ISM Updated CORE Exam Questions and Answers by asees

The buyer has identified an opportunity to reduce costs through competitive bidding but the current statement of work (SOW) is incomplete.

Gather information on the service and prepare a new statement of work: This could be effective but may not leverage the expertise of stakeholders.

Send an email to stakeholders asking them to review and update the current statement of work: This may not ensure thorough and coordinated input.

Contact the stakeholders and coordinate the improvement of the existing statement of work: This is the best course of action as it ensures a collaborative approach, leveraging the knowledge and expertise of all relevant parties to create a comprehensive and accurate SOW.

Send an email to stakeholders and request a new statement of work: Similar to option B, this may not ensure a coordinated effort.

Therefore, the best course of action is to contact the stakeholders and coordinate the improvement of the existing statement of work.

References:

Project management best practices on developing statements of work.

Procurement strategy literature on stakeholder engagement.

An audit committee is primarily responsible for overseeing the organization's financial reporting and internal control processes. Their main focus areas include ensuring compliance with legal and regulatory requirements, the effectiveness of internal controls, and the accuracy of financial reporting.

Paperwork needed to remain compliant with regulations: While important, this is more operational and administrative in nature.

Whether policy changes will optimize profits: This falls under strategic decision-making, which is typically outside the primary scope of an audit committee.

The existence of appropriate internal controls: This is a critical responsibility of the audit committee. They must ensure that there are adequate internal controls to prevent fraud, errors, and ensure accurate financial reporting.

Forecasted sales and revenues: This is more related to financial planning and analysis, not the direct focus of the audit committee.

Thus, the most appropriate for review by an audit committee is the existence of appropriate internal controls.

References:

Institute of Internal Auditors (IIA) standards on audit committee responsibilities.

Corporate governance literature on the role of audit committees.

When a supplier requests that the contract be based on its local currency, the first course of action for the supply manager is to assess the potential financial implications of this request. Exchange rate fluctuations can significantly impact the cost of goods and services over time. By performing exchange rate due diligence with the help of a financial advisor, the supply manager can understand the risks and potential cost variations. This involves analyzing historical exchange rate trends, forecasting future movements, and considering hedging strategies to mitigate risk. The supply manager can then make an informed decision on how to proceed with the supplier's request. References:

Monczka, R. M., Handfield, R. B., Giunipero, L. C., & Patterson, J. L. (2015). Purchasing and Supply Chain Management. Cengage Learning.

Supply Chain Management Review articles on currency risk management

PQR, Inc.'s CEO has directed supply management to provide wing flap inventory at the lowest cost while meeting the goal of multinational market expansion. The options given are:

Option A suggests purchasing refurbished parts from a non-certified repair shop with an extended warranty. While this is the lowest cost option, using non-certified parts can compromise quality and regulatory compliance, which is critical in the aerospace industry.

Option B involves manufacturing the parts internally, which is the most expensive option at $11,000 per part.

Option D proposes purchasing materials from an outside manufacturer at $10,000 per part, which is still more expensive than repairing internally.

Option C, acquiring resale parts and repairing them internally, costs $9,000 per part. This option ensures the parts meet PQR's quality standards and regulatory requirements, as PQR can control the repair process. It balances cost efficiency and quality, making it the best course of action to meet the CEO's directive.

References:

Cost-benefit analysis in supply chain management.

Aerospace industry standards and regulations on part certification.