EMT Practice Test

1. Question Content...

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Question1: Due to growth, a private school system finds that its costs for support, including maintenance and janitorial services, have increased dramatically. Though supply management generally does a good job in managing service contracts, there Is no strategic plan or systematic method for reviewing costs on a long-term basis.
The school's board has made the development of a strategic plan the supply manager's priority assignment for the next school year. Given this situation, which of the following should be the supply manager's FIRST step in developing this plan?

Question2: A firm purchases large quantities of parts from an overseas supplier in order to take advantage of volume discounts. The firm wants to delay paying duty on the parts until they are required for manufacturing. Given this situation, which of the following Is the MOST appropriate course of action for the firm to take?

Question3: A chief procurement officer (CPO) is asked by the company corporate travel department to present strategies and tactics related to the acquisition of travel services. Which of the following approaches will BEST demonstrate an understanding of the travel department's needs?

Question4: MNO, Inc. has been one of XYZ Company's most valuable customers for a number of years. During a formal competitive bid event for a new product introduction, MNO becomes a supplier to XYZ. In this situation, which of the following should be of GREATEST concern to these organizations?

Question5: A supply manager negotiates an agreement with a salesperson from the supplier's organization. With regard to signing the agreement, which of the following is MOST correct?

Question6: A supplier of software critical to PQR Inc.'s scheduling system plans to discontinue supporting the version PQR uses in order to concentrate its resources on a newer version. The current software works well for PQR, and upgrading It would be costly for them in both money and time. The supply manager for PQR assembles a negotiating team with representatives from user departments to discuss the situation with the supplier and try to reach a mutually satisfactory agreement.
Soon after the start of negotiations, the supplier states that 90 days is the longest they can guarantee support for the current software. PQR's production manager responds by saying, "Fine, we will take any extension at this point." But PQR's IT director shouts, "We can't do that! It will take at least six months to replace the software, even if we could afford to do so." Given this situation, which of the following is the BEST course of action for the supply manager to take?

Question7: A company has a large upcoming project. While the company has a current list of qualified suppliers capable of participating in this project, the chief procurement officer (CPO) wants supply management to conduct site visits with the suppliers under consideration. A senior supply manager is given the assignment of planning and scheduling the visits. Which of the following is the BEST way to begin this project?

Question8: After a bid process concludes and an award is made, there should be a debriefing process that involves

Question9: A manufacturing company experiences an increase in returns due to product quality issues. A root cause analysis determines that the raw materials are the cause, not the production process. In order to resolve this issue and avoid similar problems in the future, the firm should FIRST do which of the following?

Question10: The chief executive officer (CEO) of a candy company directs the firm to source, produce and market a line of organic clothing. The firm's internal stakeholders are not in agreement with the CEO. In this situation, which of the following courses of action should supply management take?

Question11: A US-based manufacturing firm receives a quoted price for an item from an offshore supplier of $.40 each (in US dollars), delivered duty paid to its US plant per Incoterms 2020 rules, in minimum quantities of 20,000 units. The buying organization uses 80,000 units per year, and the carrying cost is 25%. The item price is fixed for one year. What are the total costs of purchasing annual requirements from this supplier?

Question12: DEF, Inc. conducts a Request for Information (RFI) to identify suppliers who will be invited to participate in a Request for Proposal (RFP) for technical support. The RFI requires audited financial statements. DEF receives an inquiry from a publicly traded supplier asking if their 10K statement will suffice, and a privately held supplier states that it will only provide its audited financial statement after receiving a nondisclosure agreement from DEF.
Given this situation, which of the following is the BEST course of action for DEF to take?

Question13: A supply manager Is leading a team in developing a strategic sourcing strategy for the company's corporate-wide desktop and laptop computer procurement. Several business unit managers get into a heated debate over the relative Importance and exposure of desktop computers for their specific business units. Some units consider the desktop computer to be a low risk/low value commodity, while others consider them to be high risk/high value critical items. How should the supply manager proceed?

Question14: Which of the following is the MOST important reason for supply management to share company business plans with current and prospective suppliers?

Question15: A supply manager is planning to conduct negotiations with three potential suppliers, one of which will be selected to provide components for a new product line. A number of internal stakeholders have asked to participate in the negotiations. However, most of the stakeholders have not been involved with the sourcing process up to this point. In this situation, which of the following would be the BEST approach for the supply manager to take?

