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Question No. 1

A manufacturer has direct relationships with its tier 1 suppliers. Which of the following suppliercapabilities is a benefit to the manufacturer establishing a direct relationship with lower-tiersuppliers?

A. Provides smaller lot sizesB. Provides components with short lead timesC. Provides Just in Time deliveriesD. Provides information about impending shifts in the economy

Answer: D

Question No. 2

A company has recently implemented a vendor-managed inventory (VMI) program with several keysuppliers but quality issues are disrupting production. Which of the following actions would be moreeffective in dealing with these issues?

A. Tighten the quality tolerancesB. Implement a supplier certification programC. Implement quality inspection at the receiving dockD. Charge back to the supplier the rework and scrap costs

Answer: B

Question No. 3

A procurement manager wants to reduce costs on commodity items. Which of the following actions islikely to result in the greatest savings?

A. Conducting a supplier review and recertificationB. Renegotiating contracts with commodity suppliersC. Standardizing and eliminating redundant itemsD. Leveraging group purchasing power

Answer: D

Question No. 4

A firm has determined its cash-to-cash cycle time to be 60 days. The number of days' payablesoutstanding is 25, and number of days' sales outstanding is 35. If the firm reduces its inventory by20%, the new cash-to-cash cycle time, in days, will be approximately:

A. 48.B. 50.C. 60.D. 88.

Answer: B

Question No. 5

Which of the following manufacturing strategies would run the greatest risk of increasing obsolete

inventory costs?

A. Make-to-stockB. Assemble-to-orderC. Make-to-orderD. Engineer-to-order

Answer: A