CPSM Diagnostic Practice Exam 1 With
100% Correct Solutions.
A supply manager issues a request to proposal for engineering services. In order to
provide clarification on the specification on the specifications, the company holds a
question-and-answer session for interested suppliers. Shortly after the question-and-
answer session is held and before any proposals are actually received, the firm's
engineering department revises the specifications. Given this situation, which of the
following should the supply manager do FIRST?
(A) Call and email the suppliers of the change, tell them when the new specifications
will be available, and ask for immediate notification if additional time will be required.
(B) Write a letter to each supplier advising of the change, tell each supplier when the
new specifications will be available, and ask for immediate notification if additional
time will be required.
(C) Hold an interim pre-bid meeting withal suppliers to discuss and clarify the revised
specifications, and ask for immediate notification if additional item will be required.
(D) Prepare and distribute a brand-new request for proposal package to be sent to
each supplier. - Answer (A) Call and email the suppliers of the change, tell them
when the new specifications will be available, and ask for immediate notification if
additional time will be required.
Which of the following should have the MOST influence in determining end product
specifications, so as to minimize the potential for returns?
(A) Marketing
(B) Supply management
(C) Engineering
(D) Manufacturing - Answer (A) Marketing
When developing specifications, a buyer may consider information from which of the
following?
I. Suppliers
II. Industry Standards
III. Professional Organizations
IV. Competitors
(A) I and IV only
(B) II and III only
(C) I, II and III only
(D) I, II, III and IV - Answer (D) I, II, III and IV
A supply manager completes a category profile and identifies services provided
through multiple suppliers. A market and industry analysis shows that the service
provides are growing their businesses by acquiring competitors, thus enabling them
to provide a greater range of services. Which of the following techniques will BEST
enable the supply manager to leverage market competition?
(A) Lotting strategy
(B) Market-basket model
(C) Market segmentation
,CPSM Diagnostic Practice Exam 1 With
100% Correct Solutions.
(D) Sole sourcing - Answer (A) Lotting strategy
A supply manager implements a system whereby the potential supplier names are
hidden until final contract awards are made. This example is BEST described as
ensuring
(A) confidential information is protected
(B) diversity initiatives are met
(C) total costs are minimized
(D) collusion will not occur - Answer (A) confidential information is protected
A supply manager for a privately held manufacturing company is preparing an RFP
for raw materials. None of
the RFP recipients is an incumbent, and the award resulting from the RFP is
expected to be of significant dollar value. The supply manager is concerned that the
lack of publicly available financial information could impact willingness of the
prospective suppliers to submit proposals. Which of the following will BEST address
the concerns of the prospective bidders?
(A) Escrow account
(B) Letter of credit
(C) Payment bond
(D) Surety bond - Answer (B) Letter of credit
Which of the following is the LEAST critical element in a best alternative to a
negotiated agreement (BATNA)?
(A) Alternate products
(B) In-house capabilities
(C) Source options
(D) Supplier capabilities - Answer (D) Supplier capabilities
A supply manager is negotiating with a critical supplier. The parties have relatively
equal bargaining power. Which of the following would MOST likely occur in "win-win"
negotiation between these parties?
(A) The supply manager and supplier conclude the negotiation by splitting the
difference between their respective positions.
(B) The supply manager and supplier each find concessions with equal weight/value
to provide a balanced outcome.
(C) The supply manager and supplier decide to share confidential information.
(D) The supply manager and supplier establish an appropriate settlement range for
the continuation of
negotiations. - Answer (B) The supply manager and supplier each find concessions
with equal weight/value to provide a balanced outcome.
An in-depth analysis of a supplier's proposal is useful because it is important to
understand the
,CPSM Diagnostic Practice Exam 1 With
100% Correct Solutions.
(A) SOW throughout the evaluation process
(B) SOW throughout the proposal development process
(C) supplier's proposal throughout the negotiation process
(D) supplier's firm-fixed price - Answer (C) supplier's proposal throughout the
negotiation process
Which of the following is LEAST appropriate as an objective for negotiations?