Question16: Questions pertaining to standardizing products, reducing the number of suppliers, and combining volumes to attain better pricing are BEST addressed by which of the following?

Question17: The types of suppliers MOST suited for regular business reviews are those providing

Question18: As interest rates rise, what will MOST likely be the effect on supply?

Question19: A supply manager Is seeking potential suppliers to recreate a now obsolete custom component. The supply manager identifies five suppliers who have the technology to manufacture the part. The supply manager wants to understand the capability of these suppliers prior to bidding. Which of the following should the supply manager use in this instance?

Question20: XYZ, Inc. currently has a transactional relationship with suppliers, but would like to work strategically with them. The firm wants to initially focus attention on the most critical suppliers. To do this, they should FIRST reach out to

Question21: A supply manager is developing a request for proposal (RFP) for travel agency services. The firm's travel manager has a short list of requirements that have served the company well in the past. However, the vice president (VP) of sales wants frequent fliers from the sales team to be given special status. The travel manager is concerned these additional requirements will limit competition and result in a less favorable deal. In which of the following ways can the supply manager BEST resolve this situation?

Question22: MNO, Inc. is a manufacturing operation that has recently expanded from domestic to global locations. MNO's supply management department is considering a plan to obtain raw materials from suppliers nearby each location. The organization currently handles its sourcing from headquarters, which provides coordination and support for all contracts. Which of the following strategies will likely be MOST useful to MNO's expansion efforts?

Question23: HIJ, Inc. is planning to purchase a generic, well specified item offered by many suppliers. This will be HIJ's first time purchasing an item of this type. The market is highly competitive, and HIJ has identified many pre-qualified suppliers. HIJ needs a standard weekly delivery of two full truckloads of the item to meet a fixed production schedule. In this situation, which of the following is likely to yield the BEST value for HIJ?

Question24: A foundation maintains ongoing relationships with agents in several remote locations. The agents are recruited to serve as instructors for the foundation's microbusiness development program. The foundation's supply manager learns that one of the agents has gone outside the defined area of responsibility by having repairs made to the local office after a storm. The agent explains that the building was unusable and potentially dangerous, and had to be repaired. The agent tried to contact the foundation headquarters to request approval for the repairs, but communications were down. Which of the following is the BEST course of action for the supply manager to take?

Question25: A chief executive officer (CEO) asks a supply manager to prepare a statement of work for a consultant to perform audit services. The consultant occasionally does other non-audit work for the company. In this situation, which of the following is the BEST course of action for the supply manager to take?

Question26: EFG uses specialized components from Supplier A in the manufacture of state-of-the-art testing equipment.
Supplier A has been very successful in meeting EFG's stringent quality specifications, which has been critical for EFG.
EFG learns that Supplier A plans to acquire a smaller firm which makes components similar to those under contract with EFG. EFG is concerned that the supplier may transfer its contract to the new subsidiary, leading to compromises in quality. Given this situation, which of the following is the BEST course of action for EFG to take?

Question27: A legal protection that covers an invention, the discovery of a process, or a machine or method of manufacturing, is known as a

Question28: A supply manager concludes that the best source for a critical component is a manufacturer located in an overseas country. The supplier's pricing and reputation are excellent, but it is in an area that Is politically and economically unstable. The supply manager has no experience in this country, but needs to build a relationship with the supplier. Given this situation, which of the following will be MOST helpful in the long-term?

Question29: A commodity manager at company headquarters is given responsibility for consolidating spend among all the company's locations, with the goal of leveraging larger volumes. The manager collects data on spend categories, analyzes the information by supplier and type of material, and sends out goals for combining spend and reducing the number of suppliers. Several locations express reluctance to participate, saying that their needs for quality and delivery of critical parts have not been taken into consideration. Based on this situation, which of the following errors was MOST likely made by the commodity manager?

Question30: A luxury scarf manufacturer located in Europe selects a fine wool supplier in Australia. The manufacturer's supply manager wants to ensure timely monthly deliveries while keeping transportation costs reasonable.
Which of the following actions by the supply manager is MOST likely to meet the scarf company's needs?

