[Jan-2025] The Best ISM CPSM Study Guide for the INTE Exam
INTE certification guide Q&A from Training Expert TopExamCollection
ISM INTE Exam Syllabus Topics:
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NEW QUESTION # 20
In sourcing packaging for industrial purposes, which of the following will be MOST useful for monitoring price behavior?
- A. Consumer Price Index - All Items Less Food & Energy
- B. Producer Price Index - Finished Goods
- C. Consumer Price Index - All Items
- D. Producer Price Index - Intermediate Materials
Answer: D
Explanation:
The Producer Price Index for Intermediate Materials is most relevant for monitoring price behavior in industrial packaging, reflecting changes in production costs that affect supply chain economics. References:
Price index reports are essential tools for tracking market trends and making informed procurement decisions in industrial sectors.
NEW QUESTION # 21
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'
- A. Consignment
- B. Re-order point system
- C. ABC analysis
- D. Vendor-managed inventory
Answer: D
Explanation:
Vendor-managed inventory (VMI) places the responsibility on the supplier to maintain stock lev-els at the purchaser's facility. This system enhances supply chain efficiency, reduces inventory costs, and ensures timely replenishment based on actual consumption patterns.
NEW QUESTION # 22
Based on the global reach and complexity of supply chains, resiliency planning and risk assessment are necessary because of which of the following'
- A. Uncollected receivables
- B. Natural and man-made disasters
- C. Lack of training within the organization
- D. Supplier bankruptcies in competitive markets
Answer: B
Explanation:
Resiliency planning and risk assessment in global supply chains are critical due to the potential impact of natural and man-made disasters. These events can disrupt operations, affecting logistics, supply continuity, and financial performance. Effective risk management strategies mitigate such disruptions, ensuring supply chain stability.
NEW QUESTION # 23
A disaster response manager plans to deliver pallets of bottled water to volunteers at a disaster site. The water comes from a nearby bottling company at a preferential cost of $50 per pallet. The number of pallets of bottled water needed is impossible to know in advance due to numerous variables, although experience indicates that the likelihood of consumption is equal: a 25% chance each for 1, 2, 3 or 4 pallets of bottled water. If a full pallet is returned, a restocking fee of 520 is charged. If not enough water is brought in, the cost of purchasing a pallet of water on location is expected to be $200.
How many pallets should the manager deliver?
- A. 3 pallets
- B. 2 pallets
- C. 1 pallet
- D. 4 pallets
Answer: B
Explanation:
Delivering 2 pallets optimizes cost-effectiveness based on the probabilities of usage and potential costs of over- or under-supply. This number balances the likelihood of demand with the costs associated with restocking and emergency purchases, minimizing overall expenditure in uncertain conditions.
NEW QUESTION # 24
A manufacturer has historically ordered fasteners utilizing monthly fixed order quantities. The firm wishes to explore the feasibility of using economic order quantity (EOQ), and determines that the EOQ is less than the supplier's quoted price break. Which of the following is the BEST course of action for the firm to take?
- A. Place orders using the economic order quantity
- B. Compare the price break to the carrying cost of buying at the economic order quantity
- C. Implement a Vendor Managed Inventory program with the supplier to transfer carrying costs
- D. Negotiate a new contract with the supplier to modify price breaks
Answer: B
Explanation:
Comparing the price break to the carrying cost of buying at the economic order quantity is essential. This analysis will help the firm determine the most cost-effective purchasing strategy by weighing the benefits of the price break against the costs associated with holding additional inventory. Reference: Inventory management and cost analysis.
NEW QUESTION # 25
Which of the following requires investment recovery action'
- A. Finished goods
- B. Slow-moving materials
- C. Work-in-process
- D. Raw materials
Answer: B
Explanation:
Investment recovery focuses on recouping value from obsolete or excess inventory. Slow-moving materials often require such actions to minimize losses and free up resources. This practice is part of effective inventory management and resource optimization strategies.
NEW QUESTION # 26
A buyer is reviewing a quote for a shipment of electronic materials from Europe to Africa. The supplier offers a reasonable price for the materials and plans to deliver them using its regular shipping service. The terms are such that the buying company takes possession of the goods once they are loaded onto a boat in Europe.
Which of the following information should be of GREATEST concern to the buyer?
- A. The details of the proposed Incoterms 2020 rule
- B. The reason for choosing sea transportation over air
- C. The risks involved in the shipping terms
- D. Whether or not export regulations will be followed
Answer: C
Explanation:
The buyer should be most concerned about the risks associated with the shipping terms, especially as they take possession once the goods are loaded. This includes potential liabilities and loss during transit. Understanding these risks is critical for mitigating potential issues. Reference: Incoterms 2020 by ICC.
