Online Access Free CORe Practice Test

DEF, Inc. is a small manufacturing firm. DEF enters into a three-year contract for raw materials, with payment terms of net 30. On one of the initial deliveries, a mistake by DEF results in failure to pay for three months. In return, the supplier puts DEF on credit hold. As the materials are critical to manufacturing operations, DEF pre-pays for future orders.
After several months of pre-payments, the firm issues an order with payment net 30, but the supplier refuses to ship goods under these terms. DEF's supply manager believes the firm has made a good-faith effort to address the supplier's concerns, and now wants to enforce the original contract terms. Which of the following is the BEST way for the supply manager to resolve this situation?

• A.Terminate the contract, as the supplier is breaching the terms and conditions
• B.Escalate the issue to the executive level with the supplier indicating that all future orders must comply with the original contract
• C.Negotiate a reasonable compromise with the supplier, including plans for returning to net 30
• D.Make one last pre-payment on credit hold, then notify the supplier of the return to net 30

MNO Inc. is a U.S.-based manufacturing company that imports sub-assemblies from Asia and incorporates them into several products. The firm orders in large quantities to obtain the lowest price per unit, and then pulls the items as required to produce finished goods. MNO wishes to improve its cash flow and seeks ways to reduce the impact of import duties. Which of the following Is the BEST approach for the company to use?

• A.Review tariff classifications for potential savings opportunities
• B.Place goods in a bonded warehouse and delay duty payment
• C.Apply for duty refunds when goods are exported
• D.Obtain a temporary import bond

A company buys 200 metric tons of ethylene per month. The firm has a one-year agreement with Supplier X to buy the ethylene at $1000 per metric ton. After 3 months, the market price drops to $900 per metric ton, and the firm renegotiates the price to $890 per metric ton for the remaining contract term.
What savings should be reported?

• A.$264,000 cost reduction and $240,000 cost avoidance
• B.$18,000 cost reduction and $180,000 cost avoidance
• C.$24,000 cost reduction and $240,000 cost avoidance
• D.$198,000 cost reduction and $198,000 cost avoidance

A supplier is awarded a contract to network all of a buying company's production and forecasting applications.
The supplier completes the work on time. However, follow-up tests by the buying organization's IT department determine that performance does not meet contract specifications. Given this situation, which of the following is the BEST course of action for the buying firm to take?

• A.Have IT attempt to repair the network so it works correctly
• B.Have another supplier review the network to estimate the cost of repairs
• C.Accept the network and sign a maintenance contract to fix the problems
• D.Review the contract warranty terms and remedies

A university is evaluating its student registration software. The current system, purchased from Supplier A, has been in place for five years and works well, but may be outdated. A new system provided by Supplier B includes an online chat feature, which Supplier A's system currently does not have. While the costs for the two systems are essentially the same, Supplier B's system has an additional one-time implementation cost of
$250,000. Supplier A informs the university It will provide its own online chat option for a one-time fee of
$50,000.
The university calculates that switching to any new platform will involve migration costs. In this situation, the BEST course of action for the university is to

• A.request Supplier A provide a single source justification, and implement the change by paying $50,000
• B.continue with Supplier A, as the migration costs will be too high
• C.conduct an RFx stating new requirements, and add the migration costs to the evaluation criteria
• D.negotiate with Supplier A to have the new platform implemented under $50,000