Question31: A firm has repeatedly experienced communication problems with three crucial suppliers. The firm's supply manager concludes that many of these problems are the result of not having regular business reviews with these suppliers. However, all three suppliers have indicated that they do not see the value in regular business reviews. Given this situation, which of the following is the BEST course of action for the supplier manager to take?

Question32: A company buys 200 metric tons of ethylene per month. The firm has a one-year agreement with Supplier X to buy the ethylene at $1000 per metric ton. After 3 months, the market price drops to $900 per metric ton, and the firm renegotiates the price to $890 per metric ton for the remaining contract term.
What savings should be reported?

Question33: A firm buys a particular product that has low business impact and low supply market complexity. How would this product be categorized using the Kraljic classification model?

Question34: Which of the following is the BEST long-term strategy for creating top line revenue growth and increased sales for both an organization and its key suppliers?

Question35: TUV Inc., a small manufacturing firm, hopes to rebuild its customer base and return to profitability after a period of losing market share. Negotiations with a key supplier will be an important factor in this turnaround if target costs and pricing can be worked out.
Given this situation, which of the following would create the MOST challenging constraints In negotiations?

Question36: Which of the following is the FIRST step in the category management process?

Question37: A supplier's willingness to deal with rejected materials, fill surges in orders, and provide technical support will be MOST affected by which of the following?

Question38: A supply manager Is conducting negotiations with a supplier. The supplier states that it cannot offer a lower price because the product under negotiation is covered by a government contract. In this situation, the supply manager should

Question39: A supply manager for JKL, Inc. finds a potential new supplier for an item included In a finished product.
Quality and service are comparable to those of the current supplier, and the new supplier's cost per unit is $.03 lower than that of the current supplier. Making the transition to the new supplier will require changes to operations costing approximately $12,000. How many units would JKL need to buy in order to justify changing suppliers?

Question40: Of the following, the BEST way for supply management to effectively support stakeholders is to ensure that

Question41: Which of the following BEST describes a cash flow budget?

Question42: CDE, Inc. contracts with a supplier for the fabrication of trade show booths and displays. The contract is on a cost-plus fixed fee (CPFF) basis, with the supplier's agreed-upon fee set at $15,000 and the estimated allowable cost of materials set at $20,000, for a total of $35,000. The supplier is able to bring down total material costs to $18,500. Given this situation, how much can the supplier bill CDE for the project?

Question43: IJK, Inc. is currently under contract with Supplier X to provide parts utilized in retail products manufactured by IJK. Demand for UK's products is expected to increase dramatically, and thus the firm's supply manager wants to explore possible cost savings. Supplier X has been a reliable supplier for many years and provides excellent quality, on-time service, and a willingness to work with UK on improvements. However, the supply manager believes Supplier X's price is too high, as a competitor is offering a lower price. Given this situation, which of the following is the BEST course of action for UK's supply manager to take?

Question44: An operations manager wants to replace the existing fleet of aging vehicles owned by the company. The operations manager presents the supply manager with a list denoting the quantity, makes and models currently in operation:
Quantity
Brand A - 4X4 SUVs15
Brand B - Midsize Cars5
Brand C - Compact Cars45
Which of the following is the BEST course of action for the supply manager to take?

Question45: A corporation acquires a startup company, with the objective of branching out into a new product line. The firm's procurement team needs to enlarge the supply base in order to meet the new production requirements.
Which of the following is the BEST way for the team to ensure suppliers are aligned with organizational goals?

Question46: One of TUV Company's largest suppliers has been performing poorly, and the quality of its services does not meet the needs of a particular stakeholder. Which of the following is the BEST way for TUV's supply manager to evaluate how to establish service level agreements (SLAs) to improve the performance of this supplier?

Question47: BCD Inc. is in the early stages of selecting a new procure to pay (P2P) system, which is expected to add efficiencies and reduce transaction costs. Which of the following is the BEST way for supply management to participate in the selection of this system?

Question48: DEF, Inc. is a multinational oil company expanding into a new geographic region. The firm's policy is to purchase locally for its operations whenever possible. Thus, DEF needs to find sources of materials, basic equipment, and standard bulk items within the new region. Given this situation, which of the following is the BEST way for DEF to proceed?

Question49: It takes an employee 30 minutes to produce the first unit of an item. If an 80% unit learning curve is in effect, what is the projected time required to produce the eighth unit?

