EMT Practice Test

1. Question Content...

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Question1: BCD, Inc. manufactures a product for a highly regulated industry. All details of the product must be traceable.
The firm's engineering team specifies the types and quantities of materials within blueprints, but this is insufficient, as a record of material usage needs to be maintained. The product development group asks supply management to develop a system. Given this situation, which of the following is the BEST course of action for supply management to take?

Question2: 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?

Question3: A company that wants to add value to its operations should work with its suppliers on which of the following?

Question4: Which of the following is the PRIMARY benefit of supply base rationalization?

Question5: In portfolio analysis, purchases for which the buying organization consolidates spend with a handful of suppliers but still maintains competition are BEST classified as

Question6: 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

Question7: Which of the following is MOST important to review before employing a low-cost country sourcing (LCCS) strategy in a remote region located in a distant geographical location?

Question8: 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?

Question9: Which of the following is a factor to be considered in a Total Cost of Ownership analysis for fleet automobiles?

Question10: Which of the following is the PRIMARY reason an organization's executive team and internal stakeholders should be aligned on the definitions of cost savings reporting?

Question11: 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?

Question12: A supply manager works with engineering on an aerospace project. A request for quotation (RFQ) Is distributed to five potential suppliers, three of whom respond that they are not interested In the project. The two remaining suppliers say they are interested, but a high level of risk involving tight tolerances will force them to raise prices significantly, and neither will accept a firm fixed price contract. The supply manager arranges a conference with engineering and both suppliers. During this conference, it is determined that only three of the tolerances are truly critical. Based on this conference, a revised RFQ is issued.
This scenario is an example of which of the following aspects of supply management?

Question13: Which of the following refers to a stakeholder want as opposed to a stakeholder need?

Question14: 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?

Question15: 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?

Question16: 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?

Question17: As interest rates rise, what will MOST likely be the effect on supply?

Question18: PQR, Inc. is a small manufacturing firm that is rebuilding its customer base after emerging from bankruptcy.
PQR now projects growing demand for its products. PQR's supply manager is planning negotiations with a key supplier that has worked well with the firm in the past. Which of the following is the STRONGEST factor the supply manager can use to improve PQR's negotiating position?

Question19: 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?

Question20: A machining company outsources its recycling program to a third party. The third party recycles the metals from the production area, but neglects to recycle the aluminum cans from the break room, as this stipulation was not included in the service-level agreement. This situation is MOST likely a result of the supply manager's failure to have an appropriate

Question21: A firm becomes a publicly-traded company. To ensure compliance with Sarbanes-Oxley, the company must report what types of risks (if any) on the annual report to shareholders?

Question22: The supply manager for TUV Inc. is planning for negotiations with a supplier of software critical to TUV's order processing system. The supplier informs the supply manager that support for this software will soon be dropped. Upgrading to a newer version will be cost prohibitive for TUV. Given this situation, which of the following is the BEST course of action for TUV's supply manager to take prior to negotiations?

Question23: An exploration firm's supply manager meets with the fleet operations team to plan for the acquisition of vehicles to be used in company operations on a remote Pacific island. As removing the old vehicles from the island has proven to be a significant problem, the team requests the inclusion of a "take-back" requirement in the contract. Which of the following is the BEST way for the supply manager to respond to this request?

Question24: 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?

Question25: A product is approaching end-of-life, and the firm is considering its various options. While long-term, ongoing conflicts have occurred between the current supplier and the buying organization, there are few other supply options available for this particular component. In this situation, which of the following is the BEST course of action for the firm to take to ensure continued supply?

Question26: 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?

Question27: A supply manager is drafting a request for proposal (RFP) for courier services. Which of the following requirements is MOST likely to affect external stakeholder satisfaction?

Question28: 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?

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 business unit conducts discussions with key management members that Include category overviews, contracting executive summaries, local content spending plans, sourcing timelines, and cost management/value creation. These presentations can BEST be described as which of the following?

Question31: 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?

Question32: Which of the following BEST describes the strategic sourcing process?

Question33: 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?

Question34: An automobile manufacturer learns that its supplier for brake parts cannot maintain a steady workforce of machinists. In this instance, it is likely that the manufacturer failed to examine which of the following during supplier performance evaluations?

