Exam 2
10. Of the following, which is the BEST measure of the rate of inflation? (A) Year-to-year change in the consumer price index (B) Year-to-year variation in annual rate of return (C) Period-to-period change in interest rates (D) Period-to-period valuation of tangible assets
A
102. Which of the following target costing strategies is performed to provide suppliers with a target price? (A) Cost reduction (B) Cost disclosure and understanding (C) Continuous improvement/competitiveness (D) Improved communications and early involvement
A
26. A supply manager for a small manufacturer has responsibility for logistics functions. The company ships approximately 10,000 pounds of product per month. The prices vary considerably depending upon end use. The supply manager negotiates lower freight rates by leveraging volume and obtaining more favorable rate classifications. After 18 months, the supply manager wants to conduct an audit to verify that the organization is being invoiced correctly. In this situation, which of the following methods would be MOST effective? (A) Carrier's charges (B) Carrier performance (C) Freight-rate maintenance (D) Line haul rate
A
3. A home medical testing device includes a very sensitive sensor with a customized, easily readable display. This sensor is low-cost but high-risk because shortages could stop production at the buying organization's plant. In this situation, which term BEST describes the sensor? (A) Bottleneck item (B) Noncritical component z Ci Leverage buy (D) Routine component
A
32. A company is an exporter of steel beams. Which of the following is LEAST likely to be required for each shipment made by this firm? (A) Arrival notice (B) Bill of lading (C) Certificate of origin (D) Dock receipt
A
36. A company finds that a large part of its operations budget is devoted to returns from customers. A major portion of these fees is associated with a particular high-volume product. This product is the highest revenue producer for the company, but it incurs considerable return costs through restocking, repackaging, reworking, and recycling. Which of the following would be the BEST way to resolve this issue? (A) Outsource the reverse logistics portion of the business to a third party (B) Improve the quality assurance program for manufacturing (C) Outsource the manufacturing of the product to a third party (D) Discontinue the product, thereby avoiding the return costs
A
40. ISO 14000 and ISO 14001 focus on which of the following? (A) Environmental considerations (B) Guidelines for auditing quality h C) Information security (D) Security of the procurement process
A
42. Simplification refers to which of the following? (A) Reducing the variety of models of an item (B) Cutting back on the number of suppliers (C) Reducing the number of parts performing the same function (D) Moving to a program of product and supplier pre-approval
A
48. To create and maintain accurate master data for inventory items, it is important that a company do all of the following EXCEPT (A)allow the material users to update records if they encounter problems (B) establish minimum data requirements before an item is created n Cl implement master data quality assessment methods and standards (D) develop reliable processes to identify and consolidate duplicate records
A
50. Which of the following are MOST likely to have inventory tracking numbers assigned to them? (A) Capital equipment (B) Construction materials (C) Food items (D) Spare parts and repair inventory
A
6. Country A has a large and steadily increasing trade surplus with Country B It is MOST likely to also have (A) barriers on Country B's imports (B) shelters on Country B's imports (C) preferences for Country B's imports (D) balances on Country B's imports
A
62. A supply manager wishes to measure the supply management organization's activities in terms of its vision and strategies. Which of the following should the supply manager use? (A) Balanced scorecard (B) Earned value management system (Ci Income statement (D) Mission statement
A
63. A supply management organization concludes that customer service is critical to its success. To determine how well it is doing in this area, the supply management organization issues a survey to internal customers. Respondents are asked to rate the supply management organization on a scale of 1 to 5, with 1 representing "Poor customer service" and 5 representing "Excellent customer service." The survey results measure which of the following? (A) Key performance indicators (B) Process improvement metrics (C) Resolution process (D) Root cause analysis
A
65. In reviewing the performance of an employee, a supply manager seeks feedback from key internal customers, suppliers, peers, and individuals working for the employee. The supply manager uses written feedback and in-person meetings. Once the information is attained, the supply manager develops an evaluation that identifies weaknesses and areas for improvement. This type of evaluation is known as (A) 360-degree (B) formative (C) program (D) assumptive
A
67. Which of the following is the MOST important reason for performance tracking? (A) Recognizing/rewarding behaviors congruent with organizational goals (B) Providing criteria for orientation and retraining programs (C) Determining job descriptions (D) Assessing compliance with legal mandates such as affirmative action
A
72. The supply management department of a midsize service organization is charged with doubling the organization's relatively small diversity spend within 18 months. Which of the following courses of action would be LEAST effective in helping to meet this objective? (A) Consolidating the supplier base and using e-procurement (B) Establishing a tracking and reporting system (C) Reviewing current supplier policies and programs (D) Establishing fixed and discretionary spend targets
A
73. A company sells software tools and related hardware in a competitive market dominated by four major players. The company wants to differentiate itself through superior order-delivery performance. Department managers regularly collect order-fulfillment metrics, but use them mainly to justify or explain cycle times that are longer than their functional targets, and to redirect responsibility to the group causing the problem. Using a Responsible Accountable Consulted Informed (RACI) analysis, the supply manager determines that the first step should be to redesign the order-fulfillment process. The first step in this analysis would be to designate the person(s) or function(s) (A) responsible for executing a particular activity (B) ultimately accountable for completing the activity (C) that must be consulted before a decision is finalized (D) that must be notified of the completion of a decision
