All About CORE ISM Latest Exam News, Questions and Passing Tips (2024)

A.

Collaborative optimization

B.

E-Design

C.

E-RFx

D.

E-Sourcing

A.

Litigation and arbitration laws

B.

Geo-political risks

C.

Access to basic infrastructure needs

D.

Unemployment and crime in the region

The supply manager for a community college is contacted by the college's chief financial officer (CFO), who describes a meeting with Supplier X, a food service contractor interested in providing cafeteria services. The supply manager reminds the CFO that services must be procured via a competitive request for proposal (RFP), with solicitations issued only to suppliers who have completed a pre-qualification review.

The procurement process goes forward, and a contract is awarded to another bidder. Supplier X then sues the college. It claims that it never received an RFP, even though the CFO promised it an opportunity to submit a proposal. Which of the following aspects of the CFO's conversation with Supplier X is MOST likely to be an issue?

A.

Apparent authority

B.

Implied authority

C.

Breach of confidentiality

D.

Restraint of trade

A.

Accuracy of invoices

B.

Fuel efficiency of delivery vehicles

C.

Liability insurance coverage

D.

On-time delivery

A.

Request that WXY's senior management hold a conference call with Supplier Y and inform it that the quality issues need to be resolved immediately

B.

Replace Supplier Y, as trying to improve its performance will likely be a waste of time and resources

C.

Assign specialists in lean manufacturing from WXY to develop Supplier Y into a lean manufacturing organization

D.

Assign a Six Sigma black belt from WXY to help Supplier Y find the root cause of the problems and institute procedures to improve quality

A.

Supplier relationship management

B.

Contingency planning

C.

Supply chain mapping

D.

Supplier mentorship

A.

Supplier development

B.

Supplier partnership

C.

Supply chain management

D.

Early supplier Involvement

A.

Issue a Request for Quotation (RFQ)

B.

Conduct a suppliers' conference

C.

Issue a Request for Information (RFI)

D.

Issue a Request for Proposal (RFP)

A.

review with the legal department what actions can be taken against suppliers with late deliveries

B.

document a corrective action plan

C.

determine what changes can be made to contracts to ensure suppliers meet delivery deadlines

D.

terminate contracts with suppliers who have been late with deliveries

A.

Supplier K, as the firm will save $500

B.

Supplier J, as it provides the best value

C.

Supplier J, based on prior satisfactory performance

D.

Supplier K, to save money over the van's life cycle

A.

Demand that the current supplier reduce costs to meet the required budget

B.

Contact the current supplier and develop a solution to reduce costs

C.

Send out a request for quotation (RFQ) to all possible qualified suppliers

D.

Conduct a root-cause analysis, and then negotiate with the current supplier

A.

Reservation of Rights

B.

Termination for Convenience

C.

Repudiation

D.

Termination for Cause

A chemical company develops a new product that relies heavily on quartz, a common and abundant mineral. The company believes that the new product is critical to its financial success and future

growth. In developing a sourcing strategy for quartz, the company supply manager should focus PRIMARILY on

A.

ensuring long-term availability of supply

B.

reducing exposure to price increases or supply disruption

C.

using volume and economies of scale to minimize price

D.

streamlining the supply management process to achieve efficiency

DEF, Inc. conducts a Request for Information (RFI) to identify suppliers who will be invited to participate in a Request for Proposal (RFP) for technical support. The RFI requires audited financial statements. DEF receives an inquiry from a publicly traded supplier asking if their 10K statement will suffice, and a privately held supplier states that it will only provide its audited financial statement after receiving a nondisclosure agreement from DEF.

Given this situation, which of the following is the BEST course of action for DEF to take?

A.

Issue a revision to the current RFI listing alternate methods and conditions acceptable in demonstrating financial health

B.

Maintain the requirement for audited financial statements so that all respondents are graded on the same basis

C.

State that DEF reserves the right to use information other than that received in response to the RFI to evaluate respondents' financial condition

D.

Negotiate with all respondents for more financial information

A.

The specifications favor a particular supplier

B.

The pre-qualification process was flawed

C.

The reserve price was set too low

D.

The suppliers lack experience with reverse auctions

A.

Supplier D:Netincome=50, Assets = 20

B.

Supplier A:Netincome=100,Assets=100

C.

Supplier B:Netincome=200,Assets=100

D.

Supplier C:Netincome=200,Assets=400

DEF, Inc. is a small manufacturing firm. DEF enters into a three-year contract for raw materials, with payment terms of net 30. On one of the initial deliveries, a mistake by DEF results in failure to pay for three months. In return, the supplier puts DEF on credit hold. As the materials are critical to manufacturing operations, DEF pre-pays for future orders.

After several months of pre-payments, the firm issues an order with payment net 30, but the supplier refuses to ship goods under these terms. DEF's supply manager believes the firm has made a good-faith effort to address the supplier's concerns, and now wants to enforce the original contract terms. Which of the following is the BEST way for the supply manager to resolve this situation?

A.

