Partial preview of the text
Download Smog Check Inspector Exam CA 2025| Questions With Verified and Answers and more Exams Supply Management in PDF only on Docsity!
CPSM Diagnostic Practice Exam 1 | Updated Questions With 100% Correct Answers A supply manager issues a request to proposal for engineering services. In order to provide clarification on the specification on the specifications, the company holds a question-and-answer session for interested suppliers. Shortly after the question-and-answer session is held and before any proposals are actually received, the firm's engineering department revises the specifications. Given this situation, which of the following should the supply manager do FIRST? (A) Call and email the suppliers of the change, tell them when the new specifications will be available, and ask for immediate notification if additional time will be required. (B) Write a letter to each supplier advising of the change, tell each supplier when the new specifications will be available, and ask for immediate notification if additional time will be required. (C) Hold an interim pre-bid meeting withal suppliers to discuss and clarify the revi - Correct Answer (A) Call and email the suppliers of the change, tell them when the new specifications will be available, and ask for immediate notification if additional time will be required. Which of the following should have the MOST influence in determining end product specifications, so as to minimize the potential for returns? (A) Marketing (B) Supply management (C) Engineering (D) D) Manufacturing - Correct Answer (A) Marketing When developing specifications, a buyer may consider information from which of the following? |. Suppliers Il. Industry Standards Ill. Professional Organizations IV. Competitors (A) | and IV only (B) Il and Ill only (C) |, Il and III only (D) I, Il, Ill and IV - Correct Answer (D) |, II, II] and IV A supply manager completes a category profile and identifies services provided through multiple suppliers. A market and industry analysis shows that the service provides are growing their businesses by acquiring competitors, thus enabling them to provide a greater range of services. Which of the following techniques will BEST enable the supply manager to leverage market competition? (A) Lotting strategy (B) Market-basket model (C) Market segmentation (D) Sole sourcing - Correct Answer (A) Lotting strategy A supply manager implements a system whereby the potential supplier names are hidden until final contract awards are made. This example is BEST described as ensuring (A) confidential information is protected (A) The supply manager and supplier conclude the negotiation by splitting the difference between their respective positions. (B) The supply manager and supplier each find concessions with equal weight/value to provide a balanced outcome. (C) The supply manager and supplier decide to share confidential information. (D) The supply manager and supplier establish an appropriate settlement range for the continuation of negotiations. - Correct Answer (B) The supply manager and supplier each find concessions with equal weight/value to provide a balanced outcome. An in-depth analysis of a supplier's proposal is useful because it is important to understand the (A) SOW throughout the evaluation process (B) SOW throughout the proposal development process (C) supplier's proposal throughout the negotiation process (D) supplier's firm-fixed price - Correct Answer (C) supplier's proposal throughout the negotiation process Which of the following is LEAST appropriate as an objective for negotiations? (A) Meeting the minimum essential needs of the organization (B) Maintaining control over contract performance (C) Determining the negotiation site (D) Ensuring the correct ratio of contract administrators to workers - Correct Answer (D) Ensuring the correct ratio of contract administrators to workers Which of the following is likely to be the BEST use of social media sites such as LinkedIn during the preparation for negotiations with a potential supplier? (A) Selecting the ideal negotiation sire (B) Determining objectives for the negotiation (C) Collecting information, reports and comments on the supplier (D) Defining the roles and responsibilities of the negotiating team - Correct Answer (C) Collecting information, reports and comments on the supplier. A supply manager for XYZ Corp. is planning for negotiations with Supplier A, a provider of software critical for use on XYZ's production line. XYZ likes the software, but was recently alerted by Supplier A that they are dropping support for the version that XYZ uses. The supply manager learns that an upgrade is cost prohibitive for XYZ. Prior to negotiations, the supply manager asks the IT department to detail its requirements for support of the software, and to assign an IT employee to attend the negotiations. The day before the negotiation, the IT employee calls the supply manager and stares that he is unable to attend due to a scheduling conflict. He further states that he is confident the supply manager can represent the IT department's needs in the negotiations. Given this scenario, which of the following should the supply manager do? (A) Follow the advice of the IT employee and represent IT in the negotiation - Correct Answer (B) Escalate the issue to the IT director, ensuring that they send a representative A supply manager is negotiating a contract with a supplier to purchase one million components. To determine a pricing arrangement satisfactory to both parties, which of the following is LEAST appropriate? (B) Exclude the two suppliers from any future e-auctions that the company holds, as they did not honor their e-auction pricing. (C) Rather than using e-auctions, opt for a closed-bid process to avoid the possibility of companies not honoring their pricing during the e-auctions. (D) Verify with the suppliers midway through the e-auction to make certain that they will continue to honor their prices. - Correct Answer (A) Include