A
75. Which of the following is LEAST likely to contribute to the effectiveness of audits? (A) Requiring that audits be announced as soon as possible to give departments involved time to check records (B) Identifying factors that may determine whether an internal or external audit is appropriate (C) Describing how information and/ or results will be validated by in-house resources or outsourcing (D) Seeking input and agreement on metrics to be used
A
80. Non-defensive problem solving occurs when the (A) focus is on the root cause of the problem (B) problem is dealt with via written correspondence rather than face- to-face (C) person who created the problem is excluded from the discussion (D) organization hires an outside consultant
A
86. Which of the following departments would be LEAST likely to access an MRP system for information? (A) Top management, for use in decision-making (B) Customer service departments, for sales delivery information (C) Supply management, for material demand information (D) Finance, for cash flow projections
A
9. A supply manager uses regression analysis to model costs. Using three variables to predict price, the analysis yields the following: R=0.855 2 R =0.730 Standard Error of Estimate= 328.827 F=85.815 p<0.001 What is the percentage of variance in price that is accounted for by the model? (A) 73% (B) 32.8% (Co 85.5% (D) Cannot be determined from above information
A
92. Which of the following should be used to determine the frequency of inventory cycle counts? (A) Activity-Based Costing (ABC) (B) Electronic Data Interchange (EDI) (C) Economic Order Quantity (EOQ) (D) Materials Resource Planning (MRP)
A
96. A supply manager for XYZ Plastics notices a large increase in orders from hardware stores for large, blue plastic sheets after a hurricane strikes a major city. Several months later, XYZ's inventory of unsold product rises dramatically. Which of the following is the MOST likely cause of this? (A) Bull-whip effect (B) Level scheduling (C) Package optimization (D) Theory of Constraints
A
97. In conducting a regression analysis, extrapolation is performed when one wishes to (A) predict beyond the limits of the sample (B) determine cause and effect (C) use a lag variable as an explanatory variable (D) fill in gaps for missing observations
A
98. A supply manager is using an exponential smoothing model to forecast demand. The most recent data may have been negatively impacted by a market anomaly. To account for this, the supply manager should (A) decrease the level of alpha (B) increase the level of alpha (C) decrease the beta coefficient (D) increase the beta coefficient
A
104. Which of the following refers to the bringing together of one or more selected sources with a company's product design team in the product development process? (A) Early purchasing involvement (B) Early supplier involvement (C) Value analysis (D) Value engineering
B
11. Which of the following exchange rates are set by governments? (A) Differential and floating (B) Fixed and differential (C) Variable and differential (D) Variable and floating
B
12. A supermarket chain implements a new forecasting technique to determine demand for dairy products. With the new technique, the mean absolute percent error (MAPE) for dairy product forecasts rises from 3.2 % to 9.8%. Which of the following is TRUE in this situation? (A) The new forecasting technique is more accurate than the previous method. (B) The new forecasting technique is less accurate than the previous method. t Ci The new forecasting technique has a positive effect on demand for dairy products. (D) The new forecasting technique has a negative effect on demand for dairy products.
B
13- All of the following are economic conditions that affect forecast EXCEPT (A) consumer spending (B) ethnic diversity (C) Gross Domestic Product (GDP) (D) unemployment rates
B
16. A manufacturer of men's sport coats has been a supplier for many years to a regional retail chain. Based on internal seasonal demand forecasts , the manufacturer orders fabric, and arranges production overseas. After the coats are manufactured, they are placed on plain plastic hangers and shipped to a domestic distribution center. As the orders are received from various retailers, the coats are placed on wooden hangers emblazoned with the retailer's logo. Recently, the manufacturer has begun placing the coats on· the retailers' hangers at the point of manufacture. This change is MOST likely the result of the effective implementation of (A) Collaborative Planning, Forecasting, and Replenishment (CPFR) (B) Early Supplier Involvement (ESI) (C) Manufacturing Resource Planning (MRPII) (D) Supplier Managed Inventory (SMI)
B
22. An electronics manufacturing plant is planning a major expansion of its facilities. The company purchases a broad range of materials ranging from bulk packaging to delicate components, and they are gradually redesigning several assembly processes. Managers from all affected departments are brought together to brainstorm the most efficient design for new shipping and receiving areas. Which of the following is the LEAST important consideration in this situation? (A) How can the dock(s) be positioned on the site to allow safest access to roads? (B) Is the payback for replacing diesel forklifts with electric short enough to justify a change? (C) Are changes in the size of shipping containers likely to require access for larger trucks? (D) What might be the shortest and smoothest path for materials from receiving to inspection?
B
28. A supply management and logistics department are working together to improve performance and obtain more accurate data on incoming and outgoing freight. They identify the timing of delivery van stops and shipping paperwork preparation as priorities. Which of the following types of software is MOST likely to improve these functions? (A) Freight-rate maintenance and auditing (B) Traffic routing and scheduling (C) Transportation analysis (D) Vehicle maintenance
B
33. Which of the following is TRUE regarding certified importers in a global security program such as Customs Trade Partnership Against Terrorism ( C-TPAT) or Authorized Economic Operator (AEO)? (A) Their freight will be loaded with priority at the port of origin. (B) Their freight will pass through customs with less chance of inspection. (C) Their freight will be the first items from an arriving vessel to be inspected. (D) Their freight will be allowed to bypass all customs processes.