Question50: A rapidly-growing food service company Is creating a service level agreement (SLA) for laundry services. The current supply base has invested in new machines. Which of the following should be the PRIMARY focus area of the new SLA?

Question51: For many years, BCD Inc. has purchased electronic assemblies from Supplier X. Based on Supplier X's past reliability, BCD eliminated incoming inspection of these assemblies several years ago. Recently, increasing quality problems have emerged, causing significant delays in BCD's manufacturing process. BCD's supply manager believes Supplier X is falling behind the market in technological advances and wants to assess the market for new opportunities. Given this situation, which of the following should the supply manager do FIRST?

Question52: A company that makes specialized equipment for a very competitive industry relies on several critical engineered imported components. The components present a high degree of risk that could impact the future growth of the company. Given this situation, which of the following is the BEST course of action for the buying organization to take when preparing for negotiations with suppliers?

Question53: A supply manager Is leading a project to implement a change from a common grade material to a newer grade that improves performance and achieves cost savings. The project team includes representatives from engineering, quality, sales, product development, and cost accounting. Two suppliers capable of producing the new material have been identified and proposals have been received. The project is now approaching the final implementation phase. Which of the following should be the NEXT step in the process?

Question54: Which of the following is MOST appropriate for review by an audit committee?

Question55: The procurement team for a construction firm is tasked with identifying a new supplier of small construction tools. The tools will be subject to heavy usage, and the firm wants the team to focus not only on costs but also service, to ensure the items can be repaired or replaced quickly. However, the firm does not want to invest in any specialized service, and the tools do not represent a strategic advantage to the firm. Based on this information, which of the following kinds of partnerships should the procurement team pursue with the supplier?

Question56: A procurement specialist reviews a report from a financial agency about a potential supplier. The report reveals that the supplier had a lien against some of its assets a few years ago, that the supplier has had several delayed payments over the last few months, and that the supplier's debt-to-equity ratio equals 2.0. Which of the following is the BEST course of action for the procurement specialist to take?

Question57: The chief procurement officer (CPO) for a large hospital system is planning to implement a new e-sourcing system. Satellite clinics and specialty centers will be authorized to process small orders through this system, rather than sending requests to the central supply management department, as has been done in the past. Which of the following actions by the CPO will MOST likely support a successful implementation of this system?

Question58: The price of raw materials for a critical product is highly volatile. The supplier will not commit to long-term pricing due to the dramatic swings of raw material price. In this situation, the buying organization should

Question59: Rebates are considered part of which of the following types of cost management?

Question60: According to the Law of Agency, a supply manager acting as an agent makes decisions and acts in whose interest(s)?

Question61: Which of the following is a factor to be considered in a Total Cost of Ownership analysis for fleet automobiles?

Question62: A firm wants to reduce the supply base for a particular product from three to two suppliers. Which of the following is the BEST course of action for this firm to take?

Question63: A sourcing manager is negotiating a contract with a human resources supplier that has access to employee data, including social security numbers. The supplier proposes an annual cap of $10,000 on overall liability. In this situation, which of the following is the MOST important stakeholder for the sourcing manager to consult in regard to this supplier?

Question64: Which component of the COSO framework, as required by the Sarbanes-Oxley Act of 2002, specifies that the buying organization must have top management commitment and a supporting organizational culture in which policies and procedures are standardized?

Question65: An organization is preparing its budget for the next fiscal year. Management challenges the procurement team to reduce MRO purchasing costs. The procurement team has reduced the janitorial services budget by 2.5%, but corporate management wants a 5% reduction. Which of the following is the BEST approach for the team to take in order to meet management's expectation?

Question66: A manufacturing firm has a product that has been experiencing shrinking profits. The product requires several high-tech parts with strict specification tolerances. The contract for these parts was recently renegotiated with favorable terms, including lower costs. The firm's supply manager has been asked to reduce the product's costs and improve margins. Given this situation, which of the following is the BES1 course of action that the supply manager can recommend?

Question67: A manufacturing company with plants and suppliers in numerous locations wants to cut its travel budget for the next year by 20%. Which of the following is MOST likely to help reduce travel costs?

Question68: Which of the following Is the BEST way to address a supplier's service performance and product quality during an annual business review?

Question69: A supply manager needs to develop additional raw material suppliers in support of a category management plan created for a specific region. The project has been approved by senior management and the team has been selected. Which of the following is the NEXT step the supply manager should take?

