Question 1

As interest rates rise, what will MOST likely be the effect on supply?

Options :

A : Suppliers will lock in raw material prices in anticipation of price increases.

B : Suppliers will delay shipments by selling to other customers.

C : Bond prices will rise, forcing suppliers to pay more for capital investments.

D : The risk of supplier stock outs will increase due to higher costs of holding inventory.

Answer: D

Question 2

At what point in the development of a category strategy should spend review occur?

Options :

A : After key internal stakeholders agree on sourcing priorities

B : After development of the sourcing team

C : After presentation of the strategy to senior management

D : During validation of the savings or contribution

Answer: D

Question 3

According to the Law of Agency, a supply manager acting as an agent makes decisions and acts in whose interest(s)?

Options :

A : The interests of the profession

B : His/her personal interest

C : The interest of the organization that employs him/her

D : The interests of the supplier which overlap with those of the buyer

Answer: C

Question 4

A company's major supplier of sub-assemblies provides excellent quality and reasonable costs. However, shipping delays and damage in transit make this supplier less reliable than desired. The supply manager would like to retain this supplier if possible, but is concerned about the reliability issues. Given this situation, which of the following is the BEST course of action for the supply manager to take?

Options :

A : Negotiate lower prices to compensate for the impact of delivery problems

B : Collaborate with the supplier to improve its outbound logistics

C : Increase forecasting lead times and safety stock for the supplier-s products

D : Give the supplier a deadline by which to remedy unsatisfactory performance

Answer: B

Question 5

A firm enters into a contract with a minority business. The invoice does not match the purchase order, and some incorrect items are shipped. The erroneous items, valued at $5,000, are returned. The replacement items are scheduled to be delivered within 2 days. The total invoice is for $18,000, which is a substantial amount for the business. Preferential payment terms have previously been negotiated from 30 to 14 days from receipt of goods, as cash flow is a significant issue. The situation is summarized as follows: Purchase Order RaisedGoods Received Invoiced Timing18 days ago 13 days ago 12 days ago Amount$18,000 $18,000 $18,000 As it will take one business day to process payment, a decision needs to be made on whether the supplier should receive payment on time. Which of the following courses of action should the supply manager take?

Options :

A : Pay the full $18,000 immediately

B : Pay $18,000 14 days after receipt of all the goods in the original purchase order

C : Pay $13,000 now and $5,000 upon receipt of the replacement goods

D : Pay $13,000 now and $5,000 14 days after receipt of the replacement goods

Answer: D

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