ISM INTE Exam Practice Test Instant Access

Question 1

A supply manager is responsible for the raw material supply to a manufacturing operation. After three months of successfully meeting key performance indicators (KPIs), the supply manager conducts a meeting with stakeholders---including engineers, manufacturing technicians, supply chain personnel, and finance team members---to solicit their feedback regarding the raw material supply chain. Which of the following quality management principles is the supply manager executing?

AImplementing requirements planning to align supply management activities with organizational strategy

BCreating systems and process improvements to help the organization meet sales goals

CStructuring the supply chain in support of the organization's business strategy

DImplementing continuous improvement processes within the supply chain

Answer : D

The supply manager's actions align with the principle of continuous improvement, a key component of quality management. By gathering feedback from various stakeholders, the manager seeks to enhance the supply chain's performance, addressing issues and optimizing processes. This approach fosters a culture of ongoing enhancement, supported by Total Quality Management (TQM) principles.

Question 2

Which of the following categories is regarded as low risk and low value?

AStrategic

BLeverage

CRoutine

DBottleneck

Answer : C

Routine categories are regarded as low risk and low value. These items are typically standardized and widely available, requiring minimal management effort. They often include office supplies or basic maintenance items. This classification allows firms to focus resources on more critical areas. Reference: Kraljic's purchasing portfolio model.

Question 3

A manufacturing firm redesigns its premier product to benefit from material standardization. The change will entail re-tooling costs. The firm conducts a cost benefit analysis on four possible options. Option 1 is to make no change at all. Options 2, 3, and 4 represent different re-tooling configurations involving different materials:

Option 1 Option 2 Option 3 Option 4

Re-tooling Costs (Year 1) $0 $800,000 $1,000,000 $1,200,000

Material Costs

Year 1 51,000,000 $700,000 $650,000 $600,000

Year 2 $1,100,000 $750,000 $700,000 $650,000

Year 3 SI,200,000 $800,000 $750,000 $700,000

Year 4 51,300,000 $850,000 $800,000 $750,000

Year 5 51,400,000 $900,000 $850,000 $800,000

Total $6,000,000 $4,000,000 $3,750,000 $3,500,000

Labor Costs

Year 1 $1,000,000 $700,000 $650,000 $600,000

Year 2 $1,100,000 $770,000 $715,000 S660,000

Year 3 $1,210,000 $847,000 $786,500 $726,000

Year 4 $1,331,000 $931,700 $865,150 $798,600

Year 5 $1,464,100 $1,024,870 $951,665 $878,460

Total $6,105,100 $4,273,570 $3,968,315 $3,663,060

In addition to this, there will be a cost of $3.5 million in lost production during Year 1, should any of the re-tooling options (2, 3, or 4) be selected.

The firm wants to rank the options in order of financial preference, from the best option to the worst. Based on this information, how should the four options be ranked?

A2, 3, 1, 4

B4, 1, 3, 2

C4, 3, 2, 1

D1, 2, 3, 4

Answer : C

To determine the financial preference, we calculate total costs including re-tooling, material, labor, and lost production for each option. Option 4 has the lowest total cost, followed by Option 3, then Option 2, and Option 1, which incurs the highest costs without any change. This ranking is based on cumulative costs over five years. Reference: Cost-benefit analysis in supply chain management helps in decision-making by comparing total costs of different strategies.

Question 4

Analysis of inventory turnover is generally considered part of what status assessment ratio?

AFinancial efficiency

BWorking capital

COperating expense

DDebt-to-equity

Answer : A

Inventory turnover analysis is part of assessing financial efficiency. It measures how effectively a company uses its inventory and resources, indicating how well inventory is managed relative to sales, thus reflecting operational efficiency.

Question 5

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 6

A manufacturer receives notice from one of its largest customers stating that, from this point on, it will only accept environmentally friendly boxes for packaging. The manufacturer checks the remaining packaging in its inventory and finds that it still has over six months' worth of boxes that are not made of environmentally-friendly materials. These boxes are custom-designed and cannot be returned to the packaging material supplier. In this situation, the manufacturer would be BEST served by doing which of the following?

ADisposing of the existing boxes and switching to environmentally-friendly materials

BExplaining the situation to the customer and offering the products in the existing boxes at a discounted price

CNegotiating a grace period with the customer to allow a gradual switch from the existing design to the new one

DUsing the leftover boxes for internal purposes within the organization

Answer : C

Negotiating a grace period allows the manufacturer to utilize the existing inventory of non-environmentally friendly boxes while planning a transition to meet the customer's requirements. This approach balances customer satisfaction and cost efficiency, avoiding waste and financial loss. Reference: Supply chain flexibility and customer relationship management practices emphasize negotiation as a key strategy in adapting to changing customer demands.

Question 7

Which of the following modes of transportation BEST promotes international trade and offers a low cost option fortransporting large quantities of product?

AO Pipeline

BO Motor carriage

CO Rail

DMarine

Answer : C

The line count fill rate is calculated by dividing the number of lines fully filled by the total number of order lines. Here, two lines are fully filled (Item #XYZ-09 from both POs), and one line is partially filled (Item #XYZ-06). The fill rate is therefore 23100=66%\frac{2}{3} \times 100 = 66\%32100=66%. Reference: Inventory management metrics use line fill rates to evaluate order fulfillment efficiency.

ISM Supply Management Integration INTE Exam Practice Test