Escalate the issue to the executive level with the supplier indicating that all future orders must comply with the original contract

B.

Terminate the contract, as the supplier is breaching the terms and conditions

C.

Make one last pre-payment on credit hold, then notify the supplier of the return to net 30

D.

Negotiate a reasonable compromise with the supplier, including plans for returning to net 30

A supplier of software critical to PQR Inc.'s scheduling system plans to discontinue supporting the version PQR uses in order to concentrate its resources on a newer version. The current software works well for PQR, and upgrading It would be costly for them in both money and time. The supply manager for PQR assembles a negotiating team with representatives from user departments to discuss the situation with the supplier and try to reach a mutually satisfactory agreement.

Soon after the start of negotiations, the supplier states that 90 days is the longest they can guarantee support for the current software. PQR’s production manager responds by saying, "Fine, we will take any extension at this point." But PQR's IT director shouts, "We can't do that! It will take at least six months to replace the software, even if we could afford to do so."

Given this situation, which of the following is the BEST course of action for the supply manager to take?

A.

Ask the production manager and IT manager to calm down, and move on to another issue

B.

Ignore the outburst and continue with the negotiations as if it had not occurred

C.

Call a recess and meet with the team to recommit to agreed-upon roles and a unified strategy

D.

Use the outburst as an opportunity for all parties to address their concerns

A.

Escalate Supplier X's proposal to executive management

B.

Re-open the RFP for all suppliers to re-submit proposals

C.

Reject Supplier X's offer

D.

Withdraw the award from the selected bidder and re-award the contract to Supplier X

A.

Supplier A will have breached the contract, but only if JKL did not know or have reason to know that Supplier A's low bid was the result of an error.

B.

Supplier A will not have breached the contract, because Supplier A can successfully argue that the contract is voidable.

C.

Supplier A will not have breached the contract because the frustration of purpose doctrine excuses Supplier A's non-performance.

D.

Supplier A will have breached the contract, but only if it is too late for JKL to accept the bid of the second lowest bidder.

A.

Monitoring activities

B.

Control environment

C.

Risk assessment

D.

Control activities

A major supplier for JKL, Inc. has a production capacity of 100 units a month. For the last six months, however, the supplier's production rate has climbed to 105 units a month. JKL audits the

supplier and takes note of the higher production rate. In this situation, which of the following would MOST likely be of concern to JKL?

A.

Increased pricing

B.

Deteriorating quality

C.

Increased lead time

D.

Loss of flexibility

A supply manager solicits bids for janitorial services. The incumbent cost is $20,000 per month to perform Scope A. After working with internal stakeholders, obtaining bids, and performing negotiations, a new supplier is awarded the agreement. The new supplier's cost is $19,000 per month to perform Scope A as well as Scope B, which was previously performed by another supplier at a cost of $2,000 per month.

What is the annual cost reduction?

A.

$24,000

B.

$36,000

C.

$12,000

D.

$48,000

A.

bottleneck and strategic items

B.

bottleneck and non-critical items

C.

strategic and leveraged item

D.

leveraged and non-critical items

A.

Negotiate with new suppliers to put pressure on the current suppliers

B.

Cease conducting business with the most difficult supplier and retain the other two suppliers

C.

Reassess the firm's supplier selection process

D.

Select two suppliers based on past performance and negotiate more favorable pricing

A.

Benchmarking

B.

Categorical

C.

Weighted point

D.

Scorecard

A.

Improve access to information about preferred suppliers via the corporate intranet

B.

Establish a mentoring program, matching staff members from top performing locations with their counterparts at less successful locations

C.

Recommend changes in the composition of the steering committee

D.

Obtain endorsem*nt from top management for adding compliance to all divisions' goals and performance criteria

A.

Seek opportunities for supplier collaboration and product innovation

B.

Implement Enterprise Resource Planning (ERP) throughout the organization

C.

Establish a competitive environment between suppliers to encourage the development of new products

D.

Promote internal collaboration to find a solution

A.

Missing person

B.

Red herring

C.

Power position

D.

False offer

A.

Recommend giving a presentation to the board of directors on the category strategy for consulting and professional services

B.

Explain to the CEO the conflict of interest in contracting with an existing consultant as an auditor, and recommend alternative solutions

C.

Prioritize execution of the statement of work, as it has likely been mandated by the board of directors

D.

Review professional service rates for the audit services and verify they are competitive prior to executing the statement of work

A.

Identifying low cost options for high volume components

B.

Reaching out to suppliers for innovative ideas on products and services

C.

Reviewing current scope of work (SOW) standards with suppliers

D.

Asking sales and marketing for the latest information on industry trends

A.

$114,000

B.

$135,000

C.

$110,000

D.

$115,000

A.

Dedicated internal audit employees

B.

Strong management oversight

C.

Effective internal controls

D.

Supplier surveys

A.

The Internal Revenue Service

B.

The Securities and Exchange Commission

C.

The company's shareholders

D.

The firm's CEO

A.

