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ISM 630-006 Exam -

Free 630-006 Sample Questions:

1. An approach that focuses on cooperative rather than adversarial relationships with suppliers is referred to as
A. single sourcing
B. cross-functional teams
C. supply base management
D. supplier partnerships
Answer: D

2. Negotiations are BEST defined as the process of
A. reaching an agreement through discussion
B. maximizing one's position over one's opponent
C. reaching an agreement through competitive bidding
D. verifying that the terms and conditions of a contract are met
Answer: A

3. The purchasing and production departments share responsibility for the following areas:
I. Product fabrication
II. Lead time for delivery of material
III. Work schedules
IV. Selection of sources of supply
Select the item which BEST describes the allocation of these responsibilities:
Purchasing Production
A. Area II Areas I, III, and IV
B. Areas II and III Areas I and IV
C. Areas II and IV Areas I and III
D. Areas I, III, and IV Area II
Answer: C

4. Which of the following protects a company from information leaks when developing a new product with a supplier?
A. Copyright
B. Patent
C. Supplier partnership
D. Confidentiality agreement
Answer: D

5. When, if at all, can a buyer ask a supplier for information regarding the disadvantaged ownership of the company?
A. At any time
B. Only when the buyer is purposefully seeking a minority supplier
C. Only when authorized by the courts
D. At no time
Answer: A

6. A purchasing manager is representing the buying organization in a meeting with a governmental body. The manager could appropriately engage in all of the following activities EXCEPT
A. describing the organization's new MRP system
B. handing out business cards to other participants
C. acting as a lobbyist for the buying organization
D. discussing the pros and cons of various types of contractual arrangements
Answer: C

7. When developing procedures for dealing with socially or economically disadvantaged businesses, a purchasing manager should consider which of the following?
I. That the staff of such businesses may have had limited exposure to technical contract language
II. That exceptions may be needed to accommodate faster payment of invoices from such businesses
III. That goods or services of lower than usual quality may be accepted from such businesses
IV. That such businesses may need information on the bidding process
A. I and IV only
B. II and III only
C. I, II, and IV only
D. I, II, III, and IV
Answer: C

8. Which two of the following are usually included among the functions of the manager of materials?
I. Receiving and stores
II. Quality control
III. Traffic management
IV. Accounts payable
A. I and III
B. I and IV
C. II and III
D. II and IV
Answer: A

9. Which of the following tends to be TRUE with regard to the decision-making capability of cross-functional sourcing teams?
A. They make better decisions than individuals.
B. They make quicker decisions than individuals.
C. They require the input of suppliers.
D. They are a poor substitute for individual decisions.
Answer: A

10. Which of the following types of software is MOST appropriate for use in the analysis of a competitive bid?
A. Application
B. Interface
C. Scientific
D. Operating system
Answer: A

11. If a piece of capital equipment is designed and specified so as to force the purchasing department into a sole supplier situation, a buyer may still affect the procurement process by negotiating which of the following support items from the sole supplier?
I. Technical documentation, including data sheets, performance specs, maintenance and operating manuals, supplier-furnished training programs, and full supplier documentation
II. The initial provisioning of high-risk spare parts for start-up and a one-year period thereafter
III. A promise to maintain equipment on an annual basis by the manufacturer or its authorized service agent
IV. A determination of whether equipment or services are taxable or tax-exempt
A. I and III only
B. II and IV only
C. I, II, and III only
D. I, II, III, and IV
Answer: C

12. The receipt of a functional acknowledgment after sending a purchase order via EDI means
A. the transmission is received
B. the purchase order is accepted
C. a valid contract exists
D. the goods have been shipped
Answer: A

13. In day-to-day operational control in a manufacturing firm, purchasing management would be MOST concerned with
A. labor utilization variance
B. materials utilization variance
C. labor cost variance
D. materials cost variance
Answer: D

14. Which of the following is the MOST important tool for achieving continuous improvement in an organization's integrations with its suppliers?
A. Quality inspection at the supplier's plant
B. Early involvement in product design
C. Supplier input into forms design
D. Joint examination of cost structure
Answer: B

15. All of the following are terms associated with the Internet EXCEPT:
A. Browsers
B. Home pages
C. Web sites
D. Time sharing
Answer: D