B
34. An automotive parts distributor implements an in-house freight auditing process. The freight audits have uncovered inconsistencies between the descriptions of parts ordered and descriptions of parts received. These inconsistencies affect the audit ability of the freight bills. Of the following, the BEST course of action for the distributors to take is to institute a policy to have (A) supplier purchase orders forwarded to the responsible carrier. (B) order, receipt, and invoice documentation matched before shipping. (C) restrictions on the choice of carriers to those who provide the best information. (D) shipments with incomplete bills of lading refused.
B
37. A ship carries cargo from four different parties. While at sea, the vessel faces imminent and inevitable danger. The cargo can only be saved by voluntarily incurring a loss on part of the shipment. The different parties proportionally share the losses resulting from the voluntary sacrifice of cargo. This situation is an example of which of the following? (A) Force mature (B) General average (C) Marine salvage (D) Maritime lien
B
39. Which of the following is an advantage of being a certified supplier under the International Organization for Standardization (ISO)? (A) Production subsidies provided by ISO (B) Reputation for superior competency levels (C) Income tax breaks from governments associated with ISO (D) Exemption from environmental regulations
B
47. Which of the following is the inventory carrying cost term associated with insurance and taxes on inventory? (A) Finance Costs (B) Ownership Costs (C) Overhead Costs (D) Risk Costs
B
52. In which of the following ways does RFID contribute to increased inventory accuracy? (A) Product life cycle is increased. (B) Transaction postings are more precise (C) Increased information on component history is available. (D) Inventory replenishment is automated.
B
54. The usual way to dispose of a large lot of surplus used office furniture that has been fully depreciated but is considered to be in excellent condition is to (A) donate it to civic organizations (B) sell it to used-equipment dealers (C) sell it to scrap dealers (D) return it to suppliers for credit
B
57. A manufacturing firm acquires a competing business with a similar customer base. The merger results in a surplus of machinery and spare parts, much of which is unused and in excellent condition. In this situation, which of the following disposal methods would provide the quickest removal of the inventory from the organization's balance sheet? (A) Broker (B) Dealer (C) Third-party specialist (D) Trade-in
B
58. Year-to-year cost reductions are typically included in which category of performance metrics? (A) Business control (B) Financial (C) Operational (D) Sourcing
B
7. Qualitative methods such as the Delphi Method are forecasting models based on (A) Cause and effect relationships (B) The collective judgment of individuals (C) Trend, seasonality, cycles and randomness (D) Demand and usage requirements
B
70. A supply organization uses a self-assessment process to align the most critical components of the supply employee's job. Each employee and supervisor is asked to rate, on a scale of 1 (Low) to 5 (High), the importance of several key supply management activities. The results for a department sourcing specialist are as follows: Accountability Employee Rating Supervisor Rating Continuity of Supply 3.5 4.4 Cost Reduction 4.6 4.1 Inventory Investment 4.2 3.6 Negotiations 3.6 4.3 Which of the following BEST describes these results? (A) The employee avoids stock outs by carrying safety stock. (B) The employee seeks to minimize inventory and cost. (C) The supervisor strives for minimal inventories. (D) The supervisor values cost reduction over customer satisfaction.
B
81. Which of the following is LEAST likely to be a component of a corrective action plan developed by auditors? (A) Prioritization of implementation steps (B) Identification of a new management team (C) Establishment of a time frame for change (D) Analysis of costs and benefits
B
82. In a manufacturing operation, a typical audit of the supply management department is LEAST likely to include which of the following items? (A) Supply management operations (B) Inspection (C) Inventory management (D) Department structure
B
89. The supply manager for a multinational company is required to keep two separate part numbers for various items in the firm's Enterprise Resource Planning (ERP) system. This arrangement exists because some of the parts are used in more than one country. Given this situation, which of the following should the supply manager be MOST concerned with? (A) Data decision-making (B) Data integrity (C) Data security (D) Information sharing
B
90. Materials Resource Planning (MRP) results in a closer relationship with suppliers primarily because (A) erratic demands require that suppliers be more than reasonably flexible (B) the buying company continually provides suppliers with more reliable forecasts for ongoing delicateness (C) the buying company often places frequent orders for relatively small quantities of materials (D) planners deal directly with suppliers to improve efficiency
B
93. A large retail chain is considering the implementation of a supplier/vendor-managed inventory agreement with one of its primary suppliers. The agreement will serve as a test case to determine the feasibility of implementing such arrangements on a broader scale. There are many factors to take into account, not the least of which is the reaction of the other suppliers who will now have to depend on a competitor to keep track of inventory and to place orders. Which of the following is TRUE with regard to this situation? (A) As this is a typical contracting issue, the only requirement is to report the contract details to senior management, including contract minimums and maximums. (B) As this will require a long-term purchase agreement, a timestamped list of obligations must be included in reports. (C) As this will require a long-term purchase agreement with a blanket purchase order, the CFO must be made aware of contract minimums and maximums. (D) As this is only a test of a planned set of agreements, no additional reporting is necessary until it is decided that the full program will be implemented.
B
103. Which of the following target costing strategies facilitates culture change from an engineering-driven to a customer-driven company? (A) Cost reduction (B) Cost disclosure and understanding (C) Continuous improvement/competitiveness (D) Improved communications and early involvement
C
14. Early Supplier Involvement (ESI) in the development of specifications will lead to higher; quality PRIMARILY because of which of the following? (A) Suppliers will help choose the best material. (B) Suppliers will provide reduced lead times. (C) Problems causing reworks can be eliminated. (D) Required supplier capacity can be better planned.