Question35: 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

Question36: A supply manager for XYZ, Inc. visits a manufacturer's plant and research division for a general inspection and product review. The supply manager is required to sign in at the registration desk and must acknowledge acceptance of the standard terms of visiting. After the visit, which includes very encouraging discussions, the supply manager returns to XYZ with a sample of a new product-an expensive item of complex design with innovative features. The supply manager must take specific precautions to protect the sample because

Question37: 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?

Question38: A supply manager is conducting financial analysis of bidders. The supply manager wants to select the supplier that is most efficient In the use of its assets. Based on the following information, which supplier should the supply manager choose?

Question39: A chemical company develops a new product that relies heavily on quartz, a common and abundant mineral.
The company believes that the new product is critical to its financial success and future growth. In developing a sourcing strategy for quartz, the company supply manager should focus PRIMARILY on

Question40: 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?

Question41: 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?

Question42: ABC, Inc. Is a large accounting partnership with member firms In 120 countries. ABC's international sourcing team is responsible for establishing contracts with the company's suppliers around the world.
While the quality of negotiated and executed contracts remains impeccable, the sourcing team has received numerous complaints about delays in processing contracts. The delays primarily occur at the contract execution stage, when the assigned sourcing specialist must obtain internal approvals from multiple parties, including international suppliers and member firms. Because of these delays, suppliers must wait until a contract is duly executed before they can start providing services, which has a significant impact on the member firms' commitments to their clients.
Which of the following is the BEST course of action for the sourcing team to take to address this issue?

Question43: Rebates are considered part of which of the following types of cost management?

Question44: 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?

Question45: 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?

Question46: 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?

Question47: A supply manager issues a Request for Quotation (RFQ) for software development services. Two suppliers respond to the solicitation, and both suppliers' quotes are well above the target range. In this situation, which of the following is the FIRST course of action the supply manager should take?

Question48: A buyer finds an opportunity to reduce costs for a particular service through competitive bidding. The buyer issues a request for quotation (RFQ) to prequalified suppliers. However, the statement of work is incomplete, and not clear enough to get an accurate price for the service. Which of the following is the BEST course of action for the buyer to take in order to get a proper statement of work included in the RFQ?

Question49: XYZ Inc. is a chemical manufacturing company. XYZ requires high levels of consistency and precision from certain suppliers in their machining work. In order to drive continuous improvement with these suppliers, XYZ should develop KPIs to track performance in which of the following areas?

Question50: A company's sales have increased from $100 million to $105 million over the past year. The company has a
10% profit margin before taxes and spends 50% of total product costs on materials. To match the resulting profit increase, what percentage reduction in material costs would be needed?

Question51: 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?

Question52: A software design firm has traditionally done most of its work in-house, including support services and distribution management. The firm is planning a large expansion, and is evaluating how the various departments can support It. The chief executive officer (CEO) recommends concentrating on core competencies to increase the firm's agility and emphasize what differentiates them from competitors. Which of the following is the BEST way supply management can support this recommendation?

Question53: 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?

Question54: PQR's supply manager signs a contract with Supplier X for delivery of parts totaling $1,250,000 per year for four years. Accompanying the contract is a copy of the organization's signing policy, which states that supply managers have authority to execute contracts up to $1,000,000 per year. Supplier X questions the discrepancy, but is told verbally by the supply manager that the policy has changed, and supply managers now have a
$1,500,000 per year signing limit for up to five years.
Senior management at PQR discovers the supply manager's misstatement and tries to disavow the contract.
This attempt will likely be

Question55: A small electronics manufacturer patents a new device for securing internet servers. While this device consists of standard components and is simple to manufacture, it also contains proprietary engineering and design elements not widely known in the marketplace. After receiving a large order, which exceeds the company's current manufacturing capacity, the firm's supply management department is tasked with outsourcing the manufacture of the device to the most competitive sources available. As the supply management team evaluates selected suppliers, which of the following should be given the MOST consideration?

Question56: 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?

Question57: 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?

Question58: During a request for proposal (RFP) debriefing, a supplier provides clarification on some of the answers in the RFP that, had they been included, would have increased the supplier's score. In response to this, which of the following is the BEST course of action for the supply manager to take?

Question59: A firm wants to leverage supply contracts by making maintenance, repair, and operations (MRO) supplies available to all of its subsidiaries. Which of the following is the MOST efficient and cost-effective way to provide product details to potential users?

Question60: Development of which of the following would be MOST beneficial for supplier technologies and processes important to the buying organization?

Question61: 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?

Question62: 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?

