ISM INTE Exam Practice Test Instant Access

Question 1

DEF, Inc. is in the ramp-up phase of a unique medical device. The device has a two-year life expectancy. The sales forecast for the ramp-up period is as follows:

Month Jul Aug Sep Oct Nov Dec Jan Feb

Unit Sales 100 150 200 600 1,400 2,200 4,000 10,000

Demand after February is expected to remain at 10,000 units per month for several months, then decrease gradually. The units are small, and thus maintaining an inventory of up to 10,000 units is possible.

There are only three suppliers capable of providing the specialized component critical to this product. The production capacities of these suppliers are as follows:

* Supplier X has a capacity of 500 units per month at a cost of S20 per unit, representing 80% of its total business

* Supplier Y has a capacity of 2,000 units per month at a cost of S2O.5O per unit, representing 50% of its total business

* Supplier Z has a capacity of 20,000 units per month at a cost of $20.70 per unit, representing 10% of its total business

Two of these companies---Supplier X and Supplier Y---are minority businesses.

Given this situation, DEF should contract with

ASupplier Z only, as it can best fulfill the forecasted demand

Ball three companies in a tiered system, with up to 40% from Supplier X and Y's total monthly business, and the remainder going to Supplier Z

CSuppliers X and Y, and work with them to increase their production capability

Dall three companies in a tiered system, with up to 5,000 units from Supplier X, 20,000 units from Supplier Y, and the remainder from Supplier Z

Answer : B

Contracting with all three suppliers in a tiered system allows DEF, Inc. to diversify its supply chain, supporting both minority businesses and ensuring capacity to meet demand. This strategy balances cost, supplier diversity, and risk management, aligning with best practices in supply chain management.

Question 2

Which of the following holds the supplier responsible for ensuring that stock is maintained at appropriate levels and replenished when needed at the purchaser s facility'

AConsignment

BVendor-managed inventory

CRe-order point system

DABC analysis

Answer : B

Question 3

A supply manager collects data on all suppliers regarding their on-time delivery performance. The data are sorted in order of supplier percentage of on-time delivery. This type of analysis is known as which of the following?

ACause and effect analysis

BKepner-Tregoe method

CPareto analysis

DBenchmarking

Answer : C

Pareto analysis involves sorting data to identify the most significant factors---in this case, supplier performance on on-time delivery. This analysis helps prioritize supplier management efforts based on their impact, consistent with the 80/20 rule.

Question 4

Identifying risks is MOST associated with which of the following stages of a project?

AExecuting

BMonitoring and Controlling

CInitiating

DPlanning

Answer : D

Risk identification primarily occurs during the planning phase of a project. This stage involves assessing potential risks that could impact project objectives, allowing for the development of mitigation strategies and contingency plans.

Question 5

RST, Inc. is an electronics manufacturer. The profit margins for a major product developed by RST are falling. Accordingly, the firm asks the supply manager to identify ways to reduce the product's costs. The product includes a high-tech, high-cost component for which only one source is able to meet quality standards. Which of the following is the BEST way the supply manager can achieve cost reductions from this supplier?

AConduct a should-cost analysis

BRenegotiate with the supplier, citing changes in marketplace

CRevise order quantities based on updated sales forecasts

DRecommend reengineering or revising specifications

Answer : A

A should-cost analysis helps understand the component's cost structure and identify potential cost-saving opportunities. This method provides a basis for negotiations and ensures that the supplier's pricing is fair, fostering transparency and cost management.

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 refers to the practice of buying a commodity on the open market for immediate delivery?

AHedging
B.
C.
D.

FForward buying

GSpot buying

HSpeculative buying

Answer : G

Spot buying refers to the purchase of commodities on the open market for immediate delivery. This practice is typically used to meet urgent needs or take advantage of favorable market conditions. It contrasts with forward buying, which involves purchasing for future delivery to lock in prices or quantities.

ISM Supply Management Integration Exam Practice Test