Question70: RST Bus Corporation contracts with Supplier X to buy 5,000 gallons of diesel fuel per month over the course of a year. After the first delivery is used in RST's fleet of tour buses, several of the buses stall on the highway.
An inspection by RST's mechanics determines that the damage was caused by contaminated fuel. RST's supply manager notifies Supplier X that no further deliveries will be accepted, and that the supplier is expected to pay the cost of the repairs to the buses. In response, Supplier X cites its contract clause disclaiming warranties and liability, and its e-mail acceptance of RST's purchase order, including a statement that Supplier X's terms and conditions were applicable and available upon request. Supplier X contends that RST must accept all scheduled deliveries.
In this situation, which of the following is the BEST course of action for RST's supply manager to take?

Question71: A sourcing manager is evaluating the following bids:
Quality ScoreCost
Supplier 190$100,000
Supplier 290$104,000
Supplier 3100$105,000
Supplier 4100$110,000
To score the cost attribute, the company with the lowest cost is awarded 100 points. The remaining companies lose 1 point for every 1% in higher costs. The overall weighting for the score is 50% quality and 50% cost.
Which supplier should be awarded the contract?

Question72: A supply management team reviews all documents dealing with processes and procedures for the supply management function. Each team member reviews the documents and reports back to the group on the accuracy of the information, particularly concerning financial transactions. Any discrepancies are documented, updated, and submitted to senior management for approval. Which of the following is the MOST important legal requirement for this activity?

Question73: A team from RST, Inc. is conducting a negotiation session with a supplier. During the session, RST's lead negotiator perceives that various members of the supplier's team are being evasive on the issue of the supplier's capacity to handle the project. However, there is no apparent sign that the other members of RST's team share this perception. Given this situation, which of the following is the BEST course of action for the lead negotiator to take?

Question74: After working for several years at ABC, Inc.-a large manufacturing company-Smith moves to a senior position at XYZ, a smaller firm which is part of ABC's family of companies. In an effort to lower costs, Smith begins negotiations with a supplier that sells to both ABC and XYZ. While at ABC, Smith was able to negotiate very favorable contracts for parts and services. However, Smith is unable to obtain as favorable terms for XYZ with the same supplier.
To improve XYZ's position, which of the following is the BEST course of action for Smith to take?

Question75: A company's internal ordering system for indirect spend generally works well, though one group of products is often ordered under the wrong commodity codes, making spend history inaccurate. Which of the following will MOST likely improve data accuracy?

Question76: EFG, Inc. is conducting a sourcing activity to identify a provider of operational software. Both large and small consulting firms are invited to bid. Given that the supplier's financial stability will be an important element in the selection process, which of the following is the BEST course of action for EFG to take?

Question77: Planning and negotiating a contract while considering its impact on a supplier is an example of which of the following?

Question78: PQR, Inc. is a large international life insurance company. PQR's vice president of sales asks the firm's supply manager to require that any future procurement contracts contain a provision which obligates the supplier to make PQR's insurance products available to the supplier's employees for optional purchase. In this situation, the supply manager should

Question79: A manufacturer develops a new product that will be more efficient and easier to use than previous versions.
Prototypes are created, evaluated, and approved, and the company begins large scale production.
Three months into production, costs rise beyond expectations, due to one of the raw materials not providing the economies of scale predicted by the design team. This results in a net loss at the recommended price point. Which of the following actions should the design team have taken to prevent this situation?

Question80: A company that wants to add value to its operations should work with its suppliers on which of the following?

Question81: When developing a supplier exit strategy, which of the following is generally considered the MOST important internal consideration?

Question82: A U.S. firm receives several blds for a piece of specialized testing equipment. A supplier from Japan quotes a price of 360,000 Yen. If the current exchange rate is 90 Yen per U.S. Dollar, what will the price be in U.S.
dollars?

Question83: DEF, Inc. is a medium-sized manufacturer in the precious metals industry. Continued price increases in precious metals have put a strain on the financial resources of suppliers, and while some have closed their businesses, others have converted to lower cost metals. DEF's supply manager is concerned not only about the evaporation of the specialty supply base but also that marketing efforts into new online markets are providing new growth and renewed demand for long-established product lines. The supply manager determines that although little precious raw material Is used internally in the organization, the combined volumes from component manufacturers are large and growing.
Which of the following should the supply manager employ to gain value under these conditions?

