CPSM Diagnostic Exam Questions With 100% Correct Answers Latest Update 2024/2025 (Graded A+)

CPSM Diagnostic Exam Questions With 100% Correct Answers Latest Update 2024/2025 (Graded A+) 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 Questions With 100% Correct Answers Latest Update 2024/2025 Graded A (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 (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 (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 (C) Strong initial offer (D) Phantom quote - Answer (B) High ball Both parties leave the room during a negotiation with the understanding that they will reconvene at a later time. This is known as a (A) stalemate (B) recess (C) caucus (D) conference - Answer (B) recess A supply manager is preparing for negotiations with a business consulting supplier. The supplier provides services to IT and corporate headquarters, and has frequent interactions with a number of people across the company, including executive staff. Which of the following is the BEST course of action for the supply manager to take? (A) Set up a meeting with all the key stakeholders to discuss the upcoming negotiations and what they should say, and send a follow-up email to all attendees plus those who could not attend. (B) Send an email to all employees, letting them know that negotiations are being conducted with this supplier, and that no one should have any interaction with the supplier while negotiations continue. (C) Contact the head of each department and explain that negotiations will be conducted with the supplier, and ask the department heads to share the information with their teams. (D) Start negotiations with the supplier, and instruct them not to talk to other people within the company during the negotiation period. - Answer (A) Set up a meeting with all the key stakeholders to discuss the upcoming negotiations and what they should say, and send a follow-up email to all attendees plus those who could not attend. The global commodity manager for manufacturer XYZ Inc. is conducting negotiations on a long-term contract with DEF, a key strategic supplier. DEF's delivery performance is rated at 73%, which is below the divisional goal of 98%. For this reason, XYZ's operations manager wants to drop DEF and find a new supplier. The commodity manage; however, is not in agreement with the operations manage; and notes that as part of the long-term agreement, DEF will provide a 15% cost reduction, which is critical to achieving the cost-reduction goal for the division for the current year. At this point, which of the following would be the MOST appropriate course of action for the commodity manager to take? (A) Move forward with the contract implementation, as negotiations with DEF have been taken in good faith. (B) Place contract negotiations on hold to validate the initial project scope on delivery and cost targets for DEF. (C) Proceed with the contract implementation, but add a delivery performance clause to clarify the divisional goal. (D) Postpone contract negotiations to review the contract with the operations manager to ensure improved performance. - Answer (D) Postpone contract negotiations to review the contract with the operations manager to ensure improved performance A supply manager determines that only one supplier possesses the process capabilities to make a custom-designed part. In this situation, which of the following negotiation strategies would be appropriate? I. Advising the potential supplier that substitute parts are under consideration II. Advising the supplier that the part may be manufactured in-house (A) I only (B) 11 only (C) Both I and II (ID) Neither I nor lI - Answer (C) Both I and II A hospital purchases glass laboratory supplies through a co-op. Because of the volume prices paid by the consortium, the supplier will only offer generic supplies. As a result, there is considerable variation in quality, which has led to complaints from internal customers. In this situation, which of the following should the supply manager do FIRST? (A) Instruct the co-op to change suppliers (B) Determine if other members of the co-op have the same problem (C) Join the co-op's commodity team to increase pressure on the supplier (D) Inform the supplier that co op payments may be withheld if quality does not improve - Answer (B) Determine if other members of the co-op have the same problem Which of the following is used to confer decision-making power upon an individual when the regular decision-maker is unavailable? (A) Assignability provision (B) Dealer's agreement (C) Letter of authorization (D) Limitation of liability - Answer (C) Letter of authorization A company hires a supplier to launch a website for a new product. The implementation is very successful, and the supplier would like to publicize its efforts in advertising and on its website, with testimonials from the buying company's employees. However, the contract prohibits this. Which of the following is the LEAST likely to be the reason for the company's position on this matter? (A) Other suppliers may seek endorsement from the company. (B) Employees might be targeted for sales pitches by the supplier's competitors. (C) The company has a policy of not endorsing suppliers. (D) The company plans to launch additional websites on its own. - Answer (D) The company plans to launch additional websites on its own. What is the contract term for the obligation of one party to cover the loss or damage suffered by another parry? A) Assignment (B) Confidentiality (C) Indemnification (D) Severability - Answer (C) Indemnification What is the contract term for a provision to restrict the disclosure of proprietary information? A) Assignment (B) Confidentiality (C) Indemnification (D) Severability - Answer (B) Confidentiality What is the contract term for the transfer by one party of their right or obligations to another parry? A) Assignment (B) Confidentiality (C) Indemnification (0) Severability - Answer A) Assignment A company plans to hire a consulting firm to implement a new employee benefits website. Which of the following is MOST appropriate for this contract? (A) Cost plus pricing (B) Loss leader pricing (C) Market based pricing (D) Time and material pricing - Answer (D) Time and material pricing A supply manager holds a pre-performance conference with a chosen supplier. This event falls under which of the following areas of responsibility? (A) Contract administration (B) Contract closeout (C) Earned value management (D) Project planning - Answer (A) Contract administration Risk monitoring, as implemented under the process of contract administration, is MOST likely to take place under the phase or step known as CPSM Diagnostic Practice Exam 1 With 100% Correct Solutions. (A) performance measurement (B) performance reporting (C) pre-performance conference (D) project closeout - Answer (A) performance measurement If a supplier does not respond to a buyer's reject or rework notice of non conforming goods within a reasonable amount of time, the LEAST appropriate course of action for the buyer to take would be to (A) store the goods and file a claim for storage charges (B) ship the goods back to the sup plier freight collect