C
17. Which of the following involves the stationing of representatives of key suppliers within a buying organization's facility in order to enhance the transfer of forecast data and minimize communication breakdowns? (A) Enterprise Resource Planning(ERP) (B) Just in Time (JIT) (C) Just in Time (JIT) (D) Supplier Managed Inventory (SMI)
C
2. A supply manager is tasked with acquiring training services for a group of engineers who will be part of specialized sourcing team charged with driving an aggressive cost-reduction program. Which of the following methods would be MOST appropriate for the supply manager to employ m identifying appropriate training solutions? (A) SWOT analysis (B) Industry benchmarks r Ca Request for information (D) Porter's Five Forces
C
24. Which of the following are the PRIMARY factors that influence transportation costs? (A) Energy and interest rates (B) Exchange rates and interest rates (C) Labor and energy (D) Labor and interest rates
C
27. To ensure the optimum flow of material and the consolidation of freight, it is MOST important that the supply manager have a thorough knowledge of which of the following? (A) Carrier cost auditing (B) Freight classifications/rates (C) Transportation modalities (D) Transportation restrictions
C
30. A leading manufacturer of fiber optics wishes to lower import costs by leveraging volume in order to gain discounts. The manufacturer will MOST likely be able to leverage volume discounts by consolidating suppliers to arrange and pay for which of the following? (A) Transportation from exporter to port of departure (B) Pre-shipment inspection (C) Insurance (D) Stevedore costs
C
35. A bill of lading indicates that a shipment is being rated under a "Declared Value." If this shipment is lost or damaged by the carrier, the carrier's maximum liability will be equal to the (A) manufactured cost declared by the carrier (B) per pound value as indicated by the classification (C) invoice value as declared by the purchaser (D) value as declared in negotiation between the shipper and the carrier
C
38. A shipment of goods from a supplier was found to have latent damage. Which of the following offers the BEST protection for the purchaser to recover damages? (A) Noting the damage on the carrier's delivery receipt (B) Keeping copies of the delivery paperwork (C) Putting strong warranty provisions in the contract (D) Refusing initial delivery
C
43. A supply chain manager has been tasked with developing and implementing material and service level standardization programs. Which of the following will be the BEST way in which the supply chain manager can put this program in place? (A)Increase outsourcing and international sourcing activities for better purchase price variance (B) Identify a system of exchanging jointly developed sales forecast and inventory replenishment schedules with suppliers (C)Define a process to reduce product complexity and the number of required parts, operations, and SKUs (D) Negotiate price savings and volume leveraging with suppliers
C
44. A group of supply managers from different branches of the same firm learn that several locations have technical support contracts with the same supplier, though at different rates. Each was unaware of the others' contracts because service spend, unlike that for products, is tracked only at the local level. Which of the following is the LEAST appropriate course of action for the supply managers to take? (A)Assemble and analyze service contract spend from all locations (B) Designate one manager to negotiate with the supplier on behalf of all (C) Continue to contract on a local level, as needs may differ (D) Determine how the services fit into delivery of company products/services to customers
C
45. Which of the following is the inventory carrying term associated with space, handling and control? (A)Finance Costs (B) Ownership Costs (C) Overhead Costs (D) Risk Costs
C
5. A supply manager is developing a process to monitor market trends. Information about which of the following is of LEAST importance in this instance? (A) Market capacity (B) Alternate sources tCi Forward buying (D) Supplier profiles
C
55. A supply manager decides to sell useless inventory that is scattered throughout the organization's multi-channel supply chain. Which of the following would be MOST appropriate to maximize cost savings? (A) Classifying the inventory by ABC type (B) Consolidating the inventory at one location (C) Negotiating restocking agreements with the suppliers (D) Valuing the inventory
C
60. Contracted labor utilization rates are typically included in which category of performance metrics? (A) Business control (B) Financial (C) Operational (D) Sourcing
C
74. An organization is seeking to improve its sales volume, margins, and image as a corporate citizen. The results from activities within the organization's supply management function are as follows: Accountability Goal Results Cost Reduction 20% 16.3% Inventory Investment 40% 44.1% Supplier Diversity 8% 4.3% Supplier rationalization 25% 19.6% Based on these data, in which of the following areas is training MOST needed in relation to organizational policy? (A) Cost reduction (B) Inventory investment (C) Supplier diversity (D) Supplier rationalization
C
76. Which of the following is the PRI- MARY purpose of creating metrics for a supply management organization? (A) To support audits of the supply management function (B) To determine the efficiency of supply management (C) To ensure that organizational objectives are being met (D) To control the supply management organization
C
78. Which of the following BEST defines a supply management audit? (A) A process to evaluate strengths and weaknesses of supply management staff (B) A process to compare sample transactions to established benchmarks (C) A comprehensive periodic examination of an organization's supply management activities (D) After-the-fact controls that measure supply management performance
C
8. Which two of the following would most likely be effective monitoring techniques for a buyer to take in order to forecast and project future general market conditions and business activity? I. Follow a single indicator for 12 months and project future variances from it II. Identify indicators known to lead general business activity, verify their reliability, and use them as a basis for projection III. Select a group of indicators and project future activity on the basis of current and past movement of these indicators IV. Disregard indicators if seasonal fluctuations are not a part of the business cycle of the company (A) I and II (B) I and IV i C) II and ill (D) III and IV
C
1. A supply management organization partners with another department to determine the feasibility of marketing a new product. To aid in decision-making, the supply management organization should employ which of the following? (A) Decision tree (B) Pareto analysis (C) Supplier forecast (D) SWOT analysis