Question63: XI Corporation awards a contract for the building of a prototype critical to its introduction of a new product line. To protect itself against delays and unsatisfactory quality, which of the following is MOST appropriate for Xi's supply manager to require from the contractor?

Question64: A supply manager solicits bids for janitorial services. The incumbent cost is $20,000 per month to perform Scope A. After working with internal stakeholders, obtaining bids, and performing negotiations, a new supplier is awarded the agreement. The new supplier's cost is $19,000 per month to perform Scope A as well as Scope B, which was previously performed by another supplier at a cost of $2,000 per month.
What is the annual cost reduction?

Question65: A small company identifies a market need for a new device. However, the firm is relatively young and does not have much design expertise. In this situation, which of the following would be the BEST option for bringing the new product concept to market?

Question66: Which of the following is the GREATEST benefit of a supplier day/forum?

Question67: 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?

Question68: Which of the following is the PRIMARY reason for holding a business review with a supplier?

Question69: A company's accounting department implements a new system to track liabilities for capital assets. The reports developed by this system exclude some important indirect procurement data (e.g., transactions related to test equipment), as this information is tracked by another system. Which of the following is the BEST course of action for the firm to take in this situation?

Question70: 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?

Question71: PQR Inc. sponsors numerous large events involving all of its divisions. PQR's supply manager proposes that the firm coordinate this spend to bring significant savings and simplify administration. However, PQR's top management believes that each division would prefer to deal with its own event planners. In this situation, which of the following is the BEST course of action for the supply manager to take?

Question72: 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?

Question73: 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?

Question74: A large manufacturing firm has offices across the country. The company wants to obtain the best price and reduce administrative costs associated with procuring office supplies. Which of the following would be BEST suited to the firm's needs?

Question75: 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?

Question76: Planning and negotiating a contract while considering its impact on a supplier is an example of which of the following?

Question77: Which of the following is the FIRST step in the category management process?

Question78: Supplier X is awarded an exclusive contract by a resort chain to supply bulk peanuts for the chain's snack bars.
A contract is signed with the term to begin in three months and extend for two years. Pricing per shipment is to be determined by the average monthly price for the previous month, less a fixed discount rate. Before any orders have been placed against this contract, the resort chain's supply manager finds that other suppliers are offering deeper discounts. How, If at all, can the resort chain avoid its commitment to Supplier X and save money by buying elsewhere?

Question79: 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?

Question80: When evaluating bids, the MOST critical aspect Is ensuring the quote meets the solicitation's

Question81: A university is evaluating its student registration software. The current system, purchased from Supplier A, has been in place for five years and works well, but may be outdated. A new system provided by Supplier B includes an online chat feature, which Supplier A's system currently does not have. While the costs for the two systems are essentially the same, Supplier B's system has an additional one-time implementation cost of
$250,000. Supplier A informs the university It will provide its own online chat option for a one-time fee of
$50,000.
The university calculates that switching to any new platform will involve migration costs. In this situation, the BEST course of action for the university is to

Question82: Which of the following is MOST important to address in an exit plan when an organization Is transitioning to a new supplier?

Question83: What is the landed cost per unit for the following item?
Item cost$.76
Packaging for shipment$.02
Shipping from Indonesia$.14
Duty$.03
Customs clearance$.10
Storage at buyer's warehouse$.09
Shipment from warehouse to plant$.06

Question84: According to the Sarbanes-Oxley Act, to whom must an audit committee for a publicly traded company answer?

Question85: 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?

Question86: A supply management department obtains executive support to adopt category management. Which of the following is a key step in establishing the categories to be managed?

Question87: Which of the following BEST describes a single source supply strategy?

Question88: 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?

Question89: A supply management department is looking to standardize purchases across the entire organization and leverage spend with fewer suppliers. Which of the following will be MOST useful for determining historical baseline costs?

Question90: A company employs a special testing device within its laboratories. The firm needs two additional units of this device with the same capabilities, but wants to encourage competition rather than be brand-specific. The company's supply manager issues a solicitation with the brand and model number of the devices in use, appended with the phrase "or functional equivalent". Suppliers of other brands submit inquiries as to what the firm's exact needs are. Which of the following is the BEST response the supply manager can make to these inquiries?

Question91: Which of the following Is a strategic deliverable whereby proactive steps are identified in order to execute tactical-level actions within the sourcing process?

Question92: 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?

