ISM INTE Exam Practice Test Instant Access

Question 1

A firm engaging in low-cost country sourcing wants to assume the least amount of risk when importing goods into its own country. Which of the following Incoterms 2020 rules would be MOST useful in achieving this goal7

ACFR

BCPT

CEXW

DDAP

Answer : D

In the context of low-cost country sourcing and minimizing risk when importing goods, the selection of appropriate Incoterms 2020 rules is crucial.

DAP (Delivered at Place) is the most suitable Incoterm for a firm wanting to assume the least amount of risk. Under DAP, the seller is responsible for all costs and risks associated with delivering the goods to a specified destination, which includes transportation, export customs clearance, and any other logistical arrangements until the goods are made available for unloading at the buyer's location. This significantly reduces the buyer's risk as the seller handles most of the transportation and logistics.

Other Incoterms, such as:

CFR (Cost and Freight): The seller pays for the cost and freight to bring the goods to the port of destination. However, the risk is transferred to the buyer once the goods are loaded on the vessel.

CPT (Carriage Paid To): Similar to CFR, but can be used for any mode of transport. The seller covers transport costs to a specified destination, but the risk transfers to the buyer upon handing over the goods to the first carrier.

EXW (Ex Works): The buyer assumes all risks and costs from the seller's premises onward, making it the highest risk for the buyer.

Incoterms 2020 by the International Chamber of Commerce (ICC)

'A Guide to Incoterms 2020' by the International Trade Centre (ITC)

Question 2

Based on the global reach and complexity of supply chains, resiliency planning and risk assessment are necessary because of which of the following'

ASupplier bankruptcies in competitive markets

BNatural and man-made disasters

CLack of training within the organization

DUncollected receivables

Answer : B

Resiliency planning and risk assessment in global supply chains are critical due to the potential impact of natural and man-made disasters. These events can disrupt operations, affecting logistics, supply continuity, and financial performance. Effective risk management strategies mitigate such disruptions, ensuring supply chain stability.

Question 3

An engineering team requests assistance from a supply manager to resolve an issue related to a new product under development. The product is seasonal, and the organization has a short lead time to bring the product to market. Given this situation, which of the following is the BEST course of action for the supply manager to take7

AIn-source product manufacturing

BInvestigate capability of an existing strategic supplier

CConduct a request for information to identify potential suppliers

DSell the product design to a third party

Answer : B

Given the short lead time and the need for rapid market entry, leveraging an existing strategic supplier's capabilities is optimal. This approach minimizes delays and leverages established relationships and processes, ensuring the product can be developed and delivered efficiently.

Question 4

Reducing the number of items that perform the same or similar function is known as

Avalue analysis

Bstandardization

Cvalue engineering

Dsimplification

Answer : B

Standardization involves reducing the variety of items performing similar functions. This process streamlines inventory, reduces costs, and simplifies procurement by focusing on a limited range of products. It supports efficiency and cost management in supply chain operations, as referenced in supply chain management best practices.

Question 5

A supply manager is seeking to align the procurement function with the organization's business strategy and growth potential. Which of the following is the BEST initial course of action to take in this instance7

ASchedule a meeting with each functional area to learn about their procurement requirements

BConsult with accounting to obtain information on the financial relationships with each current supplier

CDevelop a recommendation on procurement activities and the necessary interactions with external stakeholders

DReview current procurement activities and assess if they are strategic or tactical and how they contribute value

Answer : D

To align procurement with the organization's strategy, the supply manager should first review existing procurement practices to determine their strategic or tactical nature. This assessment provides insight into how procurement supports overall business goals and identifies areas for alignment and improvement, ensuring procurement adds maximum value.

Question 6

Which of the following refers to the practice of buying a commodity on the open market for immediate delivery?

AHedging
B.
C.
D.

FForward buying

GSpot buying

HSpeculative buying

Answer : G

Spot buying refers to the purchase of commodities on the open market for immediate delivery. This practice is typically used to meet urgent needs or take advantage of favorable market conditions. It contrasts with forward buying, which involves purchasing for future delivery to lock in prices or quantities.

Question 7

Which of the following forecasting methods is regarded as participatory7

AExponential smoothing

BBox-Jenkins

CSales force composite

DMarket research

Answer : C

The sales force composite method is participatory, involving input from the sales team who provide forecasts based on their knowledge of customer needs and market trends. This method leverages the insights of those directly engaged with customers, enhancing the accuracy of demand forecasts.

ISM INTE Supply Management Integration Exam Practice Test