D
100. A company specializes in manufacturing high performance computers. In an effort to address increased price pressure and innovation from competitors, the company decides to fast track new product development. In which of the following aspects of this process should procurement be involved? I. Contracting for design services II. Designing marketing materials Ill. Identifying substitutions IV. Shaping product innovation (A) I and III (B) II and IV (DC) I, II, and IV (D) I, III, and IV
D
101. Which of the following target costing strategies is performed to facilitate supplier negotiations? (A) Cost reduction (B) Cost disclosure and understanding (C) Continuous improvement/competitiveness (D) Improved communications and early involvement
D
15. To facilitate partnering and shorten lead timings "a manufacturing organization shares production plans and schedules with key suppliers. Which of th following is LEAST likely to be part of this interchange? (A) A non-disclosure agreement protecting critical information (B) A written agreement on what portion of the schedule, if any, constitutes a firm commitment (C) An agreement on who shall own any process improvements resulting from the partnership (D) Inspection standards for incoming materials
D
23. Which of the following is MOST likely to minimize picking errors, increase inventory accuracy, and reduce associated costs? (A) Automated fulfillment systems (B) Picking modules sC) Radio frequency identification (D) Voice recognition devices
D
25. A supply manager for an automotive parts distributor is trying to determine why the company is experiencing high fleet operating costs, slow customer response times, increasing overtime charges, and problems managing the drivers' schedules. Of the following, the BEST course of action is for the supply manager to implement a (A) process audit to see where systems are failing (B) change in transportation modalities (C) freight rate maintenance and auditing software package (D) traffic routing and scheduling software package
D
29. Which of the following is LEAST likely to improve processing time through customs? (A) Using RFID technology (B) Adding "smart seals" after source inspection ( C) Contracting with a brokering agent to handle documentation (D) Investigating applicable industry-specific standards
D
31. When contracting with a freight forwarder to import or export goods, which of the following should be in place FIRST? (A) Certificate of origin (B) Commercial invoice (C) Export declaration (D) Power of attorney
D
4. Supply management typically provides top management all of the following market intelligence information EXCEPT (A) technology updates (B) supply forecasts and market capability data (Ci alternative sources of supply (D) recommendations on financial standards
D
41. A supply manager forms a cross-functionality team to study opportunities for standardization in the manufacture of widgets. Currently, the widgets are produced in facilities located in Hong Kong, Costa Rica, and the United States. Which of the following factors is LEAST likely to affect the standardization efforts? (A) Ability to ship parts to all locations (B) Lead time for shipping parts (C) Local buying requirements (D) Use of the metric system
D
46. Which of the following is the inventory carrying cost term associated with having material on hand for a specified period of rime? (A)Finance Costs (B) Ownership Costs (C) Overhead Costs (D) Risk Costs
D
49. Which of the following typically determines which items an organization classifies as capital assets? (A) Financial Accounting Standards Board (B) Internal Revenue Service (C) Securities and Exchange Commission (D) The organization itself
D
51. Consider the following steps m an asset recovery program: I. Review environmental disposal responsibilities II. Analyze the value of current assets III. Review security policies for removing company information IV. Determine the potential and residual value of assets Select the option which BEST describes the correct order of these steps (from first to last): (A) II,I,IV,III (B) I,II,III,IV (C) I,III,IV,II (D) II,IV,III,I
D
53. A company is evaluating its supplier performance classification criteria. Currently, data are reviewed in 1-,3-, and 5-year intervals to determine best value, which is based on price and delivery. The company wishes to determine if additional resources are needed in order to manage the investment recovery program. Which of the following should the company consider analyzing? (A) Direct materials cost modeling (B) First-in-first-out (FIFO) (C) Last-in-first-out (LIFO) (D) Life cycle management
D
56. An organization's warehouse is piled up with damaged goods. The material takes up a lot of valuable space and skews information on usable stock. Which of the following actions is LEAST likely to improve this situation? (A) Processing inventory adjustment to classify the item(s) as nontaxable (B) Determining if goods can be reworked at reasonable cost (C) Defining standards for acceptable rework (D) Finding potential uses for goods in other branches or processes
D
59. Diversity supplier spending is typically included in which category of performance metrics? (A) Business control (B) Financial (C) Operational (D) Sourcing
D
61. Supply management social responsibility is typically included in which category of performance metrics? (A) Business control (B) Financial i C) Operational (D) Sourcing
D
64. When using the balanced scorecard approach in evaluating organizational performance, a supply manager will need to collect data in all of the following areas EXCEPT (A) financial impacts (B) internal business processes (C) learning and growth initiatives (D) organizational structure
D
66. Which of the following forms of feedback, used in a performance review, is the LEAST useful in a competitive work environment? (A) Internal customer input (B) Self-assessment (C) Supervisor's assessment (D) Team and/or peer input
D
68. A supply manager evaluates new staff members by conducting face-to-face conversations after six months of employment to review job responsibilities against previously set targets, and to identify goals for future performance. The supply manager is using which of the following? (A) Behavioral observation scale (B) Management by objectives (C) Narrative evaluation (D) Performance appraisal interview
D
69. A supply manager develops a process for gathering feedback to be used in employee evaluations, as well as to motivate staff. The process measures employee contributions toward the organization's goals. Which of the following is the supply manager utilizing? (A) Management by objectives (B) Performance improvement process plan (C) Self-assessment (D) Team, internal customer, and peer interviews