a clause within the registration process stating that participants will honor their prices, or be excluded from the current auction and all subsequent auctions. Which of the following is the MOST effective method for negotiating with the sole supplier of a unique item? (A) Price analysis negotiations (B) Price comparison negotiations (C) Cost analysis negotiations (D) Adversarial negotiations - Correct Answer (C) Cost analysis negotiations Shortly after contract negotiations have begun, a supplier makes an offer with a price well above the expected range. Which of the following tactics is the supplier using? (A) Foot in the door (B) High ball (C) Strong initial offer (D) Phantom quote - Correct Answer (B) High ball Both parties leave the room during a negotiation with the understanding that they will reconvene at a later time. This is known as a (A) stalemate (B) recess (C) caucus ( D) conference - Correct Answer (B) recess A supply manager is preparing for negotiations with a business consulting supplier. The supplier provides services to IT and corporate headquarters, and has frequent interactions with a number of people across the company, including executive staff. Which of the following is the BEST course of action for the supply manager to take? (A) Set up a meeting with all the key stakeholders to discuss the upcoming negotiations and what they should say, and send a follow-up email to all attendees plus those who could not attend. (B) Send an email to all employees, letting them know that negotiations are being conducted with this supplier, and that no one should have any interaction with the supplier while negotiations continue. (C) Contact the head of each department and explain that negotiations will be conducted with the supplier, and ask the department heads to share the information with their teams. (D) Start negotiations - Correct Answer (A) Set up a meeting with all the key stakeholders to discuss the upcoming negotiations and what they should say, and send a follow-up email to all attendees plus those who could not attend. The global commodity manager for manufacturer XYZ Inc. is conducting negotiations on a long-term contract with DEF, a key strategic supplier. DEF's delivery performance is rated at 73%, which is below the divisional goal of 98%. For this reason, XYZ's operations manager wants to drop complaints from internal customers. In this situation, which of the following should the supply manager do FIRST? (A) Instruct the co-op to change suppliers (B) Determine if other members of the co-op have the same problem (C) Join the co-op's commodity team to increase pressure on the supplier (D) Inform the supplier that co op payments may be withheld if quality does not improve - Correct Answer (B) Determine if other members of the co-op have the same problem Which of the following is used to confer decision-making power upon an individual when the regular decision-maker is unavailable? (A) Assignability provision (B) Dealer's agreement (C) Letter of authorization (D) Limitation of liability - Correct Answer (C) Letter of authorization A company hires a supplier to launch a website for a new product. The implementation is very successful, and the supplier would like to publicize its efforts in advertising and on its website, with testimonials from the buying company's employees. However, the contract prohibits this. Which of the following is the LEAST likely to be the reason for the company's position on this matter? (A) Other suppliers may seek endorsement from the company. (B) Employees might be targeted for sales pitches by the supplier's competitors. (C) The company has a policy of not endorsing suppliers. (D) The company plans to launch additional websites on its own. - Correct Answer (D) The company plans to launch additional websites on its own. What is the contract term for the obligation of one party to cover the loss or damage suffered by another parry? A) Assignment (B) Confidentiality (C) Indemnification (D) Severability - Correct Answer (C) Indemnification What is the contract term for a provision to restrict the disclosure of proprietary information? A) Assignment (B) Confidentiality (C) Indemnification (D) Severability - Correct Answer (B) Confidentiality What is the contract term for the transfer by one party of their right or obligations to another parry? A) Assignment (B) Confidentiality (C) Indemnification (0) Severability - Correct Answer A) Assignment A company plans to hire a consulting firm to implement a new employee benefits website. Which of the following is (C) accept the goods (D) sell the goods and charge the supplier for the sales costs - Correct Answer (C) accept the goods After the notice period specified in a "Termination for Convenience" clause, the buying organization may no longer (A) employ that contractor for providing other goods or services (B) request damages for any default under the contract (C) seek certain deliverables in the contract (D) provide payments to the con tractor - Correct Answer (C) seek certain deliverables in the contract Which of the following types of bud gets is MOST likely to be used for logistics financial controllership? (A) Capital (B) Fixed (C) Flexible (D) Zero-based - Correct Answer (B) Fixed A supply manager has been asked by the facilities manager to prepare a purchase order for $3,000 to buy a new air compressor for the company headquarters. Company policy requires senior management authorization for purchases greater than $2,500, yet the facilities manager has not secured this authorization. Which of the following is the BEST course of action for the supply manager to take? (A) Place the order without the budget authorization. (B) Contact the finance office for the budget authorization. (C) Inform the facilities manager to obtain the authorization. (D) Negotiate a price that falls under the capital budget threshold. - Correct Answer (C) Inform the facilities manager to obtain the authorization. A supply manager is evaluating a departmental budget