NEW QUESTION # 27
FGH, Inc., a specialty construction company located in Italy, orders bulky customized sound equipment from a sole-source supplier in Asia. The equipment is to be installed in a new auditorium that FGH is constructing.
Failure to complete the project in time for its scheduled opening will subject FGH to penalties. FGH receives notice from the supplier that the equipment is packaged and ready to ship as planned via ocean freight but that an impending storm may cause delays. FGH needs to stay within budget. In this situation, which of following is the BEST course of action for FGH to take?
- A. Use ocean freight after the storm subsides
- B. Evaluate options for a multimodal shipment
- C. Wait until the storm's path can be predicted more accurately
- D. Arrange for immediate air freight of the equipment
Answer: A
Explanation:
Marine transportation is the best option for promoting international trade and transporting large quantities of products at a low cost. It allows for economies of scale, making it the most cost-effective mode for bulk shipments. References: Global trade studies frequently cite maritime shipping as a key enabler of international commerce due to its capacity and cost benefits.
NEW QUESTION # 28
Which of the following refers to the exporting of a product by a country or company at a price that is lower in the foreign importing market than the price charged in the exporter's domestic market?
- A. Hedging
- B. Dumping
- C. Short selling
- D. Recovery
Answer: B
Explanation:
Dumping refers to the practice of exporting a product at a price lower than the price in the exporter's domestic market. This often leads to trade disputes as it can harm industries in the importing country. Reference:
International trade regulations and anti-dumping measures.
NEW QUESTION # 29
A supply manager is part of a ramp-up team for a new product line. The supply manager's role will include finding and evaluating new sources and obtaining commitments to support the volume projected by marketing.
In recent campaigns, sales forecasts have been considerably higher than actual demand, and the supply manager wants to minimize the risk of such a situation happening again. Which of the following arguments made by the supply manager will MOST likely influence the team to re-examine product launch expectations?
- A. "An overly optimistic forecast may result in costly excess inventory and obligations."
- B. "The company may experience involuntary down time if suppliers cannot keep up with production needs."
- C. "Cost overruns on unfamiliar materials might cause suppliers to raise prices. '
- D. "Supplier quality problems could mean the company misses the critical time-to-market window."
Answer: A
Explanation:
Highlighting the risks of excess inventory and financial obligations due to optimistic forecasts is a compelling argument. It addresses financial impacts and supply chain efficiency, which are critical for decision-making in product launches. By presenting potential negative outcomes, the supply manager can influence the team to adopt more realistic projections. This approach is backed by supply chain risk management literature that emphasizes forecasting accuracy and inventory control.
NEW QUESTION # 30
A supply manager oversees three distribution centers. Which of the following will be MOST useful for understanding the capacity of these centers7
- A. Capacity Requirements Planning (CRP)
- B. An Enterprise Resource Planning (ERP) system's forecasting tool
- C. Warehouse Management System (WMS)
- D. An external consultant s analysis of the distribution centers
Answer: C
Explanation:
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. References:
*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.
NEW QUESTION # 31
Which of the following describes a market structure where there are few sellers and many buyers and where price is controlled by either an industry leader or a cartel?
- A. Monopoly
- B. Monopsony
- C. Perfect competition
- D. Oligopoly
Answer: D
Explanation:
An oligopoly is a market structure where a few sellers dominate the market and many buyers ex-ist. In such a market, prices and output levels are often controlled by the leading firms or through collusion, such as forming a cartel. These firms hold significant market power, which allows them to influence prices and other market factors. Oligopolies are common in industries where high en-try barriers exist, such as telecommunications, airlines, and oil and gas. References:
*Perloff, J. M. (2016). Microeconomics: Theory and Applications with Calculus. Pearson.
*Mankiw, N. G. (2014). Principles of Microeconomics. Cengage Learning.
NEW QUESTION # 32
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?
- A. Cause and effect analysis
- B. Pareto analysis
- C. Kepner-Tregoe method
- D. Benchmarking
Answer: B
Explanation:
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.
NEW QUESTION # 33
A firm collects the following forecasted and actual demand for a certain part:
PeriodForecastActual
KI30311
22531
32826
42520
What is the absolute value of the forecast error?
- A. 14;
- B. 0
- C. Cannot be determined from above information
- D. 1
Answer: A
Explanation:
The absolute value of the forecast error is calculated as the average of the absolute differences between forecasted and actual demand. Calculating each period: |30-31| + |25-31| + |28-26| + |25-20| = 1 + 6 + 2 + 5 =
14. Therefore, the absolute value of the forecast error is 14. Reference: Demand forecasting and error measurement techniques.