Question93: 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?

Question94: 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?

Question95: 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?

Question96: A supply manager Is assigned to a new product similar to products the firm has developed in the past. Because the stakeholders have not defined all of the product's requirements, not all engineering diagrams have been completed, and the program is behind schedule. The program manager requests all procurement lead times for the project. Which of the following is the BEST way for supply manager to respond in this situation?

Question97: Which of the following are considered internal stakeholders?

Question98: A supply manager for TUV, Inc. receives a call from an internal stakeholder complaining that for the past several months, one of TUV's longtime suppliers has been late with shipments, disrupting production. The Internal stakeholder has left several messages with the supplier, which have all gone unanswered. The supply manager listens to the stakeholder's concerns and states that these recent occurrences are atypical for this supplier. The supply manager offers to set up a call with the internal stakeholder and the supplier to discuss the situation and determine how the parties can move forward.
Which of the following BEST describes the supply manager's role in this situation?

Question99: 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?

Question100: A company creates a corporate sourcing team with category management responsibilities. Previously, the firm had no dedicated sourcing staff, and all procurement was decentralized and transactional. The sourcing team is ready to commence its initial project. Which of the following should the team do FIRST?

Question101: A research company develops a tomato that grows in cold weather. The company agrees to sell ten thousand seeds to a broker for $5,000. However, an error is made on the contract which misstates the price as $4,000. The research company and broker both sign the contract without noticing the error. Some weeks later, the broker discovers the error and refuses to pay more than
$4,000. In this situation, the FIRST course of action for the research company to resolve the dispute is to establish with the broker that

Question102: 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?

Question103: Telling a seller during negotiations that "This is our best and final offer" is a(n)

Question104: Which of the following refers to a matrix that reflects the segmentation of spend based on an assessment of the value of the spend relative to the market risk to acquire?

Question105: A product's labor content is $10 and its overhead is $12.50. The product sells for $36.50 per unit. Over the past year, supply management has reduced the product's cost of materials from $14 per unit to $12.
How much have supply management's efforts contributed to profit?

Question106: Which of the following should be supply management's PRIMARY service or material selection criterion?

Question107: 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?

Question108: A supply manager is trying to leverage spend on travel and meeting services for a series of conferences to be held at various locations. The specifics of the conferences will vary according to location and cultural considerations. The organization seeks the best solution to help the conferences succeed.
In this situation, which of the following will be MOST appropriate?

Question109: 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?

Question110: 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

Question111: The use of procurement cards to simplify purchases of low cost/low complexity items is BEST suited for which of the following categories of spend?

Question112: 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?

Question113: A supply manager submits requests for additional personnel and equipment, which are approved. However, the organization's training budget is cut, giving less opportunity to train new employees. The supply manager is concerned that this will adversely affect the department's ability to build expertise. Given this situation, which of the following is the MOST effective action for the supply manager to take?

Question114: According to the Committee of Sponsoring Organizations of the Treadway Commission (COSO) framework, which of the following Is an element of effective internal controls?

Question115: When developing a category management plan, which of the following is the BEST reason for soliciting cross-functional input?

Question116: ABC, Inc. has a supply management department responsible for placing orders. In spite of this, a designer from ABC's engineering department places an order with Supplier X for several products.
When the shipment arrives, it is rejected by the receiving department, as they cannot verify the order with supply management. To avoid this situation, the designer should have

Question117: FGH, Inc. has purchased components from Supplier A for many years. The supplier's performance has been very good, with reliable deliveries and consistently high quality. As contract renewal approaches, Supplier A informs FGH's supply manager that a significant price increase is anticipated, based primarily on the costs of building a new production facility. The supply manager has been directed to negotiate a new contract with Supplier A only if it agrees to maintain current pricing. Which of the following is the BEST way for the supply manager to prepare for negotiations with Supplier A?

Question118: 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?

Question119: 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?

Question120: 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?

Question121: XYZ Company asks a specialized fastener supplier for its help in choosing a fastener for a new product. The supplier recommends its proprietary part for the application. After several months of production, many field issues are reported due to loose fasteners. The supplier refuses to take responsibility, claiming that the blame lies with XYZ. In this situation, which of the following is TRUE?

Question122: At what point in the development of a category strategy should spend review occur?