Issuing new ordering instructions to all internal departments

B.

Reviewing orders online before they are finalized

C.

Adding a drop-down menu for selecting item categories

D.

Reporting order accuracy rates to the users' supervisors

A.

The 0.50 mm packaging, as It is the most cost effective.

B.

The 0.50 mm packaging, as the supply manager's primary responsibility is honoring internal stakeholder requests.

C.

The 0.60 mm packaging, as it is the most cost effective.

D.

The 0.60 mm packaging, as it is only $0.80 each, while the 0.50 mm packaging is $1.00 each.

EFG, Inc. is conducting a sourcing activity to identify a provider of operational software. Both large and small consulting firms are invited to bid. Given that the supplier's financial stability will be

an important element in the selection process, which of the following is the BEST course of action for EFG to take?

A.

Obtain Dun & Bradstreet reports for the potential suppliers and review them for financial vulnerabilities

B.

Have EFG's comptroller evaluate the suppliers' financial statements and interview the suppliers' CFOs

C.

Conduct a reference check on the suppliers, focusing on timely performance and financial stability

D.

Contact the suppliers and ask them for the contact information of the bankers who service their accounts

A firm enters into a contract with a minority business. The invoice does not match the purchase order, and some incorrect items are shipped. The erroneous items, valued at $5,000, are returned. The replacement items are scheduled to be delivered within 2 days. The total invoice is for $18,000, which is a substantial amount for the business. Preferential payment terms have previously been negotiated from 30 to 14 days from receipt of goods, as cash flow is a significant issue. The situation is summarized as follows:

Purchase Order RaisedGoods Received Invoiced

Timing18 days ago 13 days ago 12 days ago

Amount$18,000 $18,000 $18,000

As it will take one business day to process payment, a decision needs to be made on whether the supplier should receive payment on time. Which of the following courses of action should the supply manager take?

A.

Pay the full $18,000 immediately

B.

Pay $18,000 14 days after receipt of all the goods in the original purchase order

C.

Pay $13,000 now and $5,000 upon receipt of the replacement goods

D.

Pay $13,000 now and $5,000 14 days after receipt of the replacement goods

A.

Conduct a strengths, weaknesses, opportunities and threats (SWOT) analysis

B.

Conduct market research on the options available for the product discussed

C.

Create a request for information (RFI) and find the best qualified suppliers with which to develop a sourcing plan

D.

Create a scope of work outlining the requirements, and submit it to stakeholders for review and approval

A research company develops a tomato that grows in cold weather. The company agrees to sell ten thousand seeds to a broker for $5,000. However, an error is made on the contract which

misstates the price as $4,000. The research company and broker both sign the contract without noticing the error. Some weeks later, the broker discovers the error and refuses to pay more than

$4,000. In this situation, the FIRST course of action for the research company to resolve the dispute is to establish with the broker that

A.

there was a misunderstanding concerning price

B.

the written agreement constituted a partial integration

C.

the written agreement was a sham

D.

there was an administrative mistake

A.

Current ratio

B.

Quick ratio

C.

Times interest earned

D.

Gross profit margin

A.

Reprimand the agent in writing, and consider termination if the agent oversteps authority again

B.

Require the agent to bear the cost of all repairs made without approval

C.

Create a new reporting structure for satellite offices to mitigate communication problems

D.

Ratify the action and authorize payment for repairs made at the agent's direction

A.

$36,000

B.

$33,000

C.

$32,000

D.

$40,000

A.

Implementing a standardized sourcing process

B.

Mandating the evaluation of performance

C.

Centralizing the administration of contracts

D.

Searching for potential sources of supply

A.

SWOT analysis

B.

Request for information

C.

Supplier analysis

D.

Porter's Five Forces

A.

improved community ties

B.

increased profit margins

C.

shorter lead times

D.

decreased product risk

A.

Require current suppliers to submit samples to determine if any materials do not meet standards

B.

Stop production and halt any shipments until the problem is rectified

C.

Find new suppliers for the raw materials

D.

Offer replacement products from current inventory so that customers can get new products right away

A.

ask legal counsel to review national and local laws in determining the legality of the request

B.

accommodate the request, as the provision contains no absolute requirement that a supplier's employees purchase any insurance

C.

decline the request on the grounds that it is Illegal

D.

decline the request, as it is contrary to the principle of buying and selling based on the fundamental criteria of quality, cost, and service

A.

A secure EDI system established with the overseas supplier

B.

The establishment of an international supply management office

C.

A clause in the contract stating that the buyer's language will serve as the lingua franca

D.

The employment of a trading agent to facilitate transactions

A product's labor content is $10 and its overhead is $12.50. The product sells for $36.50 per unit. Over the past year, supply management has reduced the product's cost of materials from $14 per unit to $12.

How much have supply management's efforts contributed to profit?

A.

$2.00

B.

$2.50

C.

$3.00

D.

$4.00

A.

bottleneck

B.

routine

C.

strategic

D.

leverage

Exam Code: CORE