NEW QUESTION # 34
A manufacturer has facilities around the world and purchases steel from various global markets. The firm uses decentralized purchasing, with a procurement team in each of its various markets. Management would like to see a corporate approach to steel procurement. Which of the following should the firm's supply manager recommend?
- A. Regional procurement groups that focus on steel negotiations and strategies for each market
- B. A lead business unit for steel, to interface and handle procurement and strategy for each market
- C. A corporate steering committee to advise on strategy and act as a liaison with major suppliers
- D. A sourcing committee with a representative from each market, to facilitate global steel strategy
Answer: D
Explanation:
A sourcing committee with representatives from each market is recommended to facilitate a corporate approach to global steel procurement. This structure promotes coordination and unified strategies across markets, optimizing procurement processes and leveraging corporate buying power.
NEW QUESTION # 35
BCD, Inc. is an electronics manufacturer. For many years, BCD has purchased custom white packaging with the company's signature black and red logo. Recently, BCD's quality team rejected a large number of these boxes due to the red and black portions of the logo not being correctly aligned. In addition, BCD's program manager has requested that supply management reduce the costs of the packaging, which have risen dramatically in recent years.
BCD's supply manager meets with the current supplier and learns the following:
1)The two-tone logo requires multiple setups, and the logo is often misaligned, leading to scrap
2)A single-color logo will not have alignment problems
3)The white boxes are more expensive to produce than plain cardboard boxes
4)The marketing team has determined that the all-white packages are no longer a unique way to brand the organization's products Given this situation, which of the following would be the BEST course of action for BCD's supply manager to take?
- A. Work with the supplier's quality team to correct the misalignment problem
- B. Work with the quality and marketing teams as well as the supplier to negotiate the purchase of plain boxes with a single-color logo
- C. Renegotiate the current pricing for the white boxes by increasing volume and contracting for a longer period of time
- D. Create and issue a Request for Proposal (RFP) in order to find new suppliers to provide the all-white boxes with the two-tone logo
Answer: B
Explanation:
The best course of action is to work with the quality and marketing teams, as well as the supplier, to negotiate the purchase of plain boxes with a single-color logo. This solution addresses the alignment issues and reduces costs while aligning with the marketing team's assessment that all-white packaging is no longer unique.
Reference: Cost reduction and quality improvement in supply chain management.
NEW QUESTION # 36
A company that has never focused on supply management in the past is now faced with increasing competition from new, innovative products entering its market. As a result, the firm's business strategy includes an increased focus on cost containment. Given this situation, which of the following should the company do FIRST?
- A. Standardize global processes
- B. Raise the reporting level of key supply management personnel
- C. Consolidate tactical supply management positions where possible
- D. Create an executive position for supply management
Answer: B
Explanation:
Raising the reporting level of key supply management personnel is crucial for integrating supply management into the company's strategic focus. This ensures that supply management decisions align with executive strategies on cost containment and competitiveness, enhancing visibility and influence.
NEW QUESTION # 37
A supply manager wishes to implement an enterprise resource planning (ERP) system. During which phase of the system development process should the supply manager communicate with end users to review their business environments?
- A. Design
- B. Testing
- C. Analysis
- D. Maintenance
Answer: C
Explanation:
During the analysis phase of an ERP system development process, the supply manager should communicate with end users to review their business environments. This phase involves gathering detailed information about user requirements and business processes to ensure the ERP system will meet organizational needs. It's crucial for identifying gaps and ensuring user buy-in. References: ERP implementation methodologies emphasize the importance of user engagement during the analysis phase to align system functionalities with business operations.
NEW QUESTION # 38
An organization purchases material from several countries. These materials are assembled into products and sold in several other countries. This firm's product specifications will MOST likely reference
- A. International standards
- B. exchange rates
- C. North American Free Trade Act
- D. Incoterms 2010 rules
Answer: A
Explanation:
For a firm purchasing and selling products internationally, referencing international standards ensures compatibility, quality, and compliance across different markets. This practice facilitates global trade and meets regulatory requirements. References: International standards (e.g., ISO) are critical in maintaining consistency and reliability in global supply chains.
NEW QUESTION # 39
How long after the delivery date must a freight claim on a motor carriage shipment be presented and filed with the carrier in the United States'
- A. 120 days
- B. 9 months
- C. 30 days
- D. 3 months
Answer: B
Explanation:
In the United States, freight claims for motor carriage shipments must be filed within nine months of the delivery date. This timeframe is mandated by regulations to allow shippers and carriers to address disputes over transportation damages or losses.
NEW QUESTION # 40
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