Question123: A supply manager for FGH, Inc. places a purchase order for 10 widgets with a supplier. The supplier ships 10 widgets and invoices for 10 widgets, and the end user receives 10 widgets. However, the procure to pay system shows receipt of 8 widgets. The supplier demands to be paid the full amount. Responsibility for resolving this issue will fall to FGH's

Question124: 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?

Question125: Of the following, the BEST way for supply management to effectively support stakeholders is to ensure that

Question126: Which of the following refers to the process of generating information about the types of items sourced and their cumulative dollar value, to use for strategic and operational purchase planning?

Question127: At what point in a business relationship with a supplier should discussions be held about which party has responsibility for specific costs, in the event the relationship needs to end?

Question128: Supplier X provides software critical to production at EFG Corporation. Supplier X informs EFG that the software version it currently uses will no longer be supported and recommends an upgrade to a newer version.
However, EFG is very pleased with the performance of the current version, and the costs for upgrading are prohibitive at this time. EFG wants to find incentives for Supplier X to continue supporting EFG's needs. In this situation, which of the following would be the BEST course of action for EFG to take?

Question129: 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?

Question130: 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?

Question131: A firm's primary goal for its upcoming raw material negotiations with a well-performing supplier is cost reduction. In order to achieve this, which of the following courses of action should supply management take?

Question132: 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?

Question133: A manufacturing firm needs to maintain production and prevent delays due to raw material outages and quality Issues. Which of the following is the BEST course of action for this firm to take?

Question134: 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?

Question135: A supply manager for an electronics manufacturer is asked to source packaging for the company's new printed circuit board. The specifications recommend 0.50 mm tolerances, with a projected breakage ratio of 0.50%, at a cost of $1.00 each. The supply manager finds an alternative source that is specified at 0.60 mm tolerances, with a projected breakage ratio of 0.75%, at a cost of $0.80 each. If the cost of the new circuit board is $120 per unit, which packaging should the supply manager recommend and why?

Question136: A supply manager is leading a negotiation team. This team will negotiate with several finalists supplying complex services. Prior to the negotiations, the supply manager briefs the team on strategies, roles and responsibilities. The team members seem to understand the importance of these factors, but shortly after the negotiations commence, several members begin to make mistakes such as arguing witF each other and failing to pay attention. Which of the following is the BEST course of action for the supply manager to take at this point?

Question137: 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?

Question138: Which of the following is considered the HIGHEST level in a supply chain's strategic plan?

Question139: Which of the following is the BEST method for comparing a supplier's performance to that of another organization, with the goal of understanding where improvements might be made?

Question140: A buyer for DEF, Inc. has been exceeding spending authority on agreements with several new suppliers.
Which of the following Is an accurate statement regarding DEF's liability in this situation?

Question141: Parts characterized by high cost/value and low technical complexity are categorized as

Question142: Which of the following is the FIRST step in developing a negotiation plan?

Question143: 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?

Question144: 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. Which of the following should DEF do FIRST?

Question145: An oil & gas exploration company has employed its current offshore vessels for over ten years. The firm is seeking to bring its fleet up-to-date. The firm knows what results it requires, but with the changes that have occurred over the last decade, it is not sure what combination of vessel types and quantities will deliver the most efficient operations for its needs. Given this situation, which of the following will be MOST appropriate for this firm to issue?

Question146: A supply manager seeks bids on a new piece of capital equipment. The equipment is budgeted at $115,000.
Three suppliers send in bids of $110,000, $114,000 and 5135,000. After receiving the bids, additional negotiations with the low bidder result in a final cost of $105,000. In this situation, what should the baseline value be for calculating cost avoidance?

Question147: 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?

Question148: Which of the following is the MOST important reason for supply management to share company business plans with current and prospective suppliers?

Question149: When developing a sourcing strategy, which of the following is the BEST source of data on the spend profile of a category?

Question150: A state university is looking to purchase equipment to scan books and manuscripts into a digital format.
Several variations of this equipment exist in the marketplace, and the university has not decided which format is best for their needs. There is also a possibility that the cost for additional storage requirements will be shared with the state. Given this situation, which of the following is the FIRST course of action the university should take?

Question151: MNO Inc. is a U.S.-based manufacturing company that imports sub-assemblies from Asia and incorporates them into several products. The firm orders in large quantities to obtain the lowest price per unit, and then pulls the items as required to produce finished goods. MNO wishes to improve its cash flow and seeks ways to reduce the impact of import duties. Which of the following Is the BEST approach for the company to use?