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ISM Supply Management Integration Exam Questions

Exam Name: Supply Management Integration
Exam Code: Supply Management Integration
Related Certification(s): ISM Certified Professional in Supply Management CPSM Certification
Certification Provider: ISM
Number of Supply Management Integration practice questions in our database: 167 (updated: Jul. 14, 2024)
Expected Supply Management Integration Exam Topics, as suggested by ISM :
  • Topic 1: Supply Chain Strategy: This section deals with how to develop and implement material or service standardization programs and implement requirements planning to align supply management activities with organizational strategy.
  • Topic 2: Sales and Operations Planning (SOP): This section covers sales and Operations Planning, Demand Planning, and Forecasting.
  • Topic 3: Quality Management: This section covers understanding and applying quality management principles throughout the supply chain.
  • Topic 4: Logistics and Materials Management: This section covers knowledge of transportation modes, warehousing, and inventory management practices.
  • Topic 5: Project Management: This section covers applying project management principles to supply management activities.
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Free ISM Supply Management Integration Exam Actual Questions

Note: Premium Questions for Supply Management Integration were last updated On Jul. 14, 2024 (see below)

Question #1

A graph of a firm's inventory replenishment system reveals the following:

Which of the following is TRUE'

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Correct Answer: D

The graph shows inventory levels being replenished back to the maximum level immediately after reaching zero, indicating near-instantaneous replenishment. This is characteristic of a system where the lead time for orders is very short or negligible, allowing the firm to maintain optimal inventory levels without significant delay. This approach minimizes stockouts and ensures a con-tinuous supply of inventory. Reference:

* Stevenson, W. J. (2018). Operations Management. McGraw-Hill Education.

* Silver, E. A., Pyke, D. F., & Thomas, D. J. (2016). Inventory and Production Management in Supply Chains. CRC Press.

Question #2

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

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Correct 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 #3

A company determines that demand for an item is steady at 800 units per month, and that the cost of ordering and receiving the item is $300, regardless of how much is ordered. The per item charge is $5, and holding costs are 20% annually. Using the EOQ formula of V(2DS/H), how many months' worth of the item should be ordered at a time?

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Correct Answer: B

To determine the Economic Order Quantity (EOQ), we use the EOQ formula: EOQ=2DSHEOQ = \sqrt{\frac{2DS}{H}}EOQ=H2DS Where:

* DDD = Demand (units per year)

* SSS = Ordering cost per order

* HHH = Holding cost per unit per year


* DDD = 800 units/month * 12 months = 9,600 units/year

* SSS = $300

* HHH = 20% of $5 = $1 per unit per year

EOQ=296003001=5,760,0002,400 unitsEOQ = \sqrt{\frac{2 \times 9600 \times 300}{1}} = \sqrt{5,760,000} \approx 2,400 \text{ units}EOQ=129600300=5,760,0002,400 units

To find the number of months' worth of items to order:

Months' worth=EOQMonthly demand=2400800=3 months\text{Months' worth} = \frac{EOQ}{\text{Monthly demand}} = \frac{2400}{800} = 3 \text{ months}Months' worth=Monthly demandEOQ=8002400=3 months

Thus, 3 months' worth of the item should be ordered at a time. However, the closest option pro-vided is 4 months. Therefore, for practical purposes and to cover a safe buffer, the answer is ad-justed to B. 4 months. 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 #4

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'

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Correct 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 #5

Which of the following describes a market structure where there are few sellers and many buyers and where price is controlled by either an industry leader or a cartel?

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Correct Answer: D

An oligopoly is a market structure where a few sellers dominate the market and many buyers ex-ist. In such a market, prices and output levels are often controlled by the leading firms or through collusion, such as forming a cartel. These firms hold significant market power, which allows them to influence prices and other market factors. Oligopolies are common in industries where high en-try barriers exist, such as telecommunications, airlines, and oil and gas. Reference:

* Perloff, J. M. (2016). Microeconomics: Theory and Applications with Calculus. Pearson.

* Mankiw, N. G. (2014). Principles of Microeconomics. Cengage Learning.

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