2024 Realistic Verified Free ISM CORe Exam Questions
CORe Real Exam Questions and Answers FREE
NEW QUESTION # 16
A buying firm learns that its sole supplier of a critical part is being sued by an employee for negligence. The firm is currently in negotiations with this supplier. To minimize or avoid risk, which of the following is the BEST tactic for the buying firm to utilize in this situation?
- A. Postpone the negotiations until after the suit is settled
- B. Request more favorable payment terms
- C. Purchase an all-risk insurance policy
- D. Complete the negotiations while monitoring the situation
Answer: D
Explanation:
In this situation, the best tactic is to continue negotiations while keeping an eye on the lawsuit's progress. This approach allows the buying firm to proceed with securing the critical part needed for operations without significant delays. Postponing negotiations (A) could lead to operational disruptions, while requesting more favorable payment terms (B) might not address the underlying risk associated with the lawsuit. Purchasing an all-risk insurance policy (D) could be a complementary action but does not directly resolve the immediate need to negotiate terms with the supplier. References: Concepts of risk management and supplier relationship management in supply chain and procurement textbooks.
NEW QUESTION # 17
A mutual fund manager believes that a new research method will provide better returns for clients. The manager's historical monthly return prior to the new research method was 0.46%. After the manager began using the new method the monthly return was 0.57%. After running a hypothesis test, the manager saw that the one sided p-value was 0.029. Assuming a 95% confidence level, which of the conclusions below would be correct?
- A. Do not reject the null hypothesis and continue using the new method.
- B. Reject the null hypothesis and begin using the old method.
- C. Reject the null hypothesis and continue using the new method.
- D. Do not reject the null hypothesis and begin using the old method.
Answer: C
NEW QUESTION # 18
An exploration firm's supply manager meets with the fleet operations team to plan for the acquisition of vehicles to be used in company operations on a remote Pacific island. As removing the old vehicles from the island has proven to be a significant problem, the team requests the inclusion of a "take-back" requirement in the contract. Which of the following is the BEST way for the supply manager to respond to this request?
- A. The supply manager should oppose the idea, as a take-back program from a remote island would be cost prohibitive.
- B. The supply manager should oppose the idea, as the sourcing process should be focused on acquisitions.
- C. The supply manager should include this requirement in the firm's upcoming procurement.
- D. The supply manager should refer the issue to the environmental quality manager.
Answer: C
NEW QUESTION # 19
A computer software company with market power is about to release two new products. The company knows that there is high variability in consumers' willingness to pay (WTP) for each individual product, but a customer with a low WTP for one good is likely to have a high WTPfor the other. If the marginal cost of software is $0, what pricing structure is MOST likely to maximize profits for the computer software firm?
- A. Sell the products at a high price but offer a discount to students
- B. Sell the products together as a bundle
- C. Sell each product for a minimal price, since the marginal costs of software are extremely low
- D. Sell each product at consumers' average willingness to pay
Answer: B
NEW QUESTION # 20
A buying firm receives samples from a supplier. The samples pass endurance testing, and a production batch is ordered and received. Soon after, it is found that the production parts break much sooner than the samples did.
The supplier claims the life requirements of the parts are not stated in the warranty clause of the contract and thus denies liability.
Which of the following is TRUE in this situation?
- A. If the life expectancy of the product is not clearly defined in the product specifications, there Is no protection.
- B. Express warranties are only specific assurances documented by the seller, and if quality is not documented, the buyer is not protected.
- C. Express warranties only apply to products inspected immediately upon receipt, and thus the buyer is not protected.
- D. Express warranties may be in the form of a sample, and therefore the buyer is protected.
Answer: D
Explanation:
* Express Warranties: These are explicit guarantees made by the seller regarding the quality or performance of the goods.
* Form of Warranty: An express warranty can be communicated through various forms, including samples, descriptions, and affirmations of fact.
* Implication of Samples: When a buyer receives a sample and bases their purchasing decision on it, the sample sets an expectation for the production batch.
* Protection Under Law: According to the Uniform Commercial Code (UCC) in the United States, if the seller provides a sample, the actual goods delivered must match the quality of the sample.
* Conclusion: Given the parts received do not meet the quality of the samples provided, the buyer is protected as the samples served as an express warranty. References
* Uniform Commercial Code (UCC) Article 2, Section 2-313.
NEW QUESTION # 21
Company B recorded a transaction with a debit of $10,000 to deferred revenue and a credit of $10,000 to revenue. Which of the following situations BEST describes the transaction that would lead to this journal entry?
