ISM INTE Exam - Topic 1 Question 9 Discussion

Actual exam question for ISM's INTE exam

Question #: 9
Topic #: 1

[All INTE Questions]

DEF, Inc. is in the ramp-up phase of a unique medical device. The device has a two-year life expectancy. The sales forecast for the ramp-up period is as follows:

Month Jul Aug Sep Oct Nov Dec Jan Feb

Unit Sales 100 150 200 600 1,400 2,200 4,000 10,000

Demand after February is expected to remain at 10,000 units per month for several months, then decrease gradually. The units are small, and thus maintaining an inventory of up to 10,000 units is possible.

There are only three suppliers capable of providing the specialized component critical to this product. The production capacities of these suppliers are as follows:

* Supplier X has a capacity of 500 units per month at a cost of S20 per unit, representing 80% of its total business

* Supplier Y has a capacity of 2,000 units per month at a cost of S2O.5O per unit, representing 50% of its total business

* Supplier Z has a capacity of 20,000 units per month at a cost of $20.70 per unit, representing 10% of its total business

Two of these companies---Supplier X and Supplier Y---are minority businesses.

Given this situation, DEF should contract with

ASupplier Z only, as it can best fulfill the forecasted demand

Ball three companies in a tiered system, with up to 40% from Supplier X and Y's total monthly business, and the remainder going to Supplier Z

CSuppliers X and Y, and work with them to increase their production capability

Dall three companies in a tiered system, with up to 5,000 units from Supplier X, 20,000 units from Supplier Y, and the remainder from Supplier Z

Show Suggested Answer

Suggested Answer: B

Contracting with all three suppliers in a tiered system allows DEF, Inc. to diversify its supply chain, supporting both minority businesses and ensuring capacity to meet demand. This strategy balances cost, supplier diversity, and risk management, aligning with best practices in supply chain management.

by Marica at Aug 08, 2024, 09:55 AM

Limited Time Offer

25%

Off

Get Premium INTE Questions as Interactive Web-Based Practice Test or PDF

Contribute your Thoughts:

Submit Cancel

Myra

3 months ago

Not sure if X and Y can ramp up production fast enough.

upvoted 0 times

...

Herman

3 months ago

Definitely agree with option B, diversifying is key!

upvoted 0 times

...

Lavelle

4 months ago

Surprised that Supplier Z has such a high capacity but only 10% of their business.

upvoted 0 times

...

Ling

4 months ago

I think going with all three suppliers is smart!

upvoted 0 times

...

Elden

4 months ago

Supplier Z can handle the demand, but at a higher cost.

upvoted 0 times

...

Corinne

4 months ago

I think we should definitely consider the production capabilities. Supplier Y seems like a good option, but I’m unsure about the limits on their capacity.

upvoted 0 times

...

Alana

4 months ago

I feel like we should prioritize the minority suppliers, but I'm not confident if that means we should only use X and Y.

upvoted 0 times

...

Stevie

5 months ago

I remember a similar question where we had to balance costs and capacity. Maybe a tiered system is the way to go?

upvoted 0 times

...

Jeannetta

5 months ago

I'm not entirely sure, but I think Supplier Z might be too expensive for the volume we need.

upvoted 0 times

...

Beckie

5 months ago

I feel pretty confident about this. Supplier Z seems like the obvious choice given their large capacity, so I'm going with option A.

upvoted 0 times

...

Kimberely

5 months ago

This is a tricky one. I like the idea of option D to allocate the demand across the suppliers, but I'll need to double-check the numbers to make sure it's feasible.

upvoted 0 times

...

King

5 months ago

Okay, I think I've got a handle on this. Supplier Z has the highest capacity, so I'm leaning towards option B to leverage their capabilities while also using the minority-owned suppliers.

upvoted 0 times

...

Winifred

5 months ago

This looks like a complex supply chain optimization problem. I'll need to carefully analyze the demand forecast and supplier capabilities to determine the best approach.

upvoted 0 times

...

Dick

5 months ago

Hmm, I'm a bit confused by all the different supplier details. I'll need to make sure I fully understand the constraints and costs before deciding on the best solution.

upvoted 0 times

...

Allene

5 months ago

Wait, I'm confused. Is it really that simple? I feel like there could be some tricky wording or nuance I'm missing here. Maybe I should re-read the question and answers a couple times to make sure I'm not overlooking something.

upvoted 0 times

...

Una

2 years ago

Haha, I bet the folks at DEF are wishing they had more than three suppliers to choose from! Talk about a limited market.

upvoted 0 times

...

Apolonia

2 years ago

I think option D is the way to go, we need to ensure we have enough supply from each supplier.

upvoted 0 times

...

Ernest

2 years ago

D sounds like the way to go. Spread it out across the three suppliers, but with a clear allocation plan to make sure the minority businesses get a fair share.

upvoted 0 times