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CPSM® Update

3 Questions, 3 Answers

November/December 2012, eSide Supply Management Vol. 5, No. 6

In every edition, eSide offers three sample questions — and answers — from the CPSM® and CSM™ Diagnostic Kit to help you prepare to pursue your CPSM® or CSM™ certification. First, answer all three questions; then, scroll down to the "3 Answers" section to find out how you fared.

3 Questions

Question #1: Both parties leave the room during a negotiation with the understanding that they will reconvene at a later time. This is known as a

(A) stalemate
(B) recess
(C) caucus
(D) conference

Question #2: The difference between the actual demand for a period and the forecasted demand for that period is known as the

(A) average forecast error
(B) mean absolute deviation
(C) mean squared error
(D) weighted moving average

Question #3: All of the following are key policy areas for which the supply management department has authority EXCEPT

(A) making procurement commitments
(B) changing specifications
(C) selecting suppliers
(D) negotiating price

3 Answers

Question #1: Option B is correct because a recess allows both parties time outside the negotiating area (to relax, discuss, etc.) while continuing the flow of negotiations by setting a time to reconvene. Stalemate (Option A) occurs when negotiations cease to be productive, and no further progress is anticipated. Caucus (Option C) usually describes one team's withdrawal to talk about issues, then come back to the table, while a conference (Option D) usually involves getting in touch with others in one's organization, perhaps for technical assistance or for additional authority.

References: CPSM® and CSM™ Study Guide, 1st Edition (Book 1 — Foundation of Supply Management), page 31; ISM Professional Series (Book 1 — Foundation of Supply Management), page 180; The Supply Management Handbook (7th Edition), page 505.

Question #2: Option A is correct because the average forecast error equals the actual demand minus forecast demand. Mean absolute deviation (Option B) is an average of the absolute values over a given number of time periods. Mean squared error (Option C) is an average of squared errors, which prevents positive and negative errors from canceling each other out and amplifies the effect of large errors (particularly useful when such large errors can be costly or damaging). Weighted moving average (Option D) expands moving average (sum of demand for past n period divided by n) by assigning weights to each past demand period to emphasize certain periods.

References: ISM Professional Series (Book 2 — Effective Supply Management Performance), pages 149-150,168-171

Question #3: Option B is correct because specifications are typically the responsibility of engineering or product design, though supply management may have input into specifications, particularly as they affect sourcing. Procurement commitments (Option A), supplier selection (Option B) and price negotiations (Option D) are usually defined as key functions of supply management.

References: CPSM® and CSM™ Study Guide, 1st Edition (Book 3 — Leadership in Supply Management), pages 37-41

For more information on ISM's professional credentials, visit the Institute's website.

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