16. Which of the following statements about setting negotiating objectives is NOT true?
A. They should be defined with sufficient specificity to permit measurement.
B. They should be established for each issue or condition to be negotiated.
C. They should test a supplier's strengths and avoid reference to its weaknesses.
D. They should be based on a database derived from the cooperative efforts of purchasing, production, and engineering.
Answer: C

17. If a supplier's quality level has been unsatisfactory on past orders and the quality level on a current order is critical, which of the following would be the BEST action to take in this situation?
A. Require timely inspection by the buyer's company at the supplier's plant
B. Require the supplier to supply extra amounts of the product to cover rejects
C. Require 100% in-house inspection of the order by the buyer's company's quality control department
D. Write "Quality of Material is Critical" on the purchase order
Answer: A

18. A manufacturer establishes the population mean for a round-bar machining process to be 5.76 centimeters, with a standard deviation of .15. The acceptable quality limits are plus or minus 3 standard deviations. On the first day, the sample means taken by the operator are 5.80, 5.46, and 6.20 centimeters. These means indicate that the process is
A. in control
B. out of control
C. statistically significant
D. tending toward the low side of the mean
Answer: A

19. The growing complexity of many procurements has led to an increased trend toward
A. supplier partnering
B. cross-functional teams
C. risk management
D. strategic supplier alliances
Answer: B

20. Which of the following is a key action that senior management must take when establishing a purchasing department?
A. Select a suitable purchasing system
B. Develop a list of preferred suppliers
C. Hire qualified buyers
D. Establish a policy authorizing purchasing's authority
Answer: D

21. The three external forces that have the MOST profound effect on quality improvement are
A. computer software, technology, and employee focus
B. technology, government legislation, and employee focus
C. technology, international trade, and management focus
D. government legislation, international trade, and employee focus
Answer: C

22. A purchaser has a right to resell nonconforming goods and deduct reasonable sales costs from proceeds if which of the following is/are true?
I. If the purchaser has paid for the goods and owns them
II. If the purchaser has rejected the goods and the supplier has not responded in a reasonable time
III. If the purchaser has accepted the goods and then found them in conformance
A. III only
B. I and II only
C. II and III only
D. I, II, and III
Answer: B

23. In order for MRP II and JIT to function effectively, a warehouse needs to become a dynamic, functional part of the manufacturing process. This necessitates that warehouse management software include which of the following?
I. Receiving
II. Stock locations
III. Order picking
IV. Price variances
A. I and II only
B. III and IV only
C. I, II, and III only
D. I, II, III, and IV
Answer: C

24. All of the following are reasons for a purchaser to conduct negotiations EXCEPT
A. to realize benefits for both parties
B. to emerge the winner in a transaction
C. to reduce the later possibility of misunderstanding
D. to revise a product's specifications
Answer: B

25. Of the following, the PRIMARY reason for accurate documentation of negotiations is to
A. satisfy legal requirements
B. remind the participants of the details
C. gain approval from management
D. enhance supplier relationships
Answer: B

26. Which of the following is the BEST definition of electronic data interchange (EDI)?
A. The exchange of data via computers
B. The computer-to-computer exchange of business documentation
C. The processing of purchasing information in a local area network (LAN)
D. The client-to-server exchange of purchasing documentation in standard electronic format
Answer: B

27. Which of the following statements BEST defines "cost of quality"?
A. The combined cost to maintain all company quality control functions
B. The total cost of rejects plus returns and repairs
C. The total cost of all errors plus the cost of preventing them
D. A theoretical number that represents what a company is willing to spend to produce high-quality products
Answer: C

28. All of the following are key benchmarking steps EXCEPT
A. goal setting
B. process planning
C. implementing results
D. achieving consensus
Answer: D

29. In most purchasing departments, major buying functions include all of the following EXCEPT
A. seeking engineering and product improvement
B. conducting material and compound analysis
C. protecting raw material prices in a declining market
D. conducting commodity trend analyses
Answer: C

30. The definition of a "Learning Organization" is an organization that is
A. dedicated to the solution of business problems
B. continually expanding its capacity to create its future
C. an example of innovation in an open society
D. focused on team building as the basis for learning
Answer: B

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