Question 1

A procurement specialist reviews a report from a financial agency about a potential supplier. The report reveals that the supplier had a lien against some of its assets a few years ago, that the supplier has had several delayed payments over the last few months, and that the supplier's debt-to-equity ratio equals 2.0. Which of the following is the BEST course of action for the procurement specialist to take?

Options :

A : Inform senior management of the potential supplier-s financial status

B : Exclude the supplier from the bidding process

C : Inform current suppliers about the potential supplier-s financial status

D : Use the information in considering whether to qualify the supplier

Answer: D

Question 2

A supply manager Is conducting negotiations with a supplier. The supplier states that it cannot offer a lower price because the product under negotiation is covered by a government contract. In this situation, the supply manager should

Options :

A : offer to reduce the order quantity

B : negotiate the other terms and conditions, and return to the issue of price at a later time

C : conclude that this is in fact the best price that the supplier can legally offer

D : require the supplier to provide specifics on the government contract restrictions

Answer: D

Question 3

As interest rates rise, what will MOST likely be the effect on supply?

Options :

A : Suppliers will lock in raw material prices in anticipation of price increases.

B : Suppliers will delay shipments by selling to other customers.

C : Bond prices will rise, forcing suppliers to pay more for capital investments.

D : The risk of supplier stock outs will increase due to higher costs of holding inventory.

Answer: D

Question 4

Which of the following is the MOST important reason for supply management to share company business plans with current and prospective suppliers?

Options :

A : To set the stage for supplier concessions and discounts

B : To remind suppliers how important supply management is to their success

C : To show suppliers the benefits of investing time and resources into the relationship

D : To prevent any problems or misunderstandings in the buyer/supplier relationship

Answer: C

Question 5

At what point in the development of a category strategy should spend review occur?

Options :

A : After key internal stakeholders agree on sourcing priorities

B : After development of the sourcing team

C : After presentation of the strategy to senior management

D : During validation of the savings or contribution

Answer: D