ISM INTE Exam Practice Test Instant Access

Question 1

A supply manager is reviewing safety stock for a particular unit. The unit is small, Inexpensive, non-perishable, and easily stored, but is critical to the firm's manufacturing process. The following information is known about this unit:

Maximum lead time = 8 Days

Average lead time = 3 Days

Maximum daily usage = 6,000 Units

Average daily usage = 4,000 Units

What is the maximum safety stock that should be maintained for this unit?

A12,000

B10,000

C36,000

D48,000

Answer : C

The maximum safety stock is calculated using the formula: (Maximum lead time - Average lead time) x Maximum daily usage. This results in (8 - 3) x 6,000 = 30,000 units. Adding the average usage during average lead time (3 days x 4,000 units = 12,000 units) gives a total of 36,000 units for safety stock. Reference: Safety stock calculations help in managing inventory to prevent stockouts during lead time variations.

Question 2

A supply manager oversees three distribution centers. Which of the following will be MOST useful for understanding the capacity of these centers7

AWarehouse Management System (WMS)

BCapacity Requirements Planning (CRP)

CAn Enterprise Resource Planning (ERP) system's forecasting tool

DAn external consultant s analysis of the distribution centers

Answer : A

A Warehouse Management System (WMS) is designed specifically to manage and optimize ware-house operations. It provides real-time data on inventory levels, storage locations, and warehouse capacity, enabling supply managers to understand and maximize the utilization of distribution centers. A WMS can track and improve the efficiency of receiving, putaway, picking, and ship-ping processes, providing a comprehensive view of the warehouse's capacity and performance. Reference:

* Frazelle, E. (2002). World-Class Warehousing and Material Handling. McGraw-Hill.

* Richards, G. (2017). Warehouse Management: A Complete Guide to Improving Efficiency and Minimizing Costs in the Modern Warehouse. Kogan Page Publishers.

Question 3

Which of the following ensures that project requirements are being met within project constraints?

ASchedule variance

BPerformance reporting

CScope management

DChange management

Answer : C

Scope management ensures project requirements align with constraints, preventing scope creep and maintaining project focus. It involves defining, controlling, and validating project scope. Reference: PMI. (2017). A Guide to the Project Management Body of Knowledge (PMBOK Guide).

Question 4

A manufacturer purchased a piece of production equipment over 20 years ago. The equipment is still in use, though for the last few quarters, it has been getting more difficult to keep it operational, as many of the required components are turning obsolete. According to the service agreement, the supplier must ensure the availability of the component parts for 3 more years. In this situation, the buying firm should expect that the supplier will

Acreate a list of components expected to become obsolete in the next 3 years, identify new parts to replace the existing ones, and propose the plan to the buyer

Bexplain the situation to the buyer and suggest that it source the required components on its own

Cpropose to revise the remaining timeline of the service agreement from 3 years to 6 months

Dcreate a list of components expected to become obsolete within the next 3 years, and purchase the required parts before they are actually needed, in order to support the agreement

Answer : D

The supplier should proactively identify components expected to become obsolete and purchase the necessary parts before they are needed. This ensures compliance with the service agreement and supports the continued operation of the buyer's equipment, minimizing downtime and operational disruption. Reference: Supplier agreements and obsolescence management.

Question 5

XYZ Company is a manufacturer that buys raw materials from Supplier

AIn the past several years, Supplier A has experienced increasingly unpredictable order patterns from XYZ, which has necessitated it carry more inventory as safety stock. A meeting with XYZ reveals that this is because XYZ frequently stocks out of items its upstream customers require, and thus orders more than it needs in order to ensure that it is covered. Which of the following BEST describes the problem within this supply chain?

AGrowth stage in a product cycle

BRisk transfer

CFluctuating lead times

DBullwhip effect

Answer : D

The bullwhip effect describes the phenomenon where order variability increases as it moves up the supply chain. In this case, XYZ Company's unpredictable order patterns cause Supplier A to maintain higher safety stock. This is due to demand fluctuations amplified by XYZ's overordering to compensate for stockouts, leading to inefficiencies and increased costs throughout the supply chain.

Question 6

A company supply manager conducts a review of current freight contracts and finds that payments to the primary carrier for outbound shipments have been based on a published rate schedule, which is revised annually. The supply manager believes the shipping costs may be higher than necessary. In order to reduce outbound transportation costs, which of the following should the supply manager do FIRST'

AInitiate a carrier cost audit

BExplore savings opportunities with the primary carrier

CPerform a carrier performance review

DSolicit proposals from several other reputable carriers

Answer : B

The first step in reducing outbound transportation costs is to explore potential savings with the current carrier. This approach involves negotiating rates and service terms, leveraging existing relationships, and possibly uncovering cost-saving opportunities without the need for complex audits or new vendor searches. Engaging with the primary carrier directly can be an efficient starting point.

Question 7

Which of the following forecasting methods is regarded as participatory7

AExponential smoothing

BBox-Jenkins

CSales force composite

DMarket research

Answer : C

The sales force composite method is participatory, involving input from the sales team who provide forecasts based on their knowledge of customer needs and market trends. This method leverages the insights of those directly engaged with customers, enhancing the accuracy of demand forecasts.

ISM INTE Supply Management Integration Exam Practice Test