Free Managing Supply Chain Risk Exam L5M2 Exam Practice Test

Juan is a Spanish business owner who imports several parts from Japan. Juan's business operates in Euros and the parts that he buys from Japan can often take a long time to arrive, this means that the price of the items sometimes fluctuates due to the exchange rate. Which of the following would be the best option for Juan?

• have the supplier quote in their own currency
• have the supplier quote in Juan's currency
• have the supplier match geographical profiles of customer sales with supplier purchases
• terminate the contract with the foreign supplier

Standard Deviation is the measure of the variation between the values in a range of data. From which of the following could you calculate Standard Deviation?

• normal distribution
• binomial distribution
• poisson distribution
• value at risk

Risk Management is a process with several steps. Which of the following is the last step of the cycle?

• identify risks
• treat
• monitor and review
• communicate and consult

Which of the following statements are true about risk management? Select TWO.

• the goal of risk management is to reduce risks to 0
• risk management is a continuous process
• risk management is an activity that is conducted by a business once a year
• risk management can help companies ensure the smooth and successful running of purchase and supply operations
• risk management is the process by which all risks are either treated or transferred

Rabbit Manufacturing operates several factories which create stuffed animals. As these stuffed animals are mainly bought for children, it is extremely important that the quality of the product is assured, and there are no dangerous or small parts which could become choking hazards. Which of the following are appraisal costs that the company should undertake in order to mitigate the risk of poor quality products entering the market?

• quality control inspections
• using a pro-active quality management system
• introduce a 0 defect approach
• staff training to ensure higher quality products are made

A financial instrument used by airlines to fix the price of fuel over a period of time is known commonly as a what?

• commodity
• swap
• exchange
• hedge

Which of the following form part of the Stakeholder Salience Model? Select TWO

• power
• legitimacy
• interest
• level
• attitude

Oliver is a procurement manager and he is trying to work out the likelihood that a supplier fails to deliver to the warehouse two days in a row. Which of the following methodologies should Oliver use?

• value at risk
• normal distribution
• binomial distribution
• Poisson Distribution

Which of the following is a method for approaching risks?

• tolerate
• translate
• transport
• take out

Kieran works in the manufacturing industry and his company have just implemented LEAN production processes. Will this increase or decrease the risks in relation to security of supply?

• increase security of supply risks as this is a tried and tested risk reducing process
• increase security of supply risks as there is less buffer stock held on site
• decrease security of supply risks as there will be increased efficiencies
• decrease security of supply risks as there is less buffer stock