D
71. A supply manager states: "If we know what we spend by category, by supplier, and by business unit, we could ensure compliance to supply management policies." This comment suggests a concern about (A) compliant decision-making (B) organizational misalignment (C) philosophical tension (D) tools and technology deployment
D
77. An auditing team discovers that a supply manager has awarded a contract to a new supplier without following organization policies for competitive bidding and source selection. In this instance, the auditors are conducting a (A) remediation process (B) termination process (C) training process (D) validation process
D
99. A manufacturer of decorative lamps is upgrading its line. Though the product innovation team has done a good job of documenting requirements, supply management is concerned that the requirements may not provide optimum functionality. The supply manager therefore seeks and is given approval to work with other departments to review requirements. Which of the following actions is MOST appropriate in this situation? (A) Evaluating the design and giving the results to external customers for feedback (B) Holding workshops with customers (C) Gathering input from all affected departments (D) Developing a pilot/prototype and refining it as necessary until it is successful
D
108. An environmental services company is planning to roll out a new option of reduced-allergen laundering of linens for hotels and restaurants. The company's supply manager has been involved with this new offering since the planning stages, and has been monitoring progress closely, to be sure that implementation goes as scheduled. Of the following tasks performed by the supply manager, which of these is LEAST likely to be driven by the new service offering? (A) Revising shipping classifications to reflect changing needs for products and materials (B) Identifying training resources to ensure all employees understand the new requirements (C) Ensuring that warranties and maintenance on the equipment will support expanded demand (D) Conferring with logistics and warehousing about the need to separate new cleaning supplies from old
A
115. Which of the following is LEAST useful to a root cause analysis? (A) Box-Jenkins model (B) Kepner-Tregoe analysis (C) Six Sigma process analysis (D) SWOT analysis
A
116. A Kepner-Tregoe Analysis is MOST often used in support of which of the following? (A) Decision analysis (B) Margin analysis (C) Spend analysis (D) Value analysis
A
123. Which of the following refers to a contract management model that is a road map used to assess, measure, and improve contract management processes and relationships, including roles and responsibilities, timelines, performance management, and costs? (A) Maturity (B) Performance (C) Supplier (D) Target Cost
A
125. Which of the following 1s LEAST likely to be used for general process improvement? (A) Contract management maturity model (B) Just-in-time (C) Six Sigma (D) Value Stream Mapping
A
135. A sourcing specialist is responsible for the purchase of stainless steel alloys. Supplier lead time for this product is currently four weeks. The sourcing specialist is part of a project team to eliminate incoming inspection and chemical analysis of this material, which adds one week to total lead time. The project team works with the supplier production and testing facilities to develop confidence in the supplier's process capability and laboratory procedures. As a result, the supplier is certified by the organization and starts to ship product. Which of the following is a likely result of the certification? (A) Inventory will decrease (B) Manufacturing costs will decrease (C) Product quality will increase (D) Stock out risks will increase
A
138. Which of the following terms is used to express the relationship between the actual output of a process to the specifications for that output? (A) Process capability (B) Root cause (C) Reduction of variation (D) Six Sigma
A
148. Which of the following is the PRIMARY reason for using statistical process control? (A) Determining process capability (B) Outgoing inspection for quality control (C) Forward buying (D) Incoming inspection for quality controlA
A
149. For several years, RST Inc. has satisfactorily contracted with a third-party supplier to perform supplier performance measurement. The supplier is acquired by another company, and five months later, production reports that quality levels are in decline. RST's supply manager is asked to resolve the quality issues with this supplier. The supply manager conducts numerous conversations and meetings with the supplier's customer service department. Each time, the supplier states that it is addressing the quality issues and that its service levels will improve as soon the acquisition is completed. Given this situation, what is the BEST course of action for the supply manager to take? (A) Meet with the supplier's senior management to identify solutions (B) Cancel the supplier's contract for non performance (C) Implement "best in class" benchmarks (D) Develop a new source for supplier performance measurement services
A
150. The activity of performing quality inspection on materials is BEST described as which of the following? (A) Necessary non-value-added (B) Non-value-added (C) Value-added (D) Value - driving
A
131. ISO 9000:2005 specifies requirements for establishing which of the following? (A) Continuous Process Improvement (B) Quality Management Systems (C) Six Sigma (D) Total Quality Management
B
132. A manufacturing organization is considering the outsourcing of a high-volume part. Partially completed assemblies would be sent to a supplier for customization, and then returned for inclusion in the final assembly. Because this arrangement is likely to add requirements to the supplier certification process, which of the following draft clauses will BEST address this situation? (A) "A supplier must have a defined system for meeting quality objectives." (B) "A supplier shall maintain documented procedures for the handling of customer-supplied product." (C) "A supplier shall provide value engineering, tolerance, and dimensioning assistance." (D) "A supplier's procurement records must conform to buyer standards."
B
142. Which of the following statistical tools measures the results of a process over time? (A) Cause and effect diagram (B) Control chart (C) Pareto analysis (D) Scatter diagram
B
144. Which of the following is LEAST likely to be true with regard to a Service Level Agreement (SLA)? (A) It clarifies the statement of work. (B) It defines responsibility for activities, events and tasks. (C) It relies on KPIs based on industry benchmarks. (D) It includes consequences for non-performance.
