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Exam : ISM 630-005
Title : C.P.M. Module 1: Purchasing Process

1. From which of the following are prices requested from in the second step of two-step bidding?
A. All suppliers submitting acceptable technical proposals in the first step.
B. The three suppliers submitting the best proposals in the first step.
C. All suppliers qualified to submit proposals in the first step.
D. All suppliers submitting proposals in the first step.
Answer: A

2. Which of the following statements regarding the process of reviewing supplier samples and/or demonstrations with user departments and functional departments such as quality, engineering, research, and administration, are FALSE?
A. It increases the amount of time involved in making a buying decision.
B. It is an example of purchasing’s role as a service function within the organization.
C. It reduces purchased prices by allowing purchasing to make the final buying decision.
D. It leads to improved quality because the supplier will have a better understanding of user requirements.
Answer: C

3. TestInside.com has a 10% profit margin before taxes and spends 50% of its sales dollar on materials. What percentage reduction in material costs for TestInside.com to achieve an increase of 5% in sales?
A. 1%
B. 2.5%
C. 5%
D. 7.5%
E. 10%
Answer: A

4. TestInside.com has a contract with Road Haulers, Ltd. to dispose of toxic material at a site in New Orleans. However, Road Haulers, Ltd. decides to use a site in Dallasinstead. The site at Dallas is a cheaper but disreputable source. Who has primary liability in this situation?
A. TestInside.com.
B. Road Haulers, Ltd.
C. The site at New Orleans.
D. The site at Dallas.
Answer: A

5. In which of the following countries outside of the United States do U.S. patentees enjoy protection against infringement?
A. In countries that have full diplomatic relations with the United States.
B. In countries that are signatories to patent conventions only.
C. In European Union member counties only.
D. In GATT member countries only.
E. None of the above.
Answer: B

6. You work as a purchaser at TestInside.com. Your brother works as an engineer for a major supplier for TestInside.com. Your brother asks you for input on a new product line that his company is developing. The product is quite similar to one that TestInside.com currently buys from another company. Which of the following is the PRIMARY ethical issue that arises in this situation?
A. Fraud
B. Bribery
C. Nepotism
D. Conflict of interest
Answer: D

7. Which of the following is generally NOT included in the cost analysis process?
A. Semi-variable costs.
B. Overhead costs.
C. Indirect costs.
D. Sunk costs.
Answer: D

8. Which of the following is the MOST important aspect of service contract administration?
A. Aggressive management of the contract.
B. Selection of the right source.
C. A fair and reasonable price.
D. A sound statement of work.
Answer: D