Question84: A supply manager conducts a two-step bidding process for production material. A supplier is selected and a contract is signed. During the post-contract debriefing session, another supplier offers a lower price and payment terms that are more advantageous to the buying organization. Should the supply manager accept the supplier's offer?

Question85: For several years, an environmental services company has contracted on a single-source basis with a supplier that offers highly specialized testing procedures. The supplier's performance is excellent, but it has Instituted frequent rate increases. The company's supply manager is under pressure to reduce costs wherever possible, but developing other sources will be time-consuming. Given this situation, which of the following actions should the supply manager take FIRST?

Question86: According to the Sarbanes-Oxley Act, to whom must an audit committee for a publicly traded company answer?

Question87: DEF Company receives several proposals for the manufacture of a sub-assembly used in an important product line. All of the responding suppliers indicate they plan to subcontract part of the work in order to meet high seasonal demand. Most of the proposed subcontractors are located in low-cost offshore locations. The supply manager is concerned that the subcontractors may not adhere to DEF's standards for fair labor practices.
Which of the following is the BEST way of ensuring that the suppliers' subcontractors maintain fair labor practices?

Question88: A service provider has experienced diminished value and stagnant results within an important category. Which of the following is the BEST course of action the firm can take to improve the category strategy?

Question89: XYZ, Inc. is negotiating with Supplier DEF for materials needed in manufacturing. The negotiations are moving slowly, primarily due to delays and postponements by the supplier. DEF has been the primary source for the material under negotiation, and while there are other potential sources, lead times would not make it feasible for XYZ to seek an alternative on such short notice. Which of the following tactics is DEF MOST likely employing?

Question90: With which group of suppliers is It MOST important to conduct regular performance reviews?

Question91: During negotiations with a supply manager from FGH Inc., a supplier states that if FGH buys the 200 gigabyte version of its software package at a price of $700, the supplier will include a never-before-sold malware license valued at $147. FGH needs both the malware and the software package. If the supply manager agrees to the offer, FGH may claim a

Question92: A buying organization requires suppliers to maintain an on-time delivery rate greater than 90%. Based on the data below, which of the following can be concluded regarding the delivery performance of these three suppliers?
Supplier A ScoreSupplier B ScoreSupplier C Score
Total Shipments10002000500
Late Shipments6012551

Question93: When developing a category management plan, which of the following is the BEST reason for soliciting cross-functional input?

Question94: A supply manager Is conducting financial analyses of bidders. The supply manager wants to select the supplier that is the most efficient in its use of assets. Based on the following information, which supplier should the supply manager choose?

Question95: A supplier's willingness to deal with rejected materials, fill surges in orders, and provide technical support will be MOST affected by which of the following?

Question96: A plumbing supplies company asks its supply manager to develop a category management plan for the coming year.
The supply manager conducts a spend analysis in order to identify and rank the most important categories.
Which of the following should the supply manager use?

Question97: A supply manager for DEF Inc. meets with the firm's operations team to discuss the requirements for a new piece of equipment. The team establishes the specifications, and the supply manager begins contacting suppliers. The supply manager finds that almost everything specified is outside the normal features of the equipment and will require custom modifications. These modifications will raise the cost to 2.5 times the amount budgeted. In this situation, which of the following should the supply manager do?

Question98: A firm currently pays $14 per unit for a part used in manufacturing. In an effort to lower costs, the firm invites potential suppliers to participate in an online auction. Suppliers complete a pre-qualification phase before the auction begins. The auction starts with an opening bid of $9 per unit. The auction lasts four hours and no suppliers submit bids. Which of the following is the MOST likely reason for the lack of participation in this auction?

Question99: Which of the following is the simplest form of supplier evaluation?

Question100: During its first annual business review, a supplier requests an increase in pricing. The supplier's survey results show a rating of 2.9 out of 5 possible points (with 3.0 being acceptable). Market indices indicate that the supplier's industry has experienced no price increase. In this situation, which of the following is the BEST course of action for the buyer to take?

Question101: Which of the following is the GREATEST benefit of inviting suppliers to visit the buyer's facility?

Question102: Which of the following is a key element in the development of an auditable supply chain management process?

