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ISM 630-008 Exam -

Free 630-008 Sample Questions:

1. When critical materials are available only from limited off-shore suppliers, purchasing's overall objective should be which of the following?
A. Maintaining good relations with the off-shore suppliers
B. Achieving uninterrupted support of production
C. Minimizing the cost of incoming supplies
D. Achieving economies in storage and distribution
Answer: B

2. As a general rule, the higher a manager's position in the organizational structure, the greater the demands on the manager's time for
A. supervisory tasks
B. administrative tasks
C. functional tasks
D. detail-related tasks
Answer: B

3. The step in the budgeting process involving the tracking of expenditures against budget estimates is known as
A. budget analysis
B. value analysis
C. variance analysis
D. cost analysis
Answer: C

4. Which of the following types of budgets is MOST often used by not-for-profit organizations?
A. Zero-based
B. Capital
C. Flexible
D. Program
Answer: D

5. Functional reviews of a purchasing department generally begin with which of the following?
A. Job analysis
B. Situational analysis
C. Budgetary review
D. Self-assessment
Answer: B

6. When hiring new buyers, many organizations prefer to employ persons who
A. have experience in multiple commodities
B. have completed formal training programs
C. possess substantial technical and operating competence
D. plan to begin postgraduate work within three years after hiring
Answer: C

7. In general, the orientation of new employees does NOT include
A. introducing the new person to the job and the organization
B. easing feelings of insecurity in the new employee
C. discussing characteristics of fellow employees
D. describing the organization's history, products, and operations
Answer: C

8. In 1972, the Equal Employment Opportunity Act expanded the coverage of Title VII of the Federal Civil Rights Act of 1964 to include
A. coverage to firms with 15 or more employees
B. organizations employing disabled workers
C. suppliers bidding on state and local government contracts
D. the prohibition of age-based discrimination
Answer: A

9. Using peer appraisals for employee evaluations is LEAST likely to be effective under which of the following circumstances?
A. In a competitive environment
B. When there are frequent reviews
C. When evaluating team performance
D. When the department deals with many suppliers
Answer: A

10. Which of the following would be MOST helpful in promoting purchasing personnel efficiency?
A. Setting performance standards for departmental staff
B. Setting performance standards for suppliers
C. Determining the percentage of overdue orders
D. Benchmarking the number of change orders issued
Answer: A

11. Which of the following is LEAST likely to be considered in a purchasing department evaluation?
A. Contributions to profitability
B. Quality
C. Inventory investment
D. Forms design
Answer: D

12. Which of the following postulates that managers can attain the greatest level of employee motivation by determining the most desirable outcomes?
A. Expectancy theory
B. Theory Z
C. Motivation-Hygiene theory
D. Scientific management
Answer: A

13. A purchasing manager for a dental products manufacturer implements a policy to resolve quality problems with suppliers by inserting penalty clauses within purchase orders. Whenever a supplier fails to deliver 100% defect-free parts, the penalty clause is put into effect, whereby accounts payable is instructed to withhold 30% of the invoiced amount. If the supplier corrects the problem and returns the parts without defects, the withheld amount is reduced to 10%, to cover the additional inspection costs and administration. The organization legal department learns of the penalty clause policy and advises against it. Which of the following is the BEST course of action in this situation?
A. Omit the penalty clause and, instead, work with suppliers to develop problem solving and continuous improvement efforts
B. Omit the penalty clause and, instead, find suppliers who are willing to invest in e-commerce Application Service Providers
C. Track all rejects and tie the rejection rate percentage directly to the penalty clause, so as to be more specific and contingent upon the exact number of rejects
D. Use the penalty clause policy as designed by the purchasing manager
Answer: A

14. When purchasing responsibility is assigned by project, purchasers must
A. be product specialists
B. be versatile in switching to different product markets
C. have technical backgrounds
D. have many years of professional experience
Answer: B

15. Smith is a purchasing manager at a telecommunications company. She heads a task force formed to respond to charges by a government agency about alleged illegal purchasing practices by her firm. Upon investigation, the task force is convinced that the allegations are unfounded. As head of the task force, Smith should offer to management the opportunity to
A. present the findings to the government agency
B. inform the press about the task force's findings
C. develop an ad to explain the company's viewpoint
D. initiate a libel suit against the government agency
Answer: A

16. A department supervisor informs a group of buyers that they are to receive training on a new purchasing system. The senior buyer feels that she should be exempt from such training and tells this to the supervisor. Several other buyers feel that if the senior buyer is exempt from the training, they too should be exempt. The MOST practical solution for the department supervisor to follow is to
A. inform the senior buyer that she is to take the training and that there will be no further discussion
B. inform the senior buyer that everyone including himself will receive training and that there are no exceptions
C. inform the senior buyer that her actions represent insubordination and that future complaints shall not be tolerated
D. exclude the senior buyer from the training, but inform the others of the schedule, and of the expectation that they attend
Answer: B

