1|Page
CPSM Diagnostic Exam 2025 – Study Guide, Practice
Questions, and Certification Prep
Prepare for your CPSM Diagnostic Exam (Certified Professional in Supply Management)
with this comprehensive 2025 study and review guide. Learn the essential domains of supply
management, procurement, leadership, risk, and logistics. Includes updated CPSM practice
test questions, detailed answer explanations, and expert exam tips to help you pass the ISM
CPSM certification with confidence.
CPSM diagnostic exam 2025,
CPSM practice test,
Certified Professional in Supply Management exam,
ISM CPSM diagnostic review,
CPSM study guide 2025
A supply manager for an apparel company must decide whether to change suppliers of polyurethane
hangers for the finished products that are shipped to retailers. It will cost approximately $20,000 to
make all of the necessary changes to the company's operation in order to take on a new supplier. The
current supplier is priced $0.05 per unit higher than the lowest competitor. The lowest competitor's
quality and service are equal to that of the current supplier.
What quantity of hangers will the supply manager need to buy to justify making the change on a cost
basis?
(A) 40,001
(B) 50,001
(C) 400,001
(D) 500,001 - ANSWER-(C) 400,001
,2|Page
A company wishes to reduce costs on a product it manufactures. The company is considering a capital
expenditure of $80,000, which would generate an annual net cash flow of $30,000 beginning in year
one. Marketing has determined the product will be sold for three years after the new equipment is
installed. The company expects an annual discount rate of 8%.
What is the net present value of this opportunity?
(A) -$9,200
(B) -$2,688
(C) $3,600
(D) $10,000 - ANSWER-(B) -$2,688
What is the method of depreciation that assumes that an item's utility declines over time, resulting in
significantly higher depreciation in the earlier years?
(A) Declining Balance Method
(B) Straight Line Method
(C) Sum of Years Digits Method
(D) Units of Activity Method - ANSWER-(D) Units of Activity Method
Which of the following depreciation methods is compatible with the matching principle where the higher
depreciation expense in earlier years parallels the asset's greater earning power?
(A) Declining Balance Method
(B) Straight Line Method
(C) Sum of Years Digits Method
(D) Units of Activity Method - ANSWER-(A) Declining Balance Method
,3|Page
A manufacturer's solicitation documents will on occasion include detailed design specifications that are
considered proprietary. Several potential suppliers from developing countries have expressed interest in
offering products
or services to the manufacturer company. Which of the following actions will MOST likely help balance
intellectual property protection with the expanded supplier base?
(A) Sourcing strictly from suppliers in advanced industrial countries
(B) Checking supplier references and past performance
(C) Drafting strong contract language concerning confidentiality
(D) Defining where any disputes will be settled - ANSWER-(B) Checking supplier references and past
performance
In which of the following areas is the movement into offshore markets and global sourcing MOST likely
to create risks?
(A) Business continuity
(B) Scaling of procurement
(C) Strategic execution
(D) Market expansion - ANSWER-(A) Business continuity
When assessing international markets for suppliers, the MOST important item supply management
should consider is the
(A) culture of the supplier
(B) risk of the extended supply chain
(C) broadening supply base
(D) expansion of the customer base - ANSWER-(B) risk of the extended supply chain
HMX Inc. is considering investment in a new green site manufacturing facility. The facility is to be used
for
a high-value product with strong demand. The high production rate will require many low-value
, 4|Page
commodities to be sent to the facility on a continual basis.
To benefit from low labor costs and tax incentives, HMX is planning to build the unit in one of four
overseas developing countries, each of which is more than 1,000 miles from its eventual destination.
Descriptions of the
four sites and their transportation systems appear below in Figure 1:
From an infrastructure perspective, which of these sites BEST fits the logistics needs of HMX?
(A) Site I
(B) Site II
(C) Site III
(D) Site IV - ANSWER-(D) Site IV
DEF Inc. is making efforts to buy from a wider geographic base of suppliers. However, the company is
concerned about how to release detailed specifications to potential suppliers without compromising
proprietary information. Which of the following steps should DEF take FIRST?
(A) Review laws concerning protection of intellectual property in the countries of interest
(B) Search the market for counterfeit products produced under brand name or logo mimicking
(C) Strengthen confidentiality clauses in contracts with suppliers in other countries
(D) Alert marketing to opportunities of creating a more uniform brand message internationally -
ANSWER-(A) Review laws concerning protection of intellectual property in the countries of interest
When moving from local sourcing to international sourcing, which of the following will MOST likely
increase the total cost of ownership?