C
118. A new IT sourcing director takes over a failing project from a sourcing director who has left the company. The new sourcing director is concerned that change requests have not been controlled. Which of the following should the new sourcing director review FIRST? (A) Project charter (B) Project plan (C) Project scope statement (D) Supply base
B
120. A supply chain manager should use value stream mapping to identify (A) process steps in the manufacture of goods (B) areas where items sit and wait (C) low volume-high variety products (D) quality defects
B
122. A mid-sized manufacturing company establishes a special project team to assist procurement and sales to focus on system improvements. The team will define the boundaries of the business and develop baselines to measure the results of business initiatives. It will also analyze the inputs, outputs, and relationships of suppliers, including Tier 2 and Tier 3 suppliers. Given this situation, which of the following should the special project team employ? (A) Bench marking systems (B) Process and value stream mapping (C) Scorecard business model (D) SWOT analysis
B
130. A supplier whose enterprise-wide quality control system is integrated with that of the buying organization would be considered (A) approved (B) certified (C) certified (D) preferred
B
94. A company that installs swimming pools has recently merged with another regional installer. It is becoming evident that prices over the next 24 months will increase substantially, and the supply manager is considering forward buying or some other option to take advantage of what is expected to be an expensive and tight market. In particular, there is a great need for pool chemicals. In terms of forecasting, which of the following would be MOST useful in this situation? (A) ABC analysis and classification (B) Future sales based on past sales (C) Least squares (D) Winter's model
B
l46. M & A Company utilizes a stringent supplier qualification process, with mutually agreed-upon quality standards implemented for each supplier relationship. A new supplier, RST Company, has met all of M & Ns quality standards to become a preferred supplier. M & A is looking to create a strategic relationship with RST because of their reputation for quality and low costs, and their ability to meet the requirements of M & Ns supplier qualification process. However, the first material that RST delivers proves to be slightly out of spec. The M & A supply manager contacts RST and discusses the situation with their management. It is determined that even though the material is out of spec, it can be used without causing any major issues with M & Ns final product. Which of the following is the BEST procedure for the M & A supply manager to usBe for dealing with this situation? (A) Qualify RST as a supplier (B) Determine the source of the problem (C) Keep some of the more acceptable material, and return the rest (D) Disqualify RST as a preferred supplier
B
105. Which of the following is the LEAST effective distribution tactic for a logistics department engaged in a new product introduction strategy? (A) Building up inventory prior to product launch (B) Verifying regional air and ground transportation capacity (C) Reviewing product descriptions from sales and marketing (D) Applying for the appropriate import/export licenses
C
107. A company is evaluating the speed at which potential suppliers can ramp up to meet the company's needs. Which of the following are appropriate considerations when ramping up a product or service? I. Operation capacity and capabilities II. Sales projections and resources III. Supplier service levels IV. Supply chain readiness (A) I and III (B) II and IV 110 I, II, and IV (D) I, III, and IV
C
109. During a new product ramp-up period, the supply management function is MOST likely to be responsible for adding value in which of the following areas? (A) Forecasts (B) Inbound logistics and receiving (C) Supplier capability studies (D) Supply management staffing
C
110. XYZ Company is developing several new products, and has requested that the supply manager participate in the supplier development process for the materials needed in manufacture. Which of the following would be the BEST type of supplier for the new product development effort? (A) A supplier with a large infrastructure dedicated to XYZ's production (B) A supplier that produces only a small quantity for XYZ Company (C) A supplier that specializes in state-of-the-art technology, with a diverse customer base (D) A supplier that has a large customer base consisting of large corporations
C
113. Which of the following refers to a project management team structured to reflect project roles, responsibilities, and authority shared by department members and project managers? (A) Functional (B) Kepner-Tregoe (C) Matrix (D) Projectized
C
114. Managers from all major departments in an organization are working together to find ways to minimize non-value-added activities, and devote more resources to efforts offering the best chance for continued success. Which of the following types of root cause analysis is this team using? (A) Business case (B) Kepner-Tregoe rational process (C) Six Sigma process (D) SWOT (strength, weakness, opportunity, threats)
C
119. A company analyzes the value of the new product in order to decide whether to move forward with product development. Which of the following types of analyses would be appropriate for this situation? I. Six Sigma Process (SSP) II. Kepner-Tregoe Rational Process (KTRP) III. Detailed Pricing Comparison (DPC) IV. Strengths, Weaknesses, Opportunities and Threats (SWOT) (A) I and III (B) II and IV (C) I, II, and IV (D) I, III and IV
C
121. Which of the following 1is MOST closely associated with reducing process variability? (A) Just-in-time (B) Lean production (C) Six Sigma (D) Value stream mapping
C
126. In general, the FINAL step in a supplier development model for process improvement is (A) obtaining the commitment of the supplier's top management (B) instituting data drive changes (C) Improving activities sustained by the supplier team (D) Demonstrating improvement
C
134. ISO 9001:2008 certification of a supplier does which of the following? (A) Indicates capability for a better product (B) Guarantees a better product (C) Indicates capability for a consistent product (D) Guarantees a consistent product
C
