Supply Management Core Exam (CORe) Free Practice Test

Question 1

UVW, Inc. issues a Request for Quotation (RFQ) for urgently-needed safety equipment. The equipment must be installed immediately in order to keep the firm in compliance with safety regulations. UVW is contacted by a small, minority-owned company which asks for two more weeks to submit its quotation, as its technical expert is out sick. In this situation, which of the following is the MOST appropriate course of action for UVW to take?

A. Extend the RFQ due date and notify all suppliers of the extension

B. Inform the supplier that quotations must be received by the due date in order to be considered

C. Accept other quotations as scheduled and set aside a portion of the award for the minority-owned supplier

D. Return all quotations and issue a new RFQ

Correct Answer: B

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Question 2

A supply manager wants to develop a strategy to facilitate supplier Innovation. Which of the following is MOST likely to achieve this goal?

A. Awarding contracts only to the most innovative companies

B. Leveraging innovations from one supplier to improve all other suppliers

C. Locating new suppliers that lead their industry

D. Recognizing current suppliers for innovative performance

Correct Answer: D

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Question 3

A firm purchases large quantities of parts from an overseas supplier in order to take advantage of volume discounts. The firm wants to delay paying duty on the parts until they are required for manufacturing. Given this situation, which of the following Is the MOST appropriate course of action for the firm to take?

A. Apply for a temporary import bond

B. Facilitate direct entry of the materials by way of a customs house

C. Engage the services of a customs broker

D. Store goods in a bonded warehouse and release as needed

Correct Answer: D

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Question 4

A firm has contracted for the past 3 years with Supplier DEF to supply parts used in manufacturing. As the contract comes to an end, the parties enter into negotiations in the hopes of renewing the agreement. DEF proposes a new 3-year term with a 3% increase in price each year. The supply management team believes this price increase is higher than market value, so they execute a request for proposal (RFP) event for parts, In which DEF is Included. After reviewing the proposals, DEF is the successful bidder. DEF's proposal is for 3 years with only a 1% increase in price each year.
The price difference obtained through the RFP can BEST be described as which of the following?

A. Cost containment

B. Cost reduction

C. Cost mitigation

D. Cost avoidance

Correct Answer: A

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Question 5

In portfolio analysis, purchases for which the buying organization consolidates spend with a handful of suppliers but still maintains competition are BEST classified as

A. routine

B. strategic

C. leverage

D. bottleneck

Correct Answer: C

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Question 6

A supplier is awarded a contract to network all of a buying company's production and forecasting applications.
The supplier completes the work on time. However, follow-up tests by the buying organization's IT department determine that performance does not meet contract specifications. Given this situation, which of the following is the BEST course of action for the buying firm to take?

A. Have another supplier review the network to estimate the cost of repairs

B. Accept the network and sign a maintenance contract to fix the problems

C. Review the contract warranty terms and remedies

D. Have IT attempt to repair the network so it works correctly

Correct Answer: C

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Question 7

The chief executive officer (CEO) of a candy company directs the firm to source, produce and market a line of organic clothing. The firm's internal stakeholders are not in agreement with the CEO. In this situation, which of the following courses of action should supply management take?

A. Select the best source of supply

B. Perform cost regression analysis (CRA)

C. Poll external stakeholders for input

D. Create a steering committee

Correct Answer: D

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Question 8

For several years, an environmental services company has contracted on a single-source basis with a supplier that offers highly specialized testing procedures. The supplier's performance is excellent, but it has Instituted frequent rate increases. The company's supply manager is under pressure to reduce costs wherever possible, but developing other sources will be time-consuming. Given this situation, which of the following actions should the supply manager take FIRST?

A. Inform the current supplier that the contract will be terminated If it does not reduce prices

B. Negotiate a maximum yearly limit on price increases with the current supplier

C. Issue an RFI to identify other potential sources

D. Perform a 'should cost' analysis of the current supplier's pricing

Correct Answer: D

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Question 9

A supply manager is preparing the department's budget for the next year. Which of the following is the FIRST step in this process?

A. Defining the needed resources

B. Reviewing the organization's goals

C. Controlling expenditures during the budgetary year

D. Presenting the budget for review

Correct Answer: B

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ISM Supply Management Core (CORe) Free Practice Test