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ISM Supply Management Core Exam Sample Questions (Q210-Q215):

NEW QUESTION # 210
Which of the following situations is an example of materiality in accounting?

A. Company A initiates a relatively small new advertising campaign. Company A decides to include these costs as part of selling, general, and administrative expenses on the income statement rather than disclose them separately.
B. Company A receives an order from its largest customer, but it is a relatively small order. Company A does not make any entry into the accounts at the time it receives the order.
C. Company A wants to purchase $100,000 worth of fabric to use in its upholstery business. However, the supplier will not grant credit for a purchase that large, so Company A reduces the order to $20,000.
D. Company A owns land that it purchased for $100,000 twenty years ago. The land is now appraised at $250,000, but Company A does not adjust the value of the land in its accounts.

Answer: A

NEW QUESTION # 211
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. Profit margin chart
B. Fish bone diagram
C. Frequency chart
D. Pareto analysis chart

Answer: D

NEW QUESTION # 212
An organization selects a supplier for a complex system implementation that will be conducted in several stages. Prompt initiation of the project is necessary in order to maintain the schedule, but the stakeholders have not yet defined the later milestones and deliverables. Which of the following would be the MOST appropriate course of action for the buying organization to take regarding the statement of work (SOW) for this project?

A. Issue a general letter of intent so that the supplier can start mobilizing and avoid delays
B. Postpone any type of agreement with the supplier until all requirements are fully defined
C. Provide a SOW with all requirements available thus far, and include procedures for internal customers to make changes via contract amendments
D. Create an initial SOW to allow the supplier to begin the first phase, with provisions for negotiating subsequent SOWs for full project implementation

Answer: D

Explanation:
When dealing with a complex system implementation in stages, it is critical to begin the project promptly to maintain the schedule. However, if later milestones and deliverables are not yet defined, a flexible approach is necessary. Creating an initial Statement of Work (SOW) allows the project to start with the first phase, and provisions for negotiating subsequent SOWs as the project progresses ensure that the remaining stages can be defined in detail later. This approach balances the need for a timely start with the flexibility to adapt as more information becomes available.References:
* Project Management Institute (PMI). A Guide to the Project Management Body of Knowledge
* (PMBOK Guide).
* CIPS (Chartered Institute of Procurement & Supply) guidelines on SOW management.

NEW QUESTION # 213
For a standard normal distribution (=0, =1), the area under the curve to the left of 0.37 is 0.6443. What is the probability of getting a value less than -0.37 or greater than 0.37?

A. 35.57%
B. 28.86%
C. 64.43%
D. 71.14%

Answer: D

NEW QUESTION # 214
In preparation for an upgrade to several of its business processes, a firm needs to provide training for key staff members. The firm's supply manager wants to be sure any solicitation for services uses up-to-date specifications and will attract good potential sources. Which of the following should be the FIRST step in accomplishing this?

A. Sending results-based Requests for Proposals (RFP) to known suppliers
B. identifying suitable training packages and requesting bids for delivering them
C. Inviting potential trainers to present their programs to a team of users
D. Issuing a Request for Information (RFI) to identify products and/or sources

Answer: D

Explanation:
The first step in ensuring that any solicitation for services uses up-to-date specifications and attracts good potential sources is to issue a Request for Information (RFI). An RFI allows the firm to gather information about available training packages and potential suppliers. It helps in understanding the market capabilities and the solutions that suppliers can offer. This information can then be used to create a more detailed and accurate Request for Proposal (RFP).
References
* CIPS (Chartered Institute of Procurement & Supply). The Use of RFIs in the Procurement Process.
* ISM (Institute for Supply Management). Guidelines for Effective RFIs.

NEW QUESTION # 215
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