Question 1
You are a retailer of leisure products. Business has suffered over many years due to a soft
economy. Market pressures have forced your firm to lower prices. At a press conference
this morning, your CEO stated, "In spite of lower sale prices and the poor economy, we are
on target to increase profits due to our vision to be the most streamlined and efficient
supplier of fairly-priced quality leisure products." Given this information, as the head of
supply management, what is the MOST appropriate mission statement for your
department?
A. Ensure products are available at the right price at the right time.
B. While never diminishing quality, ensure all purchases are at the total lowest cost and all
processes provide maximum value.
C. Improve internal client perception of through stellar customer svc/support.
D. Maximize quality, maximize service, maximize product availability.
CORRECT ANSWER
B. While never diminishing quality, ensure all purchases are at the total lowest cost and all
processes provide maximum value.
Question 2
Which of the following is an example of a mission statement for a supply management
organization?
A. "The supply management organization will ensure the right price for the right products or
services at the right time, with required quality and supporting documentation."
B. "The supply management organization will effectively manage supply management
activities and supplier relationships to satisfy internal stakeholders of the company."
C. "The supply management organization will ensure that all personnel perform their
responsibilities in an efficient and effective manner."
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,D. "The supply management organization will provide a minimum of $200,000 of cost
savings or cost avoidance during the upcoming fiscal year."
CORRECT ANSWER
B. "The supply management organization will effectively manage supply management
activities and supplier relationships to satisfy internal stakeholders of the company."
Question 3
An electronics manufacturer wants to maximize cost reduction to meet corporate
objectives related to cost containment.
The firm's annual spend is as follows:
ITEM TOTAL SPEND INTERNAL EXTERNAL
Optics $80M 40% 60%
Control Panel $70M 50% 50%
Hardware $55M 30% 70%
Wiring $65M 20% 80%
Which of the following would be of GREATEST benefit to the firm?
A. Conducting reverse auctions for internal components
B. Employing a cost management approach for external suppliers
C. Instituting a continuous improvement program for generated waste
D. Moving to single sources for internal components
CORRECT ANSWER
B. Employing a cost management approach for external suppliers
Question 4
Which of the following is a key component of an organizational mission statement?
A. How the organization will treat employees
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,B. How the organization will measure performance
C. How the organization will meet its customers' needs
D. How the organization will treat suppliers
CORRECT ANSWER
C. How the organization will meet its customers' needs
Question 5
Which of the following elements of a supply management strategic plan addresses relative
risks?
A. Commodity segmentation
B. Supplier strategies
C. Advanced acquisition plan
D. Objective of the supply function
CORRECT ANSWER
B. Supplier strategies
Question 6
A manufacturer produces 300,000 units each of Products A, B and C. Each product has a
direct materials cost of $10 million and direct labor costs of $5 million. The production
facility has property maintenance costs of $2 million, executive salaries of $2 million, and
personnel costs of $1.4 million.
Q. Given the information provided, what is the total cost of one unit of Product A?
A. $50
B. $56
C. $68
D. $74
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, CORRECT ANSWER
B. $56
Option B is correct because it considers all factors, using the following calculations:
Direct Costs: ($10m+$5m)/300,000 = $50
Indirect Costs: ($2m+$2m+$1.4m)/3 products/300,000 = $6
Direct costs ($50) + Indirect Costs ($6) = Total Costs ($56)
Question 7
As part of a long-term strategy, Linda Petit, the CEO of Lahaina Manufacturing, has
established four key goals for this fiscal year:
Increase Lahaina Manufacturing's top line revenue.
Increase volume.
Reduce cost.
Bring new, innovative product offerings to the marketplace.
Q. Which of the following statements best illustrates how supply management can have the
MOST impact toward achieving these goals?
A. Increase revenue
B. Increase volume and reduce cost
C. Bring innovation from suppliers, reduce cost and increase volume
D. Supply management does not have a direct impact on any of the organization's goals as
stated.