Question103: A company's major supplier of sub-assemblies provides excellent quality and reasonable costs. However, shipping delays and damage in transit make this supplier less reliable than desired. The supply manager would like to retain this supplier if possible, but is concerned about the reliability issues. Given this situation, which of the following is the BEST course of action for the supply manager to take?

Question104: A multinational company is in the market to purchase widgets. The firm's standard payment terms are net 80.
While negotiating terms and conditions, a supplier offers to provide a 2% discount on the purchase price of the widgets if they are paid within 35 days. This is an example of which of the following?

Question105: CDE Inc. is a metal casting manufacturer that uses a supplier performance scorecard to measure key performance indicators (KPIs) across the business. CDE's supply manager wants Supplier Y to improve on a number of the measured KPIs. Which of the following is the BEST approach for the supply manager to take in order to achieve this objective?

Question106: UVW, Inc. issues a Request for Quotation (RFQ) for urgently-needed safety equipment. The equipment must be installed immediately in order to keep the firm in compliance with safety regulations. UVW is contacted by a small, minority-owned company which asks for two more weeks to submit its quotation, as its technical expert is out sick. In this situation, which of the following is the MOST appropriate course of action for UVW to take?

Question107: A firm issues an RFQ for specialty electronics to be used within a new product line. Internal needs are assessed and specifications are prepared by engineering. The bid is sent to five current suppliers, all of whom are familiar with the firm's supply chain. However, only two of these suppliers respond, and their quotes are much higher than expected. Which of the following is the MOST likely explanation for what occurred?

Question108: Which of the following is the PRIMARY benefit of supply base rationalization?

Question109: A manufacturing plant employs an enterprise resource planning (ERP) system. The supply management staff find the data provided by this system to be incomplete or incorrect. Which of the following should the supply management staff do FIRST In order to obtain more useful information?

Question110: A firm enters into a contract with a minority business. The invoice does not match the purchase order, and some incorrect items are shipped. The erroneous items, valued at $5,000, are returned. The replacement items are scheduled to be delivered within 2 days. The total invoice is for $18,000, which is a substantial amount for the business. Preferential payment terms have previously been negotiated from 30 to 14 days from receipt of goods, as cash flow is a significant issue. The situation is summarized as follows:
Purchase Order RaisedGoods Received Invoiced
Timing18 days ago 13 days ago 12 days ago
Amount$18,000 $18,000 $18,000
As it will take one business day to process payment, a decision needs to be made on whether the supplier should receive payment on time. Which of the following courses of action should the supply manager take?

Question111: A supply manager Is evaluating bids for a new delivery van. Supplier J, which has provided similar equipment in the past, quotes a price of $50,000. Supplier K quotes a price of $52,500, but Includes an offer to buy back the van at the end of five years for $3,000. Both suppliers' bids meet specifications and delivery requirements.
At a 10% opportunity cost of capital, and with the 5-year present value of $1 at $.62, which supplier should the supply manager choose, and why?

Question112: A company recognizes a need for new and improved product offerings but does not have the necessary personnel or resources to accomplish this task. Which of the following is the MOST effective way for the firm to approach this problem?

Question113: A manufacturing company purchases a certain component in quantities of 10,000 units per truckload. The company uses 2,000,000 units annually. The firm's supply manager identifies two possible suppliers of the component, both of which meet service and quality requirements.
Supplier A offers the component at $.69 per unit and charges $2000 to ship one truckload. Supplier B offers the component at $.71 per unit and charges $1500 to ship one truckload. Given this situation, which of the following will be MOST useful to the supply manager in deciding between the two suppliers?

Question114: A manufacturing company has numerous sites around the country. Supply management teams at each location do not have the same understanding of the different Internal processes. Which of the following should senior supply management do in order to correct this problem?

Question115: PQR, Inc. is a globally certified manufacturer and repair shop of aircraft parts. PQR's costs to produce these parts are as follows:
MethodCost per part
Manufacture internallyS 11,000
Purchase from outside manufacturer$ 10,000
Acquire resale parts and repair internally$ 9,000
Purchase refurbished parts from non-certified repair shop with its extended warranty$ 8,000 The firm's CEO directs supply management to provide wing flap inventory at the lowest cost to the company, while still meeting the goal of multinational market expansion. Which of the following courses of action BEST meets the CEO's directive?

