDENTAL DAMAGES EVEN IF YOU GIVE
NOTICE OF THE POSSIBILITY OF SUCH DAMAGE.

1.F.3. LIMITED RIGHT OF REPLACEMENT OR REFUND - If you

discover a defect in this electronic work within 90 days of receiving it,
you can receive a refund of the money (if any) you paid for it by
sending a written explanation to the person you received the work
from. If you received the work on a physical medium, you must
return the medium with your written explanation. The person or entity
that provided you with the defective work may elect to provide a
replacement copy in lieu of a refund. If you received the work
electronically, the person or entity providing it to you may choose to
give you a second opportunity to receive the work electronically in
lieu of a refund. If the second copy is also defective, you may
demand a refund in writing without further opportunities to fix the
problem.

1.F.4. Except for the limited right of replacement or refund set forth in
paragraph 1.F.3, this work is provided to you ‘AS-IS’, WITH NO
OTHER WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED,
INCLUDING BUT NOT LIMITED TO WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR ANY PURPOSE.

1.F.5. Some states do not allow disclaimers of certain implied

warranties or the exclusion or limitation of certain types of damages.
If any disclaimer or limitation set forth in this agreement violates the
law of the state applicable to this agreement, the agreement shall be
interpreted to make the maximum disclaimer or limitation permitted
by the applicable state law. The invalidity or unenforceability of any
provision of this agreement shall not void the remaining provisions.

1.F.6. INDEMNITY - You agree to indemnify and hold the

Foundation, the trademark owner, any agent or employee of the
Foundation, anyone providing copies of Project Gutenberg™
electronic works in accordance with this agreement, and any
volunteers associated with the production, promotion and distribution
of Project Gutenberg™ electronic works, harmless from all liability,
costs and expenses, including legal fees, that arise directly or
indirectly from any of the following which you do or cause to occur:
(a) distribution of this or any Project Gutenberg™ work, (b)
alteration, modification, or additions or deletions to any Project
Gutenberg™ work, and (c) any Defect you cause.

Section 2. Information about the Mission of

Project Gutenberg™
Project Gutenberg™ is synonymous with the free distribution of
electronic works in formats readable by the widest variety of
computers including obsolete, old, middle-aged and new computers.
It exists because of the efforts of hundreds of volunteers and
donations from people in all walks of life.

Volunteers and financial support to provide volunteers with the

assistance they need are critical to reaching Project Gutenberg™’s
goals and ensuring that the Project Gutenberg™ collection will
remain freely available for generations to come. In 2001, the Project
Gutenberg Literary Archive Foundation was created to provide a
secure and permanent future for Project Gutenberg™ and future
generations. To learn more about the Project Gutenberg Literary
Archive Foundation and how your efforts and donations can help,
see Sections 3 and 4 and the Foundation information page at
www.gutenberg.org.
 Section 3. Information about the Project
Gutenberg Literary Archive Foundation
The Project Gutenberg Literary Archive Foundation is a non-profit
501(c)(3) educational corporation organized under the laws of the
state of Mississippi and granted tax exempt status by the Internal
Revenue Service. The Foundation’s EIN or federal tax identification
number is 64-6221541. Contributions to the Project Gutenberg
Literary Archive Foundation are tax deductible to the full extent
permitted by U.S. federal laws and your state’s laws.

The Foundation’s business office is located at 809 North 1500 West,

Salt Lake City, UT 84116, (801) 596-1887. Email contact links and up
to date contact information can be found at the Foundation’s website
and official page at www.gutenberg.org/contact

Section 4. Information about Donations to

the Project Gutenberg Literary Archive
Foundation
Project Gutenberg™ depends upon and cannot survive without
widespread public support and donations to carry out its mission of
increasing the number of public domain and licensed works that can
be freely distributed in machine-readable form accessible by the
widest array of equipment including outdated equipment. Many small
donations ($1 to $5,000) are particularly important to maintaining tax
exempt status with the IRS.

The Foundation is committed to complying with the laws regulating

charities and charitable donations in all 50 states of the United
States. Compliance requirements are not uniform and it takes a
considerable effort, much paperwork and many fees to meet and
keep up with these requirements. We do not solicit donations in
locations where we have not received written confirmation of
compliance. To SEND DONATIONS or determine the status of
compliance for any particular state visit www.gutenberg.org/donate.

While we cannot and do not solicit contributions from states where

we have not met the solicitation requirements, we know of no
prohibition against accepting unsolicited donations from donors in
such states who approach us with offers to donate.

International donations are gratefully accepted, but we cannot make

any statements concerning tax treatment of donations received from
outside the United States. U.S. laws alone swamp our small staff.

Please check the Project Gutenberg web pages for current donation
methods and addresses. Donations are accepted in a number of
other ways including checks, online payments and credit card
donations. To donate, please visit: www.gutenberg.org/donate.

Section 5. General Information About Project

Gutenberg™ electronic works
Professor Michael S. Hart was the originator of the Project
Gutenberg™ concept of a library of electronic works that could be
freely shared with anyone. For forty years, he produced and
distributed Project Gutenberg™ eBooks with only a loose network of
volunteer support.

Project Gutenberg™ eBooks are often created from several printed

editions, all of which are confirmed as not protected by copyright in
the U.S. unless a copyright notice is included. Thus, we do not
necessarily keep eBooks in compliance with any particular paper
edition.

Most people start at our website which has the main PG search
facility: www.gutenberg.org.

This website includes information about Project Gutenberg™,

including how to make donations to the Project Gutenberg Literary
Archive Foundation, how to help produce our new eBooks, and how
to subscribe to our email newsletter to hear about new eBooks.