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@THE STUDY VAULT
You are a retailer of leisure products. Business has suffered over many years due to a soft
economy. Market pressures have forced your firm to lower prices. At a press conference
this morning, your CEO stated, "In spite of lower sale prices and the poor economy, we are
on target to increase profits due to our vision to be the most streamlined and efficient
supplier of fairly-priced quality leisure products." Given this information, as the head of
supply management, what is the MOST appropriate mission statement for your
department?
A. Ensure products are available at the right price at the right time.
B. While never diminishing quality, ensure all purchases are at the total lowest cost and all
processes provide maximum value.
C. Improve internal client perception of through stellar customer svc/support.
D. Maximize quality, maximize service, maximize product availability.
CORRECT ANSWER
B. While never diminishing quality, ensure all purchases are at the total lowest cost and all
processes provide maximum value.
Question 2
Which of the following is an example of a mission statement for a supply management
organization?
A. "The supply management organization will ensure the right price for the right products or
services at the right time, with required quality and supporting documentation."
B. "The supply management organization will effectively manage supply management
activities and supplier relationships to satisfy internal stakeholders of the company."
C. "The supply management organization will ensure that all personnel perform their
responsibilities in an efficient and effective manner."
1
@THE STUDY VAULT
,D. "The supply management organization will provide a minimum of $200,000 of cost
savings or cost avoidance during the upcoming fiscal year."
CORRECT ANSWER
B. "The supply management organization will effectively manage supply management
activities and supplier relationships to satisfy internal stakeholders of the company."
Question 3
An electronics manufacturer wants to maximize cost reduction to meet corporate
objectives related to cost containment.
The firm's annual spend is as follows:
ITEM TOTAL SPEND INTERNAL EXTERNAL
Optics $80M 40% 60%
Control Panel $70M 50% 50%
Hardware $55M 30% 70%
Wiring $65M 20% 80%
Which of the following would be of GREATEST benefit to the firm?
A. Conducting reverse auctions for internal components
B. Employing a cost management approach for external suppliers
C. Instituting a continuous improvement program for generated waste
D. Moving to single sources for internal components
CORRECT ANSWER
B. Employing a cost management approach for external suppliers
Question 4
Which of the following is a key component of an organizational mission statement?
A. How the organization will treat employees
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@THE STUDY VAULT
,B. How the organization will measure performance
C. How the organization will meet its customers' needs
D. How the organization will treat suppliers
CORRECT ANSWER
C. How the organization will meet its customers' needs
Question 5
Which of the following elements of a supply management strategic plan addresses relative
risks?
A. Commodity segmentation
B. Supplier strategies
C. Advanced acquisition plan
D. Objective of the supply function
CORRECT ANSWER
B. Supplier strategies
Question 6
A manufacturer produces 300,000 units each of Products A, B and C. Each product has a
direct materials cost of $10 million and direct labor costs of $5 million. The production
facility has property maintenance costs of $2 million, executive salaries of $2 million, and
personnel costs of $1.4 million.
Q. Given the information provided, what is the total cost of one unit of Product A?
A. $50
B. $56
C. $68
D. $74
3
@THE STUDY VAULT
, CORRECT ANSWER
B. $56
Option B is correct because it considers all factors, using the following calculations:
Direct Costs: ($10m+$5m)/300,000 = $50
Indirect Costs: ($2m+$2m+$1.4m)/3 products/300,000 = $6
Direct costs ($50) + Indirect Costs ($6) = Total Costs ($56)
Question 7
As part of a long-term strategy, Linda Petit, the CEO of Lahaina Manufacturing, has
established four key goals for this fiscal year:
Increase Lahaina Manufacturing's top line revenue.
Increase volume.
Reduce cost.
Bring new, innovative product offerings to the marketplace.
Q. Which of the following statements best illustrates how supply management can have the
MOST impact toward achieving these goals?
A. Increase revenue
B. Increase volume and reduce cost
C. Bring innovation from suppliers, reduce cost and increase volume
D. Supply management does not have a direct impact on any of the organization's goals as
stated.
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@THE STUDY VAULT
