INTE ISM Supply Management Integration Free Practice Exam Questions (2025 Updated)

FOB Origin, Freight Collect ensures that the supplier holds liability for damaged products and is responsible for claims with the shipper, while the buying firm pays the shipping costs directly to the carrier. This arrangement clearly delineates responsibilities and liabilities as required.

GHI, Inc. would benefit most from compliance with the Customs-Trade Partnership Against Terrorism (C-TPAT) (Option D). This initiative helps reduce the administrative burden of cargo inspections by establishing security guidelines and facilitating faster customs processing for participating companies. By aligning with C-TPAT, GHI can ensure smoother import procedures, even when dealing with countries outside of specific trading blocs. Reference: U.S. Customs and Border Protection information on C-TPAT.

Highlighting the risks of excess inventory and financial obligations due to optimistic forecasts is a compelling argument. It addresses financial impacts and supply chain efficiency, which are critical for decision-making in product launches. By presenting potential negative outcomes, the supply manager can influence the team to adopt more realistic projections. This approach is backed by supply chain risk management literature that emphasizes forecasting accuracy and inventory control.

Conducting an economic and market analysis allows the retailer to identify underlying issues affecting sales. This approach provides insights into consumer behavior, competitive positioning, and industry trends, enabling the company to adapt strategically. It addresses root causes rather than symptoms, making it a more sustainable solution. References include case studies and industry reports on retail market analysis and strategic adjustment practices.

A centralized warehousing strategy minimizes the repetition of inventory across locations, optimizing resource utilization and technology use. It facilitates hiring qualified personnel and streamlining operations, which aligns with the firm's goals of efficiency and effectiveness in warehousing.

Analyzing transportation modes, classification, and cost-influencing factors allows the supply manager to identify opportunities for cost savings beyond published rates. This approach leverages supply management skills to optimize logistics strategies, demonstrating value in cost reduction. References: Logistics management theories advocate for comprehensive cost analysis to enhance decision-making and operational efficiency.

Pareto analysis involves sorting data to identify the most significant factors—in this case, supplier performance on on-time delivery. This analysis helps prioritize supplier management efforts based on their impact, consistent with the 80/20 rule.

Market intelligence involves gathering and analyzing information about the industry, suppliers, and market trends to ensure a steady supply of goods. It helps companies make informed decisions about commodities and supplier capabilities. This process supports long-term strategic planning and cost management, ensuring the business remains competitive. Key references include supply chain management literature emphasizing the role of market intelligence in proactive procurement strategies.

The absolute value of the forecast error is calculated as the average of the absolute differences between forecasted and actual demand. Calculating each period: |30-31| + |25-31| + |28-26| + |25-20| = 1 + 6 + 2 + 5 = 14. Therefore, the absolute value of the forecast error is 14. Reference: Demand forecasting and error measurement techniques.

The first course of action should be to assess internal process flow diagrams and those of the subcontractors to identify areas where the risk of loss can occur. Understanding the processes helps pinpoint vulnerabilities and implement targeted security measures. This approach ensures that the root causes of theft are addressed before investing in technology solutions. Reference: Risk management and loss prevention strategies in logistics.

The maximum safety stock is calculated using the formula: (Maximum lead time - Average lead time) x Maximum daily usage. This results in (8 - 3) x 6,000 = 30,000 units. Adding the average usage during average lead time (3 days x 4,000 units = 12,000 units) gives a total of 36,000 units for safety stock. References: Safety stock calculations help in managing inventory to prevent stockouts during lead time variations.

Risk identification primarily occurs during the planning phase of a project. This stage involves assessing potential risks that could impact project objectives, allowing for the development of mitigation strategies and contingency plans.

The sales force composite method is participatory, involving input from the sales team who provide forecasts based on their knowledge of customer needs and market trends. This method leverages the insights of those directly engaged with customers, enhancing the accuracy of demand forecasts.

The number of aircraft anticipated to be built is most likely to be protected by the NDA. This information is sensitive as it relates directly to production forecasts and potential market demand, which can impact competitive positioning and business strategy.

The bullwhip effect describes the phenomenon where order variability increases as it moves up the supply chain. In this case, XYZ Company's unpredictable order patterns cause Supplier A to maintain higher safety stock. This is due to demand fluctuations amplified by XYZ's overordering to compensate for stockouts, leading to inefficiencies and increased costs throughout the supply chain.

The supplier should proactively identify components expected to become obsolete and purchase the necessary parts before they are needed. This ensures compliance with the service agreement and supports the continued operation of the buyer’s equipment, minimizing downtime and operational disruption. Reference: Supplier agreements and obsolescence management.

Standardization ensures that products meet uniform quality standards, reducing variability and enhancing customer satisfaction. This advantage is vital in maintaining brand reputation and streamlining production processes.

Causal modeling is typically the most useful method for identifying complex market conditions affecting product or service demand factors. This method examines the relationships between variables, allowing businesses to understand how different factors influence demand. It provides deeper insights into cause-and-effect relationships than methods like time series analysis or moving averages. Reference: Advanced forecasting techniques in supply chain management.

To align procurement with the organization's strategy, the supply manager should first review existing procurement practices to determine their strategic or tactical nature. This assessment provides insight into how procurement supports overall business goals and identifies areas for alignment and improvement, ensuring procurement adds maximum value.