136. The run chart for a given supplier of raw material exhibits statistical control over a period of time. However, the supplier's defect rate is too high to be satisfactory for a new product SKU. Internal improvement can be obtained through which of the following? I. Changing the basic design of the product IL Instituting 100 % inspection III. Changing the production process with improved tooling (A) I only (B) II only (C) I and III only (D) I, II, and III
C
137. Which of the following is the principle at the heart of process control? (A) Process capability (B) Root cause (C) Reduction of variation (D) Six Sigma
C
139. Consider the following suppliers and their rates of defects: Supplier I: 65 defects Supplier II: 25 defects Supplier III: 20 defects Supplier IV: 35 defects Using a Pareto chart, which of the following describes the proper order of these suppliers? (A) IV, III, II, I (B) I, II, III, IV (C) I, IV, II, III (D) III, II, IV, I
C
140. Product reliability is BEST defined as (A) the customers' perceptions of the product (B) the absence of warranty claims after sale (C) product quality over time (D) the equivalent of product quality
C
143. Which of the following statistical tools prioritizes data from most to least prevalent? (A) Cause and effect diagram (B) Control chart (C) Pareto analysis (D) Scatter diagram
C
83. A company undergoes an external audit of all of its operational functions, including supply management. Which of the following should be done FIRST to respond to the findings in the audit report? (A) Determining what created the audit deficiencies, eliminating the source of the deficiencies, and reporting actions taken to senior management (B) Developing a corrective action plan, prioritizing each action needed to assure timely completion, and reporting actions taken to senior management (C) Determining what is needed to correct the deficiencies, assessing the cost/benefit of and prioritizing the corrective actions, and establishing a time frame (D) Reviewing the purpose of the audit, determining if recommendations are consistent with that purpose, and providing a response to each recommendation
C
88. In an MRP system, which of the following is used to disentangle combinations of optional product features? (A) Phantom bill (B) Implosion bill (C) Modular bill (D) Planning bill
C
106. A buying organization acquires a large share of a supplier's capacity for a specialized product, and thereby makes that supplier dependent upon a single customer. Under these circumstances, the supply manager is LEAST likely to (A) run the risk of supply interruption (B) establish an alliance with that supplier (C) require that the supplier be certified (D) run the risk of high pricing
D
111. As part of a process improvement project, a supply manager prepares to do a root cause analysis to determine the sources of the problems now being encountered. Which of the following tools would be LEAST useful in this effort? (A) Stakeholder analysis (B) Kepner-Tregoe analysis (C) Six Sigma analysis (D) Risk matrix analysis
D
112. Which of the following is the FIRST step in successful project management? (A) Assess risks (B) Build consensus (C) Conduct bench marking (D) Identify stakeholders
D
117. A cross-functional team at a manufacturing plant is evaluating the introduction of a new product line. Which of the following methods is LEAST likely to be helpful in this effort? (A) Business case (B) Internal rate of return (C) Payback period (D) SWOT analysis
D
124. Which of the following refers to a process by which a purchasing and supply organization identifies world-class organizations with which to compare its practices and results? (A) Best-in-class (B) Best practice (C) Brainstorming (D) Bench marking
D
127. In business process re- engineering, an early task is to study the rationale for each action, and determine if it adds value in the opinion of the (A) re-engineering team (B) oversight authority (C) bench marking team (D) customer
D
128. Which of the following are continuous improvement approaches? I. Should Cost Models IL Improvement Metrics III. Total Cost of Ownership IV. Value Stream Mapping (A) II (B) IV (C) I and IV (D) II and IV
D
129. Which of the following is the MOST important element in deploying Six Sigma? (A) Organizational structure (B) Reward and recognition (C) Supply management support (D) Top management support
D
133. A supply manager 1s developing a supplier certification program for electronic microchips. In selecting the requirements, which of the following criteria for suppliers would be MOST important? (A) Financial strength (B) Labor status (C) Plant location (D) Quality control system
D
141. Which of the following statistical tools shows the relationship between two potentially related factors? (A) Cause and effect diagram (B) Control chart (C) Pareto analysis (D) Scatter diagram
D
145. A supply manager evaluates four sources that provide the same product. The Cpk values for each of these suppliers are as follows: Cpk Supplier A -1.0 Supplier B 1.0 Supplier C 1.2 Supplier D 2.0 The supply manager wishes to achieve a Six Sigma level of quality. Given this situation, which of these suppliers should the supply manager select? (A) Supplier A (B) Supplier B (C) Supplier C (D) Supplier D
D
147. A process with no more than 3 defects per million items produced is (A) Process capability (B) Root cause (C) Reduction of variation (D) Six SigmaD
D
79. Which of the following is NOT a fundamental purpose for conducting an internal audit? (A) To provide information on the health of operations (B) To provide measurements against agreed-upon requirements (C) To assess the adequacy of management controls (D) To evaluate the appropriateness of sourcing decisions
D
84. The characteristics of an MRP system include all of the following EXCEPT (A) lower inventories (B) early-warning systems (C) short-range planning (D) strategic planning
D
85. Which of the following is the MOST important advantage of an MRP system? (A) It replaces a manual system. (B) It can reduce clerical staff. (C) It can produce up-to-date shortage lists. (D) It can update changes in priorities quickly.
D
87. Which of the following is NOT an input into MRP calculations? (A) On-hand inventory information (B) Master production schedule (C) Bills of materials (D) Purchase requisitions
D
91. Materials Resource Planning (MRP) calculates which of the following? (A) Independent requirements (B) Lot size (C) Lead time (D) Net requirements
D
95. Which of the following is an extension of a basic exponential smoothing model? (A) Box-Jenkins (B) Judgment sampling (C) Least squares/regression model (D) Winter's model
D
