ISM INTE Supply Management Integration Exam Practice Test

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Total 167 questions
Question 1

During an inventory review, a supply manager confirms that parts used for the maintenance of equipment sold during the previous year are still being stored in the warehouse. These parts cannot be used on current equipment. Which of the following BEST describes these parts'



Answer : C

Parts that were used for maintenance of equipment sold in the previous year but cannot be used on current equipment are best described as obsolete. Obsolete inventory refers to items that are no longer usable or saleable due to advancements in technology or changes in market demand. These parts should be identified and removed from active inventory to free up space and reduce carrying costs. Reference:

* Heizer, J., Render, B., & Munson, C. (2017). Operations Management: Sustainability and Supply Chain Management. Pearson.

* Chopra, S., & Meindl, P. (2015). Supply Chain Management: Strategy, Planning, and Op-eration. Pearson.


Question 2

A supplier with a previously good performance record has recently been shipping parts with a number of flaws, making them unusable for production. The firm's supply manager would like to resolve these problems before taking more drastic measures. Which of the following actions should the supply manager take FIRST'



Answer : A

When a previously reliable supplier starts delivering flawed parts, the first step should be to ex-plore possible root causes. This approach helps in identifying any recent changes in the supplier's production processes, materials, or workforce that might be contributing to the quality issues. By understanding the root cause, the supply manager can work with the supplier to implement correc-tive actions, ensuring long-term solutions rather than temporary fixes. This collaborative approach also maintains a good relationship with the supplier and encourages continuous improvement. Reference:

* Monczka, R. M., Handfield, R. B., Giunipero, L. C., & Patterson, J. L. (2015). Purchasing and Supply Chain Management. Cengage Learning.

* Burt, D. N., Petcavag


Question 3

MNO, Inc. is a national retail home goods chain formed of local franchisees. Each franchisee uses its own returns processing systems. A key advertising point for MNO is its liberal return policy, which is part of its overall focus on excellent customer service. While feedback from customers is positive regarding MNO's return policy, there have been inquiries as to why stores handle returns via different processes. MNO's supply manager suggests the implementation of a reverse supply chain to deal with this issue and possibly yield cost enhancement opportunities. In order to implement this, which of the following is the FIRST course of action the supply manager should take''



Answer : A

Implementing a reverse supply chain requires first defining a consistent return process that can be integrated into the existing forward supply chain. This ensures that all franchisees follow the same procedures for handling returns, which enhances efficiency, customer satisfaction, and potentially reduces costs. Standardizing the return process also allows for better tracking and management of returned goods, improving overall supply chain performance. By addressing this foundational step first, MNO, Inc. can ensure a smoother implementation of the reverse supply chain. Reference:

* Rogers, D. S., & Tibben-Lembke, R. (2001). An Examination of Reverse Logistics Practic-es. Journal of Business Logistics, 22(2), 129-148.

* Blanchard, D. (2010). Supply Chain Management Best Practices. John Wiley & Sons.


Question 4

A supply manager oversees three distribution centers. Which of the following will be MOST useful for understanding the capacity of these centers7



Answer : A

A Warehouse Management System (WMS) is designed specifically to manage and optimize ware-house operations. It provides real-time data on inventory levels, storage locations, and warehouse capacity, enabling supply managers to understand and maximize the utilization of distribution centers. A WMS can track and improve the efficiency of receiving, putaway, picking, and ship-ping processes, providing a comprehensive view of the warehouse's capacity and performance. Reference:

* Frazelle, E. (2002). World-Class Warehousing and Material Handling. McGraw-Hill.

* Richards, G. (2017). Warehouse Management: A Complete Guide to Improving Efficiency and Minimizing Costs in the Modern Warehouse. Kogan Page Publishers.


Question 5

A supply manager is analyzing potential costs associated with the raw materials needed for a new product launch. Tooling costs are known, but the range of forecasts for future sales---and therefore demand for materials-varies widely. Given these circumstances, the supply manager should consider using which of the following?



Answer : B

A decision tree is an effective tool for evaluating potential costs and benefits under conditions of uncertainty, such as varying forecasts for future sales. It allows the supply manager to visually map out different decision paths and their associated costs, probabilities, and outcomes. This helps in comparing different scenarios and making informed decisions about the raw materials needed for a new product launch. Decision trees are particularly useful in situations with multiple possible outcomes and complex decisions. Reference:

* Clemen, R. T., & Reilly, T. (2013). Making Hard Decisions with DecisionTools. Cengage Learning.

* Heizer, J., Render, B., & Munson, C. (2017). Operations Management: Sustainability and Supply Chain Management. Pearson.


Question 6

A supply manager receives four bids for a special piece of equipment. The equipment is large and does not fit into a normal sea container. The bids are as follows:

Supplier 1 Supplier 2 Supplier 3 Supplier 4

Bid $2,110,000 $2,105,000 $2,110,000 $2,115,000

Incoterms 2020 Rule GIF DPU FCA FAS

The costs of transportation, included within each bid price, are as follows:

Responsibility for Payment to Carrier Transfer of Risk to Buyer Cost of Transportation

Supplier, before goods are loaded onto vessel: purchaser thereafter Alongside vessel nominated by purchaser $50,000

Supplier to named port of destination: purchaser thereafter Once goods have been loaded onto the vessel $55,000

Supplier to named place of destination once unloaded: purchaser thereafter Once goods have been unloaded at named place of destination 540,000

Purchaser Where goods are loaded onto the collecting vehicle $30,000

The supply manager has taken account the firm's risk profile and wishes to use FCA for its Incoterms 2020 rules. Adjusting the pricing in the tenders to reflect this, which supplier should be awarded the contract (based on the lowest price)?



Answer : D

Using FCA Incoterms means the buyer assumes responsibility at the point where goods are loaded onto the transport. Adjusting for transportation costs, Supplier 3, with a lower base bid price and assuming buyer's responsibility earlier, results in the lowest adjusted total cost. This selection balances cost and risk, aligning with the buyer's preferred Incoterm.


Question 7

A company supply manager conducts a review of current freight contracts and finds that payments to the primary carrier for outbound shipments have been based on a published rate schedule, which is revised annually. The supply manager believes the shipping costs may be higher than necessary. In order to reduce outbound transportation costs, which of the following should the supply manager do FIRST'



Answer : B

The first step in reducing outbound transportation costs is to explore potential savings with the current carrier. This approach involves negotiating rates and service terms, leveraging existing relationships, and possibly uncovering cost-saving opportunities without the need for complex audits or new vendor searches. Engaging with the primary carrier directly can be an efficient starting point.


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