(A) Cost of quality
(B) Exchange rate
(C) Goods shipping by water
(D) Tariffs and duties - ANSWER-(C) Goods shipping by water
CPSM Diagnostic Exam 2025 – Study Guide, Practice
Questions, and Certification Prep
Prepare for your CPSM Diagnostic Exam (Certified Professional in Supply Management)
with this comprehensive 2025 study and review guide. Learn the essential domains of supply
management, procurement, leadership, risk, and logistics. Includes updated CPSM practice
test questions, detailed answer explanations, and expert exam tips to help you pass the ISM
CPSM certification with confidence.
CPSM diagnostic exam 2025,
CPSM practice test,
Certified Professional in Supply Management exam,
ISM CPSM diagnostic review,
CPSM study guide 2025
A supply manager for an apparel company must decide whether to change suppliers of polyurethane
hangers for the finished products that are shipped to retailers. It will cost approximately $20,000 to
make all of the necessary changes to the company's operation in order to take on a new supplier. The
current supplier is priced $0.05 per unit higher than the lowest competitor. The lowest competitor's
quality and service are equal to that of the current supplier.
What quantity of hangers will the supply manager need to buy to justify making the change on a cost
basis?
(A) 40,001
(B) 50,001
(C) 400,001
(D) 500,001 - ANSWER-(C) 400,001
,2|Page
A company wishes to reduce costs on a product it manufactures. The company is considering a capital
expenditure of $80,000, which would generate an annual net cash flow of $30,000 beginning in year
one. Marketing has determined the product will be sold for three years after the new equipment is
installed. The company expects an annual discount rate of 8%.
What is the net present value of this opportunity?
(A) -$9,200
(B) -$2,688
(C) $3,600
(D) $10,000 - ANSWER-(B) -$2,688
What is the method of depreciation that assumes that an item's utility declines over time, resulting in
significantly higher depreciation in the earlier years?
(A) Declining Balance Method
(B) Straight Line Method
(C) Sum of Years Digits Method
(D) Units of Activity Method - ANSWER-(D) Units of Activity Method
Which of the following depreciation methods is compatible with the matching principle where the higher
depreciation expense in earlier years parallels the asset's greater earning power?
(A) Declining Balance Method
(B) Straight Line Method
(C) Sum of Years Digits Method
(D) Units of Activity Method - ANSWER-(A) Declining Balance Method
,3|Page
A manufacturer's solicitation documents will on occasion include detailed design specifications that are
considered proprietary. Several potential suppliers from developing countries have expressed interest in
offering products
or services to the manufacturer company. Which of the following actions will MOST likely help balance
intellectual property protection with the expanded supplier base?
(A) Sourcing strictly from suppliers in advanced industrial countries
(B) Checking supplier references and past performance
(C) Drafting strong contract language concerning confidentiality
(D) Defining where any disputes will be settled - ANSWER-(B) Checking supplier references and past
performance
In which of the following areas is the movement into offshore markets and global sourcing MOST likely
to create risks?
(A) Business continuity
(B) Scaling of procurement
(C) Strategic execution
(D) Market expansion - ANSWER-(A) Business continuity
When assessing international markets for suppliers, the MOST important item supply management
should consider is the
(A) culture of the supplier
(B) risk of the extended supply chain
(C) broadening supply base
(D) expansion of the customer base - ANSWER-(B) risk of the extended supply chain
HMX Inc. is considering investment in a new green site manufacturing facility. The facility is to be used
for
a high-value product with strong demand. The high production rate will require many low-value
, 4|Page
commodities to be sent to the facility on a continual basis.
To benefit from low labor costs and tax incentives, HMX is planning to build the unit in one of four
overseas developing countries, each of which is more than 1,000 miles from its eventual destination.
Descriptions of the
four sites and their transportation systems appear below in Figure 1:
From an infrastructure perspective, which of these sites BEST fits the logistics needs of HMX?
(A) Site I
(B) Site II
(C) Site III
(D) Site IV - ANSWER-(D) Site IV
DEF Inc. is making efforts to buy from a wider geographic base of suppliers. However, the company is
concerned about how to release detailed specifications to potential suppliers without compromising
proprietary information. Which of the following steps should DEF take FIRST?
(A) Review laws concerning protection of intellectual property in the countries of interest
(B) Search the market for counterfeit products produced under brand name or logo mimicking
(C) Strengthen confidentiality clauses in contracts with suppliers in other countries
(D) Alert marketing to opportunities of creating a more uniform brand message internationally -
ANSWER-(A) Review laws concerning protection of intellectual property in the countries of interest
When moving from local sourcing to international sourcing, which of the following will MOST likely
increase the total cost of ownership?
(A) Cost of quality
(B) Exchange rate
(C) Goods shipping by water
(D) Tariffs and duties - ANSWER-(C) Goods shipping by water