(A) Meeting the minimum essential needs of the organization
(B) Maintaining control over contract performance
(C) Determining the negotiation site
(D) Ensuring the correct ratio of contract administrators to workers - Answer (D)
Ensuring the correct ratio of contract administrators to workers
Which of the following is likely to be the BEST use of social media sites such as
LinkedIn during the preparation for negotiations with a potential supplier?
(A) Selecting the ideal negotiation sire
(B) Determining objectives for the negotiation
(C) Collecting information, reports and comments on the supplier
(D) Defining the roles and responsibilities of the negotiating team - Answer (C)
Collecting information, reports and comments on the supplier.
A supply manager for XYZ Corp. is planning for negotiations with Supplier A, a
provider of software critical for use on XYZ's production line. XYZ likes the software,
but was recently alerted by Supplier A that they are dropping support for the version
that XYZ uses. The supply manager learns that an upgrade is cost prohibitive for
XYZ. Prior to negotiations, the supply manager asks the IT department to detail its
requirements for support of the software, and to assign an IT employee to attend the
negotiations. The day before the negotiation, the IT employee calls the supply
manager and stares that he
is unable to attend due to a scheduling conflict. He further states that he is confident
the supply manager can represent the IT department's needs in the negotiations.
Given this scenario, which of the following should the supply manager do?
(A) Follow the advice of the IT employee and represent IT in the negotiations
(B) Escalate the issue to the IT director, ensuring that they send a representative
(C) Conduct the negotiations with the agreement that support issues will be dealt
with at a later time
(D) Postpone the negotiations until an IT representative becomes available - Answer
(B) Escalate the issue to the IT director, ensuring that they send a representative
A supply manager is negotiating a contract with a supplier to purchase one million
components. To determine a pricing arrangement satisfactory to both parties, which
of the following is LEAST appropriate?
(A) Evaluating the supplier's current cost data
, CPSM Diagnostic Practice Exam 1 With
100% Correct Solutions.
(B) Establishing a cost goal
(C) Reviewing the supplier's anticipated costs
(D) Performing a make-buy analysis - Answer (D) Performing a make-buy analysis
Supplier B is one of two global manufacturers of a certain commodity chemical.
During a time of supply constraint, Supplier B constructs a new manufacturing
facility, which doubles its capacity. Just as the new facility is ready to commence
operations, the global demand for the commodity drops dramatically, due to the
development of a superior substitute. From the moment that Supplier B begins
construction of the new facility, Company A's negotiating position relative to that of
Supplier B became
(A) much stronger
(B) somewhat stronger
(C) somewhat weaker
(D) much weaker - Answer (A) much stronger
A company conducts an e auction for forklifts. Immediately after the e-auction
concludes, the two suppliers with the lowest prices inform the company
they will not be able to honor their pricing. To avoid situations like this in the future,
which of the following is
the BEST course of action for the company to take?
(A) Include a clause within the registration process stating that participants will honor
their prices, or be excluded from the current auction and all subsequent auctions.
(B) Exclude the two suppliers from any future e-auctions that the company holds, as
they did not honor their e-auction pricing.
(C) Rather than using e-auctions, opt for a closed-bid process to avoid the possibility
of companies not honoring their pricing during the e-auctions.
(D) Verify with the suppliers midway through the e-auction to make certain that they
will continue to honor their prices. - Answer (A) Include a clause within the
registration process stating that participants will honor their prices, or be excluded
from the current auction and all subsequent auctions.
Which of the following is the MOST
effective method for negotiating with
the sole supplier of a unique item?
(A) Price analysis negotiations
(B) Price comparison negotiations
(C) Cost analysis negotiations
(D) Adversarial negotiations - Answer (C) Cost analysis negotiations
Shortly after contract negotiations have begun, a supplier makes an offer with a price
well above the expected range. Which of the following tactics is the supplier using?