and notices that there is ho comparison between established goals and actual results. This indicates an omission in which of the following? (A) Controlling (B) Executing (C) Organizing (D) Planning - Correct Answer (A) Controlling After the evaluation of cost data and the determination of the budget figures, what is the NEXT step in the budgeting process? (A) Identifying financial resources allocated to each department (B) Negotiating with suppliers (C) Defining processes for comparing goals to actual results (D) Analyzing contract pricing - Correct Answer (C) Defining processes for comparing goals to actual results Smith is a supply manager for XYZ Inc. Smith issues a request for proposal and awards the contract to a new overseas supplier. As Smith's team concludes negotiations with the selected supplier, XYZ's chief financial officer inquires about the project's budget. Smith had assumed that supply management had the usual authorization to spend under the current direct materials budget and (D) promises the supplier shared responsibility in managing inventory - Correct Answer (A) understands the supplier's manufacturing processes. A supply manager has been asked to participate in a cost management program to help her organization generate more working capital. Which of the following is the BEST way for the supply manager to contribute to that goal? (A) Establishing a standard cost system (B) Employing a cost modeling tool (C) Focusing on a standardization program (D) Implementing a contribution to margin analysis - Correct Answer (C) Focusing on a standardization program ABC Corporation has a centralized supply management organization. The CEO directs that the organization must lower costs and expenses, and that performance appraisals will be based on results achieved. Given this scenario, which of the following should be given the LEAST attention? (A) E-procurement (B) Spend analysis (C) Supplier integration (D) Strategic sourcing - Correct Answer (C) Supplier integration XYZ Company is experiencing eroding margins for one of its key products. The company decides to commission a value analysts team to explore ways to reduce the cost of the product without degrading quality. Which of the following team compositions would MOST likely meet these objectives? (A) Cost Accounting, Finance, Marketing, Manufacturing, Product Engineering (B) Cost Accounting, Finance, Marketing, Procurement, Product Engineering (C) Cost Accounting, Finance, Manufacturing, Procurement, Product Engineering (D) Cost Accounting, Manufacturing, Marketing, Procurement, Product Engineering - Correct Answer (D) Cost Accounting, Manufacturing, Marketing, Procurement, Product Engineering A sourcing specialist working on a project improvement team identifies a product line for which both profit margins and sales volumes have declined. Although the end product is a staple in the industry, customers have resisted price increases and have sought alternatives. The product is also subject to sharp fluctuations in demand due to consumer trends. Resultant stock outages have led to lost sales. Through value analysis, the team identifies a ball bearing component that is single sourced from a supplier to the aerospace industry. The supplier was chosen years back, because of its ability to provide the precise overall dimensions required for the component. Discussions with the supplier reveal that 3 weeks of the 6-week lead time for the product are spent in a precision polishing operation for a smooth surface condition. The process also accounts for one-third of the product cost. Product quality and reliability - Correct Answer (B) Work with the current supplier tor reconsider the high-polish finish In order to guarantee supply of a com- ponent that appears in the critical quadrant of the supplier segmentation model, a supply manager should (A) join a consortium (B) issue a long-term contract Which of the following market factors would be plotted on the low end of the market complexity axis on a spend analysis matrix? (A) Many suppliers, excess capacity, unique specifications, no substitutes (B) Standard specifications, possible substitutes, few suppliers, restricted capacity (C) Many suppliers, excess capacity, standard specifications, possible substitutes (D) Few suppliers, restricted capacity, unique specifications, no substitutes - Correct Answer (C) Many suppliers, excess capacity, standard specifications, possible substitutes In anticipation of an upcoming price increase by its current supplier, a supply manager in charge of purchasing corrugated boxes conducts a competitive bid to determine if there are any suppliers who can offer more competitive prices. The supply manager accepts a bid from a supplier who will meet the current supplier's price, and will also hold pricing firm for a second year. The actions of the supply manager can BEST be described as (A) cost avoidance (B) cost containment (C) cost reduction (D) cost savings - Correct Answer (A) cost avoidance Which of the following sources of spend analysis data is likely to contain the GREATEST level of detail? (A) Accounts payable (B) General ledger (C) Supplier data (D) Supply management - Correct Answer (C) Supplier data Several items are identified as ‘critical’ in a supply segmentation analysis. In order to add value, the supply management professional should look to (A) issue long-term contracts (B) issue short-term contracts (C) join a consortium (D) leverage buy - Correct Answer (A) issue long-term contracts Which of the following provides the MOST comprehensive view when determining the total cost of procured materials? (A) Product, transportation, and delivery (B) Product, process, market, source, and security (C) Product, logistics, storage, and handling (D) Product, indirect costs, and profit - Correct Answer (B) Product, process, market, source, and security Consider the following financial data for XYZ, Inc.: Long-term debt $400,000 Preferred stock $300,000 Common equity $600,000 Total capital $1,300,000 
