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ISM Supply Management Core Exam Sample Questions (Q105-Q110):

NEW QUESTION # 105
Which of the following measures can reduce multicollinearity in multiple regression? (Select all that apply.)

A. Remove the intercept
B. Decrease the sample size
C. Increase the sample size
D. Change the units of one of the independent variables
E. Remove one of the collinear variables

Answer: C,E

NEW QUESTION # 106
A supply management department is looking to standardize purchases across the entire organization and leverage spend with fewer suppliers. Which of the following will be MOST useful for determining historical baseline costs?

A. Box-Jenkins method
B. Kraljic matrix
C. Delphi method
D. Spend analysis

Answer: D

Explanation:
* Conduct Spend Analysis: Spend analysis involves the collection, cleansing, classification, and analysis of expenditure data to understand spending patterns.
* Identify Historical Costs: By analyzing past spending data, the supply management department can identify historical baseline costs for various categories.
* Leverage Data: This data can then be used to negotiate better terms with suppliers, streamline purchasing processes, and reduce costs.
* Standardization: Spend analysis helps in identifying opportunities for standardizing purchases, thus leveraging spend with fewer suppliers and achieving economies of scale.
References:
* CIPS: "Spend Analysis and Cost Reduction"
* ISM: "Spend Analysis: The Key to Strategic Sourcing"

NEW QUESTION # 107
A supply manager Is leading a team in developing a strategic sourcing strategy for the company's corporate-wide desktop and laptop computer procurement. Several business unit managers get into a heated debate over the relative Importance and exposure of desktop computers for their specific business units. Some units consider the desktop computer to be a low risk/low value commodity, while others consider them to be high risk/high value critical items. How should the supply manager proceed?

A. Divide the desktop computers into two groups: one high risk/high value, and the other low risk/low value
B. Tell the business unit managers to come to an agreement on the risk and value assessment of the computers
C. Develop a desktop computer sourcing strategy based on medium risk and medium value
D. Conduct a regression analysis to more accurately assess the risk and value of the desktop computers

Answer: A

Explanation:
In a situation where there is a disagreement among business units about the risk and value of desktop computers, the supply manager should consider the different perspectives and categorize the desktops accordingly. Dividing the desktop computers into two groups (high risk/high value and low risk/low value) accommodates the varying needs and assessments of different business units. This approach allows the sourcing strategy to be tailored to meet the specific requirements of each group, ensuring that both critical and non-critical needs are addressed appropriately.
References:
* Kraljic, P. (1983). Purchasing must become supply management. Harvard Business Review.
* CIPS (Chartered Institute of Procurement and Supply). (2021). Procurement and Supply Chain Management.

NEW QUESTION # 108
A supplier is awarded a contract to network all of a buying company's production and forecasting applications.
The supplier completes the work on time. However, follow-up tests by the buying organization's IT department determine that performance does not meet contract specifications. Given this situation, which of the following is the BEST course of action for the buying firm to take?

A. Have another supplier review the network to estimate the cost of repairs
B. Accept the network and sign a maintenance contract to fix the problems
C. Have IT attempt to repair the network so it works correctly
D. Review the contract warranty terms and remedies

Answer: D

NEW QUESTION # 109
A company that wants to add value to its operations should work with its suppliers on which of the following?

A. Lengthening payment terms
B. Monitoring material costs
C. Using continuous improvement
D. Increasing communication

Answer: C

NEW QUESTION # 110
......

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ISM Supply Management Core Exam Sample Questions (Q105-Q110):

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