Question 1

What can cause poor payables processing in an organization?

Accepted Answer

In-house cash flow shortages

Answer

Material shortages

Answer

Equipment or personnel failure

Answer

Failure to account for country risk

Question 2

If a fleet of delivery trucks is experiencing relatively poor maintenance, this is a red flag for what type of supply risk?

Accepted Answer

Transportation lead time

Answer

Subcontractor availability

Answer

Labor disruption

Answer

Poor payables processing

Question 3

The best case for a risk scenario is that a supply disruption will not occur and the subsidiary will spend US$100,000 in prevention costs for the period. The worst case is that a supply disruption will occur and will cost US$2 million in lost revenues and remediation costs. The worst case has a 20% probability. If these are the only two options being considered, what is the net expected monetary value (EMV) for this scenario?

Accepted Answer

–US$480,000

Answer

–US$320,000

Answer

–US$80,000

Answer

–US$400,000

Question 4

What can be said of a week when $90,000 worth of garage doors were custom-built and shipped but there were $100,000 worth of customer garage door orders?

Accepted Answer

The customer service ratio was 90%.

Answer

There was a 10% stockout frequency.

Answer

There was a 90% orders-shipped-complete rate.

Answer

There is a 10-day lead time for this product.

Question 5

A proven method of estimating the amount of a risk budget to devote to a particular risk response is:

Accepted Answer

multiplying the expected cost of the risk by its likelihood.

Answer

subtracting the cost of the possible risk from the cost of business and dividing that by the likelihood of its occurrence.

Answer

adding accumulated risk associated with all strategic suppliers.

Answer

subtracting the cost of the possible risk from the cost of business.

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