ISM CORE Actual Questions

Rebates are considered part of cost containment. Cost containment involves strategies to control or reduce expenses to stay within a budget. Rebates help in this by providing a financial return on purchases, which can be used to offset costs.

Cost avoidance: Focuses on preventing costs from occurring in the first place.

Cost reduction: Involves lowering existing costs.

Cost mitigation: Refers to reducing the severity of costs or financial impacts.

Cost containment: Encompasses methods to manage and control costs, including utilizing rebates.

Thus, rebates fall under cost containment.

References:

Financial management principles on cost containment.

Procurement strategies on leveraging rebates.

Identify Root Cause: Determine that raw materials are the cause of the quality issues.

Request Supplier Samples: Requiring suppliers to submit samples allows the firm to pinpoint whether the issue lies with the raw materials being provided.

Evaluate Samples: Testing these samples against standards ensures that only compliant materials are accepted.

Address Non-compliance: If any samples do not meet standards, work with suppliers to improve quality or find new suppliers if necessary.

References

Monczka, R. M., Handfield, R. B., Giunipero, L. C., & Patterson, J. L. (2016). Purchasing and Supply Chain Management. Cengage Learning.

Lysons, K., & Farrington, B. (2016). Procurement and Supply Chain Management. Pearson.

Sales Representative’s Promise: The sales representative from XYZ Company provided documentation that the product would meet or exceed ABC's specifications.

Express Warranty: An express warranty is created when a seller makes a promise or provides assurance that a product will meet certain standards or specifications.

Non-Conforming Goods: Upon inspection, the product did not meet the required specifications and could not be used for its intended purpose.

Buyer's Rights: Under the Uniform Commercial Code (UCC) and similar laws, the buyer has the right to return non-conforming goods and seek a full refund when an express warranty has been breached.

Conclusion: ABC is entitled to return the product and receive a full refund due to the breach of the express warranty.

References

UCC (Uniform Commercial Code). (n.d.). Article 2 - Sales.

ISM. (n.d.). Managing Warranties and Product Non-Conformance.

Definition of Certification: A certified supplier is one that has demonstrated the ability to consistently meet quality and performance standards, eliminating the need for incoming inspection.

Supplier Evaluation: DEF Corporation has undergone thorough evaluation and has consistently delivered products that meet the required specifications.

Quality Assurance: This status indicates a high level of trust in the supplier’s processes and quality assurance measures.

Benefits: Reducing or eliminating incoming inspections saves time and resources for the company.

References

Supplier Certification Programs

Quality Management Systems

Procurement and Supply Chain Management Literature