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Exam : ISM 630-007
Title : C.P.M. Module 3: Value Enhancement Strategies

1. Which of the following is the FIRST step in standardization?
A. Collecting data.
B. Simplifying standards.
C. Establishing objectives.
D. Publicizing the program.
Answer: A

2. Which of the following statements is FALSE?
A. An operational lease has a non-cancelable term varying from hours to years.
B. An operational lease is a total financial commitment by the lessor.
C. In operational leases, payments are fixed payments per period.
D. Operational leases stress service.
Answer: B

3. Which of the following should a purchaser utilize when there is a need to minimize
financial risk in a sensitive market?
A. Cash flow management.
B. Long-term relationships.
C. Market demand analysis.
D. Hedging using futures contracts.
Answer: D

4. Which of the following represents the BEST strategy for minimizing price risk in a
falling market?
A. Hedging.
B. Forward buying.
C. Hand-to-mouth buying.
D. Buying to requirements.
Answer: C

5. Which of the following are the two basic categories of costs associated with
inventories from a management point of view?
A. Supplies and services costs.
B. Storage and incremental costs.
C. Carrying costs and acquisition costs.
D. Obsolescence and deterioration costs.
Answer: C

6. When would a purchasing manager generally use a third-party lease as a financing
instrument?
A. When purchasing equipment from the manufacturer with someone else’s money.
B. When acquiring equipment from one party and maintenance from another.
C. When arranging an assignment agreement with a bank.
D. When transferring the asset to the internal customer.
Answer: A

7. Which of the following represents the MOST common reason for a public or
nonprofit corporation to use lease/purchase agreements to obtain equipment?
A. To gain tax advantages.
B. To avoid capital expenditures.
C. To reduce maintenance needs.
D. To gain depreciation advantages.
Answer: B

8. Which of the following is the MOST commonly sought-after piece of inventory
information?
A. The date the inventory is taken.
B. The current price of the items.
C. Inventory I.D. numbers.
D. Quantities.
Answer: D

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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

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Exam : ISM 630-008
Title : C.P.M. Module 4: Management

1. You work as a purchasing manager at Certkiller .com. A female employee has been
working for Certkiller .com for about 12 years and has 3 years to go until her
scheduled retirement. Recently, she was laid off from her position, and her duties
were absorbed by younger workers in the department. Under which of the following
is she MOST likely to have a claim against the company?
A. Equal Employment Opportunity Act.
B. National Labor Relations Act.
C. Age Discrimination Act.
D. Executive Order 11246.
Answer: C

2. Which of the following is NOT an appropriate measure of performance for a
purchasing department?
A. Average time to place requisitions.
B. Total dollars contributed to profits.
C. Total dollars purchased per supplier.
D. Total product cost reduction compared to budget.
Answer: C

3. Which of the following does profit planning begin?
A. Business plans.
B. Long-range strategic plans.
C. Short-range strategic plans.
D. Strategic and operational plans.
Answer: D

4. You work as a purchasing manager at Certkiller .com. You are instructed to reduce
Certkiller .cm’s MRO supplier base from 50 to 1. Which of the following would be
your BEST course of action in this situation?
A. Buying at the lowest total cost, consistent with quality and service.
B. Achieving a high degree of cooperation with internal customers.
C. Developing reliable alternatives of supply.
D. Optimizing inventory turnover.
Answer: A

5. Which of the following can BEST enhance a measurement and control system for
evaluating buyer performance?
A. Including the buyer in the design of the system.
B. Including human resources in the design of the system.
C. Making a composite measurement of efficiency and effectiveness.
D. Being sufficiently broad in scope to allow the measurement of all contingencies.
Answer: A

6. Which of the following is LEAST important when evaluating buyer performance?
A. Quality of work.
B. Quantity of work.
C. Personal appearance.
D. Communication skills.
Answer: C

7. Which of the following is generally NOT strategic in nature?
A. New advertising schedule implementation.
B. New dividend policy direction.
C. New product development.
D. New sources of financing.
Answer: A

8. You work as a purchasing manager at Certkiller .com. An employee that has been at
Certkiller .com for 20-years has become accustomed to coming to work 30-45
minutes late. Initially, this was due to child-rearing responsibilities, but now is a
simply habit. The supervisor has asked the employee several times if there was a
problem and the answer has always been "no." The problem is beginning to have a
negative impact on the morale of the rest of the department. Which of the following
would be your BEST course of action in this situation?
A. Dismiss the employee.
B. Have the employee attend counseling sessions.
C. Ask the human resources department to intervene and find a solution to the problem.
D. Set goals with the employee to improve on arrival time, and include a written report in
the employee’s file.
Answer: D