Question 1

A company's major supplier of sub-assemblies provides excellent quality and reasonable costs. However, shipping delays and damage in transit make this supplier less reliable than desired. The supply manager would like to retain this supplier if possible, but is concerned about the reliability issues. Given this situation, which of the following is the BEST course of action for the supply manager to take?

Options :

A : Negotiate lower prices to compensate for the impact of delivery problems

B : Collaborate with the supplier to improve its outbound logistics

C : Increase forecasting lead times and safety stock for the supplier-s products

D : Give the supplier a deadline by which to remedy unsatisfactory performance

Answer: B

Question 2

A supply manager Is conducting negotiations with a supplier. The supplier states that it cannot offer a lower price because the product under negotiation is covered by a government contract. In this situation, the supply manager should

Options :

A : offer to reduce the order quantity

B : negotiate the other terms and conditions, and return to the issue of price at a later time

C : conclude that this is in fact the best price that the supplier can legally offer

D : require the supplier to provide specifics on the government contract restrictions

Answer: D

Question 3

As interest rates rise, what will MOST likely be the effect on supply?

Options :

A : Suppliers will lock in raw material prices in anticipation of price increases.

B : Suppliers will delay shipments by selling to other customers.

C : Bond prices will rise, forcing suppliers to pay more for capital investments.

D : The risk of supplier stock outs will increase due to higher costs of holding inventory.

Answer: D

Question 4

A director of supply management is tasked with determining where savings can be found in indirect cost categories. If needed, the company will consider hiring additional staff to negotiate and administer contracts. Which of the following is the FIRST step the supply manager should take?

Options :

A : Assess skills already available in supply management

B : Identify a cross-functional team to brainstorm solutions

C : Develop a new supplier relationship model

D : Establish a baseline using current spend data

Answer: D

Question 5

A procurement specialist reviews a report from a financial agency about a potential supplier. The report reveals that the supplier had a lien against some of its assets a few years ago, that the supplier has had several delayed payments over the last few months, and that the supplier's debt-to-equity ratio equals 2.0. Which of the following is the BEST course of action for the procurement specialist to take?

Options :

A : Inform senior management of the potential supplier-s financial status

B : Exclude the supplier from the bidding process

C : Inform current suppliers about the potential supplier-s financial status

D : Use the information in considering whether to qualify the supplier

Answer: D

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