- A. Company B received an order for a product at the price of $10,000.
- B. Company B collected $10,000 for a product that had not been delivered.
- C. Company B delivered a product for which $10,000 had already been paid.
- D. Company B sold a product for $10,000.
Answer: C
NEW QUESTION # 22
A product's labor content is $10 and its overhead is $12.50. The product sells for $36.50 per unit. Over the past year, supply management has reduced the product's cost of materials from $14 per unit to $12.
How much have supply management's efforts contributed to profit?
- A. $2.50
- B. $4.00
- C. $3.00
- D. $2.00
Answer: D
Explanation:
* Initial Cost Calculation: Initially, the product's cost includes labor ($10), overhead ($12.50), and materials ($14). Thus, the total cost is $36.50 per unit.
* Cost Reduction: Supply management reduces the cost of materials from $14 to $12, decreasing the total cost per unit to $34.50.
* Contribution to Profit: The reduction in cost directly translates to an increase in profit per unit. The cost reduction is $2 per unit ($14 - $12).
* Profit Calculation: As the selling price remains $36.50, the new profit per unit after cost reduction is the selling price minus the new total cost ($36.50 - $34.50), which results in an increased profit of $2 per unit.
References
* ISM Glossary of Key Supply Management Terms
* CIPS Cost Management Tools and Techniques
NEW QUESTION # 23
A chief executive officer (CEO) asks a supply manager to prepare a statement of work for a consultant to perform audit services. The consultant occasionally does other non-audit work for the company. In this situation, which of the following is the BEST course of action for the supply manager to take?
- A. Recommend giving a presentation to the board of directors on the category strategy for consulting and professional services
- B. Prioritize execution of the statement of work, as it has likely been mandated by the board of directors
- C. Review professional service rates for the audit services and verify they are competitive prior to executing the statement of work
- D. Explain to the CEO the conflict of interest in contracting with an existing consultant as an auditor, and recommend alternative solutions
Answer: D
Explanation:
In situations where a consultant performing audit services also engages in other non-audit work for the company, a conflict of interest may arise, compromising the integrity and objectivity of the audit. It is crucial to address this issue transparently with the CEO, explaining the potential conflict and recommending alternative solutions, such as engaging a different consultant or firm for the audit. This approach ensures compliance with ethical standards and maintains the credibility of the audit process.References:
* IFAC (International Federation of Accountants) Code of Ethics for Professional Accountants.
* ISM (Institute for Supply Management) guidelines on professional services procurement.
NEW QUESTION # 24
A firm's primary goal for its upcoming raw material negotiations with a well-performing supplier is cost reduction. In order to achieve this, which of the following courses of action should supply management take?
- A. Offer to purchase a larger volume of material over the next five years
- B. Research market conditions and the supplier's tolerance for early payment incentives
- C. Review the supplier's key performance indicators (KPIs)
- D. Inform the supplier where it is located on the Kraljic Matrix and request price concessions
Answer: B
Explanation:
* Research Market Conditions: Understanding current market conditions helps in assessing whether the supplier's prices are competitive and reasonable.
* Supplier's Financial Situation: Knowing the supplier's financial health and their tolerance for early payment incentives can be crucial in negotiations.
* Negotiate Incentives: Offering early payment incentives can be an effective strategy to negotiate cost reductions. This benefits the supplier by improving their cash flow.
* Evaluate Alternatives: Consideration of alternative suppliers or negotiating other terms can also put pressure on the supplier to offer better pricing.
References:
* CIPS: "Negotiation Techniques in Procurement and Supply"
* ISM: "Supplier Negotiation Strategies"
NEW QUESTION # 25
A supply management team reviews all documents dealing with processes and procedures for the supply management function. Each team member reviews the documents and reports back to the group on the accuracy of the information, particularly concerning financial transactions. Any discrepancies are documented, updated, and submitted to senior management for approval. Which of the following is the MOST important legal requirement for this activity?
- A. Ensuring processes adhere to requirements of anti-corruption/anti-bribery laws
- B. Ensuring processes address issues and requirements of contract and commercial laws
- C. Ensuring processes meet the requirements of Sarbanes-Oxley and similar laws
- D. Ensuring processes address the concerns of the legal team on intellectual property laws
Answer: C
NEW QUESTION # 26
What are the items that companies using the International Financial Reporting Standards (IFRS) might place in different sections within the statement of cash flows compared to those reporting under US Generally Accepted Accounting Principles (GAAP)?