(A) Foot in the door
(B) High ball
100% Correct Solutions.
A supply manager issues a request to proposal for engineering services. In order to
provide clarification on the specification on the specifications, the company holds a
question-and-answer session for interested suppliers. Shortly after the question-and-
answer session is held and before any proposals are actually received, the firm's
engineering department revises the specifications. Given this situation, which of the
following should the supply manager do FIRST?
(A) Call and email the suppliers of the change, tell them when the new specifications
will be available, and ask for immediate notification if additional time will be required.
(B) Write a letter to each supplier advising of the change, tell each supplier when the
new specifications will be available, and ask for immediate notification if additional
time will be required.
(C) Hold an interim pre-bid meeting withal suppliers to discuss and clarify the revised
specifications, and ask for immediate notification if additional item will be required.
(D) Prepare and distribute a brand-new request for proposal package to be sent to
each supplier. - Answer (A) Call and email the suppliers of the change, tell them
when the new specifications will be available, and ask for immediate notification if
additional time will be required.
Which of the following should have the MOST influence in determining end product
specifications, so as to minimize the potential for returns?
(A) Marketing
(B) Supply management
(C) Engineering
(D) Manufacturing - Answer (A) Marketing
When developing specifications, a buyer may consider information from which of the
following?
I. Suppliers
II. Industry Standards
III. Professional Organizations
IV. Competitors
(A) I and IV only
(B) II and III only
(C) I, II and III only
(D) I, II, III and IV - Answer (D) I, II, III and IV
A supply manager completes a category profile and identifies services provided
through multiple suppliers. A market and industry analysis shows that the service
provides are growing their businesses by acquiring competitors, thus enabling them
to provide a greater range of services. Which of the following techniques will BEST
enable the supply manager to leverage market competition?
(A) Lotting strategy
(B) Market-basket model
(C) Market segmentation
,CPSM Diagnostic Practice Exam 1 With
100% Correct Solutions.
(D) Sole sourcing - Answer (A) Lotting strategy
A supply manager implements a system whereby the potential supplier names are
hidden until final contract awards are made. This example is BEST described as
ensuring
(A) confidential information is protected
(B) diversity initiatives are met
(C) total costs are minimized
(D) collusion will not occur - Answer (A) confidential information is protected
A supply manager for a privately held manufacturing company is preparing an RFP
for raw materials. None of
the RFP recipients is an incumbent, and the award resulting from the RFP is
expected to be of significant dollar value. The supply manager is concerned that the
lack of publicly available financial information could impact willingness of the
prospective suppliers to submit proposals. Which of the following will BEST address
the concerns of the prospective bidders?
(A) Escrow account
(B) Letter of credit
(C) Payment bond
(D) Surety bond - Answer (B) Letter of credit
Which of the following is the LEAST critical element in a best alternative to a
negotiated agreement (BATNA)?
(A) Alternate products
(B) In-house capabilities
(C) Source options
(D) Supplier capabilities - Answer (D) Supplier capabilities
A supply manager is negotiating with a critical supplier. The parties have relatively
equal bargaining power. Which of the following would MOST likely occur in "win-win"
negotiation between these parties?
(A) The supply manager and supplier conclude the negotiation by splitting the
difference between their respective positions.
(B) The supply manager and supplier each find concessions with equal weight/value
to provide a balanced outcome.
(C) The supply manager and supplier decide to share confidential information.
(D) The supply manager and supplier establish an appropriate settlement range for
the continuation of
negotiations. - Answer (B) The supply manager and supplier each find concessions
with equal weight/value to provide a balanced outcome.
An in-depth analysis of a supplier's proposal is useful because it is important to
understand the
,CPSM Diagnostic Practice Exam 1 With
100% Correct Solutions.
(A) SOW throughout the evaluation process
(B) SOW throughout the proposal development process
(C) supplier's proposal throughout the negotiation process
(D) supplier's firm-fixed price - Answer (C) supplier's proposal throughout the
negotiation process
Which of the following is LEAST appropriate as an objective for negotiations?
