I used to work for an American semi-conductor company that no longer exists in its original form in (at that time) MCUs. MCUs are essentially CPUs with an internal bus, and some modules (PWM, A/D converter, math co-processor, what not) and that bus connects to the outside (often at a different speed) where it connects to various RAM and serial and/or parallel devices and analog innies or outies.
The systems engineer (who was a friend, but maybe not the smartest tool in the shed) spec'd a system, and (high level verilog) simulated the system, and gave the output to the circuit guys (led by (also a friend) one of the most talented mixed-signal circuit designers I know - but abrasive as hell), said: "It won't work. Too much power draw on on modules off the bus. And besided is you power them through the bus, you're going to get a lot of noise and chop and brown-outs".
The manager - who was not an idiot - but to your point (1) above, was NOT aware of the issue and didn't want to believe it was issue and was NOT keenly aware of the issue (he was in denial), so they ran the wafers.
Chips come back - they don't work. Power draw issues.
My circuit designer friend (remember the abrasive part?) - gloated and mocked them for being idiots that did not know how to listen. (He was right - but he didn't have many friends in management).
They said: "OK. Make the changes. We'll do another run.". He said: Give me a couple of die. He went back to the lab - laser snipped a couple of traces - and voila! It now worked! (He had designed in a way to solve the problem as if they had originally decided to do it his way)
He cut 3 months off the schedule - saved millions of dollars - but were mad as hell. I think they wanted to fire him.
I learned a couple of things from all of that:
- Sometimes smart people don't know about problems because they don't want to know
- Pride is a horrible sin - I would have been grateful to have my bacon saved - they were not
- Nobody ever gets a bonus or promotion for putting out a fire that never actually gets started.
EDIT: Formatting. It's stil not great.