- A. Inventory and net income changes
- B. Loan payments and stock issued
- C. Interest and dividends
- D. Capital expenditures and depreciation
Answer: C
NEW QUESTION # 27
A plumbing supplies company asks its supply manager to develop a category management plan for the coming year.
The supply manager conducts a spend analysis in order to identify and rank the most important categories.
Which of the following should the supply manager use?
- A. Pareto analysis chart
- B. Fish bone diagram
- C. Profit margin chart
- D. Frequency chart
Answer: A
NEW QUESTION # 28
After a major storm cuts off power to a large city, the local government passes an anti-gouging law to prevent a surge in the price for gasoline. After the law is in place, government officials learn that a side market for gasoline has developed, in which suppliers are procuring gasoline from surrounding areas and charging more than the legal price. Should the government shut down the side market?
- A. No; the shortage of gasoline would become more severe if the government shut down the side market.
- B. No; by ignoring this side market, the government will be able to collect significant tax revenue.
- C. Yes; otherwise the existence of the side market will result in an increase in the legal price of gasoline.
- D. Yes; shutting down the side market will signal to the market that gasoline suppliers should sell more gasoline at the legal price.
Answer: A
NEW QUESTION # 29
Current and quick ratio formulas are similar, except that for the quick ratio an analyst will subtract which account from the numerator (current assets)?
- A. Cash
- B. Accounts receivable
- C. Inventory
- D. Marketable securities
Answer: C
NEW QUESTION # 30
Which of the following refers to a method of formally evaluating suppliers, conducting site visits, and providing supplier training?
- A. Supplier development
- B. Early supplier Involvement
- C. Supply chain management
- D. Supplier partnership
Answer: A
Explanation:
Supplier development refers to activities undertaken by a buying organization to improve the performance of its suppliers. This typically involves formally evaluating suppliers to understand their capabilities, conducting site visits to observe operations and identify areas for improvement, and providing training to help suppliers meet the buying organization's standards and requirements. The goal is to enhance the supplier's performance, leading to improved quality, cost, and delivery times, ultimately benefiting the entire supply chain.
References:
* Supplier Evaluation and Performance Excellence: A Guide to Meaningful Metrics and Successful Results by Sherry Gordon.
* CIPS (Chartered Institute of Procurement & Supply) guidelines on supplier development.
NEW QUESTION # 31
DEF, Inc. is a multinational oil company expanding into a new geographic region. The firm's policy is to purchase locally for its operations whenever possible. Thus, DEF needs to find sources of materials, basic equipment, and standard bulk items within the new region. Given this situation, which of the following is the BEST way for DEF to proceed?
- A. Issue a Request for Information (RFI) followed by a Request for Quotation (RFQ)
- B. Hold a supplier conference followed by a Request for Quotation (RFQ)
- C. Issue a Request for Information (RFI) followed by a purchase order
- D. Hold a supplier conference followed by a Request for Information (RFI)
Answer: A
Explanation:
* Need for Local Suppliers: DEF, Inc. is looking for local sources of materials, equipment, and bulk items in a new geographic region.
* RFI Process: Issuing an RFI allows DEF to gather information about potential suppliers in the new region, understanding their capabilities and offerings.
* RFQ Process: Following the RFI with an RFQ enables DEF to obtain detailed quotations from the shortlisted suppliers based on the information gathered, ensuring competitive pricing and terms.
* Strategic Sourcing: This approach aligns with strategic sourcing principles by thoroughly understanding the supplier market before seeking quotations.
References
* CIPS. (n.d.). Effective Use of RFIs and RFQs in Procurement.
* APQC. (2019). Best Practices in Supplier Selection and Evaluation.
NEW QUESTION # 32
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Preparing for the HBX CORe Final Examination requires a significant amount of time and effort. Learners should review all the course materials, including lectures, case studies, and readings. They should also take practice exams to assess their readiness for the final exam. The HBX CORe program provides learners with access to online resources and support, such as discussion forums and study groups, to help them prepare for the exam.
Passing the HBX CORe Final Examination is an achievement in and of itself, but it also leads to the awarding of a certification from Harvard Business School. Supply Management Core Exam certification is a testament to the learner's dedication and hard work. It is recognized by employers and educational institutions worldwide and can be added to a learner's resume or LinkedIn profile. Supply Management Core Exam certification serves as evidence of the learner's proficiency in business fundamentals, demonstrating to potential employers that they are ready to tackle the challenges of the business world.
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