(A) Meeting the minimum essential needs of the organization
(B) Maintaining control over contract performance
(C) Determining the negotiation site
(D) Ensuring the correct ratio of contract administrators to workers - Answer (D)
Ensuring the correct ratio of contract administrators to workers
Which of the following is likely to be the BEST use of social media sites such as
LinkedIn during the preparation for negotiations with a potential supplier?
(A) Selecting the ideal negotiation sire
(B) Determining objectives for the negotiation
(C) Collecting information, reports and comments on the supplier
(D) Defining the roles and responsibilities of the negotiating team - Answer (C)
Collecting information, reports and comments on the supplier.
A supply manager for XYZ Corp. is planning for negotiations with Supplier A, a
provider of software critical for use on XYZ's production line. XYZ likes the software,
but was recently alerted by Supplier A that they are dropping support for the version
that XYZ uses. The supply manager learns that an upgrade is cost prohibitive for
XYZ. Prior to negotiations, the supply manager asks the IT department to detail its
requirements for support of the software, and to assign an IT employee to attend the
negotiations. The day before the negotiation, the IT employee calls the supply
manager and stares that he
is unable to attend due to a scheduling conflict. He further states that he is confident
the supply manager can represent the IT department's needs in the negotiations.
Given this scenario, which of the following should the supply manager do?
(A) Follow the advice of the IT employee and represent IT in the negotiations
(B) Escalate the issue to the IT director, ensuring that they send a representative
(C) Conduct the negotiations with the agreement that support issues will be dealt
with at a later time
(D) Postpone the negotiations until an IT representative becomes available - Answer
(B) Escalate the issue to the IT director, ensuring that they send a representative
A supply manager is negotiating a contract with a supplier to purchase one million
components. To determine a pricing arrangement satisfactory to both parties, which
of the following is LEAST appropriate?
(A) Evaluating the supplier's current cost data
, CPSM Diagnostic Practice Exam 1 With
100% Correct Solutions.
(B) Establishing a cost goal
(C) Reviewing the supplier's anticipated costs
(D) Performing a make-buy analysis - Answer (D) Performing a make-buy analysis
Supplier B is one of two global manufacturers of a certain commodity chemical.
During a time of supply constraint, Supplier B constructs a new manufacturing
facility, which doubles its capacity. Just as the new facility is ready to commence
operations, the global demand for the commodity drops dramatically, due to the
development of a superior substitute. From the moment that Supplier B begins
construction of the new facility, Company A's negotiating position relative to that of
Supplier B became
(A) much stronger
(B) somewhat stronger
(C) somewhat weaker
(D) much weaker - Answer (A) much stronger
A company conducts an e auction for forklifts. Immediately after the e-auction
concludes, the two suppliers with the lowest prices inform the company
they will not be able to honor their pricing. To avoid situations like this in the future,
which of the following is
the BEST course of action for the company to take?
(A) Include a clause within the registration process stating that participants will honor
their prices, or be excluded from the current auction and all subsequent auctions.
(B) Exclude the two suppliers from any future e-auctions that the company holds, as
they did not honor their e-auction pricing.
(C) Rather than using e-auctions, opt for a closed-bid process to avoid the possibility
of companies not honoring their pricing during the e-auctions.
(D) Verify with the suppliers midway through the e-auction to make certain that they
will continue to honor their prices. - Answer (A) Include a clause within the
registration process stating that participants will honor their prices, or be excluded
from the current auction and all subsequent auctions.
Which of the following is the MOST
effective method for negotiating with
the sole supplier of a unique item?
(A) Price analysis negotiations
(B) Price comparison negotiations
(C) Cost analysis negotiations
(D) Adversarial negotiations - Answer (C) Cost analysis negotiations
Shortly after contract negotiations have begun, a supplier makes an offer with a price
well above the expected range. Which of the following tactics is the supplier using?
(A) Foot in the door
(B) High ball