17. Top management whose primary current concern is a firm's "balance sheet" appearance would look for purchasing and supply management to contribute to which of the following?
A. Inventory reduction
B. Delivery improvement
C. Gross margin improvement
D. Cost-per-transaction reduction
Answer: A

18. A purchasing manager has an employee who exhibits a serious alcohol abuse problem. Of the following, the BEST course of action for the manager to take is to
A. talk with the employee's co-workers to verify the nature of the problem
B. notify the organization's security force in case the employee seems likely to lose control
C. send the employee to Alcoholics Anonymous
D. inform the employee about the Employee Assistance Program
Answer: D

19. Which two of the following criteria would be MOST important to consider in selecting a sponsor for the initial job training of a new employee?
I. Teaching ability
II. Job experience
III. Length of service
IV. Salary grade level
A. I and II
B. I and IV
C. II and III
D. III and IV
Answer: A

20. A buyer tends to ignore outstanding purchase orders. This has resulted in numerous complaints from the shop floor asking the buyer to determine order status. Which of the following should the purchasing manager do in this situation?
A. Warn the buyer that he will be dismissed if he does not improve his performance
B. Direct the buyer to set up a system for follow-up
C. Computerize the purchasing department operations
D. Allow shop floor personnel to make their own purchases
Answer: B

21. You are in charge of a small purchasing department that has recently been the subject of a work-flow study. The study proposed certain changes in duties and working relationships in order to increase productivity and efficiency. As a FIRST step before implementing the proposed changes, you should do which of the following in order to minimize possible resentment and disruption?
A. Issue a detailed memorandum to the staff, discussing the problems of work flow, and announce a specific date for implementation
B. Call a meeting of your key subordinates to discuss the problems of work flow and announce a schedule for implementation
C. Call a meeting of your staff to discuss the problems of work flow and obtain a consensus on a schedule for implementation
D. Write a detailed memorandum to your superior discussing the problems of work flow and request a schedule for implementation
Answer: C

22. Of the following, the MOST important function of strategic planning is
A. strategic marketing and competitive analysis
B. organizational purpose and direction
C. staff and line organizational structuring
D. cash-flow management and financial analysis
Answer: B

23. Which of the following would be the MOST appropriate way for a purchasing manager to prepare for a Contractor Purchasing System Review (CPSR) by the federal government?
A. Ensuring that all suppliers are delivering quality products
B. Ensuring that all suppliers are delivering products on time
C. Reviewing the operations of the MRP system
D. Improving the documentation of purchasing files
Answer: D

24. Purchasing Manager Smith has been given an important task by the vice president. Since Smith's schedule is very full, she needs to assign the task to a subordinate. Smith's assistant, Jones, is a buyer who has been with the firm for several years and has always done a good job. Smith, however, is doubtful that Jones can handle this particular assignment, yet is hesitant to assign the task to another buyer for fear of offending Jones. Which of the following is the LEAST appropriate course of action for Smith to take?
A. Give Jones the assignment and accept responsibility for the results
B. Give Jones the assignment, but assign an assistant
C. Assign the task to a more capable buyer
D. Tell the vice president the task cannot be done
Answer: D

25. Which two of the following BEST illustrate the concept of self-training?
I. Attending a management development course
II. Enrolling in a university course
III. Accompanying a senior buyer on a plant visit
IV. Reading select business periodicals
A. I and II
B. I and III
C. II and IV
D. III and IV
Answer: C

26. A purchasing manager is in charge of a group of 20 buyers, with commodity responsibilities ranging from spare parts and office supplies to capital equipment and service contracts. The purchasing manager's time is mostly spent reviewing bid summaries, countersigning purchase orders, and resolving conflicts. Based on the information provided, which of the following appears to be the LEAST important problem within this department?
A. Delegation of authority
B. Delegation of responsibility
C. Span of control
D. Chain of command
Answer: D

27. Which of the following statements about amortization of capital costs is NOT true?
A. It is a method of discharging accounts payable.
B. It is a process of transferring costs from asset accounts to expense accounts.
C. It is a method of handling prepaid tooling costs.
D. It provides for gradual extinction of a future obligation in advance of maturity.
Answer: A

28. Which of the following is/are LEAST likely to be the focus of a financial audit of the purchasing function?
A. Adherence to policies and procedures
B. Buying authority
C. Performance with respect to supplier selection
D. Employee appraisal and compensation
Answer: D

29. Which of the following would be LEAST likely to be a substantive output of strategic planning?
A. The establishment of new product lines
B. The definition of research and development programs
C. The development of new markets
D. The implementation of a comprehensive MBO program
Answer: D

30. Which of the following policies/procedures is likely to have the LEAST effect on purchasing performance?
A. Any purchase over the buyer's limit must be approved by the department manager.
B. Purchasers are expected to negotiate for cash discounts.
C. Local suppliers will be given preference.
D. Requests for quotations will be sent only to suppliers on the approved supplier list.
Answer: A

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