Question116: To weigh the benefits and risks of outsourcing a function, a supply manager conducts due diligence from cost, cultural, and service perspectives. The skills the supply manager is employing can BEST be described as

Question117: The ability to explain how and why decisions are made in support of business plans is important because it allows a supply manager to

Question118: Which of the following is the MOST important factor in the development of RFx documentation and processes?

Question119: A supply management department for a manufacturing organization receives performance reports from four suppliers and evaluates the performance of these suppliers using the weighted-point approach. Factors related to employee resources, such as worker safety and worker dignity, are used to break any ties. A higher score denotes a more favorable rating.
CategoryWeightSupplier A ScoreSupplier B ScoreSupplier C ScoreSupplier D Score Cost40%3454 Workers' compensation program20%5344 Support for employee resource groups20%5335 Customer satisfaction20%4444 Total100% Which of these suppliers can be considered the BEST performer of the four?

Question120: A company buys electronic connectors in lot sizes of 5000 units at a price of $1.00 per unit, including freight.
This connector has an annual usage of 80,000 units. The carrying cost is 25% per year. Assuming a constant consumption rate, what are the annual carrying costs for the connectors?

Question121: Motivated by public relations considerations, a company decides to insource the manufacture of a major product. This decision was MOST likely made to bring about

Question122: A firm's supply manager is asked by the engineering department to replace a chemical used in a majority of products made by the firm. The current chemical is Imported and has components that are highly regulated.
Engineering wants to replace it with a chemical that uses non-hazardous domestic materials. This chemical would still have to be reported and customers would have to be notified of the change. Initial tests indicate that the new chemical is as effective as the old one. In this situation, which of the following should be the FIRST step taken by the supply manager?

Question123: A company purchases a high-value product In an industry known for slow turnover on receivables. This creates issues with cash flow and presents a special challenge to supply management. Given this situation, which of the following should this firm negotiate to BEST avoid difficulties in the buyer/supplier relationship?

Question124: Developing a category management plan can BEST be accomplished by

Question125: A manufacturing firm creates a steering committee to review a proposal to manufacture a new product. The product is regarded by the firm's sales team as a customer requirement based on "voice of the customer" input.
In the past, this product was seen as a high-risk noncore item, but the situation has now changed enough for the firm to warrant consideration. The firm's supply manager is tasked with developing a sourcing plan for the steering committee. In this situation, which of the following is the NEXT course of action the supply manager should take?

Question126: MNO, Inc. purchases benchmarking data services from Supplier X, which is the sole source for data relevant to MNO's industry. In recent months, Supplier X's pricing has increased and its technical support has worsened. MNO's supply manager is preparing to negotiate for contract renewal with Supplier X and needs to resolve these concerns. Which of the following is the BEST course action for the supply manager to take before conducting negotiations?

Question127: Separating processes such as ordering, receiving, and payment into different duties to be performed by different employees represents what aspect of internal controls?

Question128: Which of the following is the BEST course of action to take in order to develop a positive working relationship with a supplier?

Question129: A supply manager identifies an overseas source for parts used by the organization. The supplier's capacity, performance, reputation and sample quality are all acceptable. During final price negotiations, the supplier requests that the contract be based on its local currency. Which of the following is the FIRST course of action the supply manager should take in order to address the possible impact of this request?

Question130: CBA Incorporated is an up-and-coming automobile manufacturer. CBA issues a request for proposal (RFP) for a supplier of a new radiator, to be designed by the supplier in accordance with specifications created by CBA.
Two bidders are Interested: Supplier X, with whom CBA currently does business, and Supplier Y, who is new to CBA. The firm plans to make the chosen supplier a single source for all of CBA's radiators in return for collaborative design development and open book pricing, so that profit margins can be agreed to and set. The suppliers respond to the RFP, and Supplier X quotes a much higher price than Supplier Y. Given this situation, which of the following should CBA do?

Question131: A supply manager receives negative feedback from internal stakeholders about several suppliers. However, the scorecards for these suppliers have been positive over the past few quarters, and any diminished performance is not reflected. Which of the following MOST likely explains this situation?

Question132: A supply manager is planning a major sourcing event and wants to increase competition, especially by small and minority-owned businesses. The supply manager strives to maintain fairness with all suppliers. Which of the following is the BEST way to encourage diverse suppliers to participate?