Unlock hundreds more features
Save your Quiz to the Dashboard
View and Export Results
Use AI to Create Quizzes and Analyse Results

OR
Sign inSign in with Facebook
Sign inSign in with Google
Quizzes > Business & Finance

CPSM Practice Exam: Test Your Supply Management Skills

Quick, free supply management practice test with instant results and realistic CPSM exam questions.

Editorial: Review CompletedCreated By: Elliot AronUpdated Aug 26, 2025
Difficulty: Moderate
2-5mins
Learning OutcomesCheat Sheet
Paper art collage of supply chain icons certificate checklist boxes arrows on sky blue background free CPSM quiz

This CPSM practice exam helps you check your readiness across sourcing, contracts, risk, and category management. Answer 30 exam-style questions in about 20 minutes and get instant feedback to spot study gaps. For related practice, see our operations management quiz, explore a focused supply management practice test, or build breadth with a marketing management quiz.

What does CPSM stand for?
Certified Product Supply Marketer
Certified Professional in Supply Management
Chartered Professional of Stock Management
Certified Procurement and Sourcing Manager
CPSM stands for Certified Professional in Supply Management, a credential offered by the Institute for Supply Management to validate mastery of supply management. It covers areas like strategic sourcing, contract management, and supplier relationship management. Achieving CPSM demonstrates professional expertise and commitment to the field. .
Which process involves assessing and improving supplier performance over time?
Demand Planning
Inventory Optimization
Spend Analysis
Supplier Performance Management
Supplier Performance Management is the systematic process of monitoring, measuring, and improving supplier performance based on key metrics. It ensures suppliers meet quality, delivery, and cost targets. Effective management drives continuous improvement and mitigates risks. .
In procurement, what does lead time refer to?
The time between placing an order and receiving the goods
The duration of contract negotiations
The period of supplier evaluation
The interval between invoice and payment
Lead time is the interval from order placement to delivery receipt, critical for inventory and production planning. Accurate lead time forecasting helps avoid stockouts and overstock situations. It varies by supplier capability and logistics. .
Which document is typically used to invite suppliers to submit detailed proposals for complex requirements?
Statement of Work (SOW)
Request for Proposal (RFP)
Purchase Order (PO)
Request for Quotation (RFQ)
An RFP is used when requirements are complex and buyers seek detailed technical solutions, terms, and pricing from suppliers. It solicits comprehensive proposals including methodology, staffing, and cost estimates. RFPs allow comparison across multiple dimensions beyond price. .
What is the primary goal of procurement in supply management?
Minimize supplier count regardless of cost
Maximize order frequency
Acquire goods and services at the best total cost of ownership
Eliminate all procurement risks
Procurement aims to secure the right goods or services at optimal cost, quality, and delivery terms while managing risks. Total cost of ownership includes purchase price, logistics, maintenance, and disposal costs. Focusing on value over price alone drives strategic benefits. .
Which term best describes a formal document that commits a buyer to purchase specified goods from a supplier?
Quotation
Purchase Order
Invoice
Goods Receipt Note
A Purchase Order is the buyer's formal offer to a supplier, outlining items, quantities, prices, and delivery terms. It becomes a binding contract upon supplier acceptance. POs help track commitments and facilitate accounting. .
What does the term 'reorder point' refer to in inventory management?
Order quantity determined by EOQ formula
Inventory level at which a new order should be placed
Maximum stock level allowed
Lead time plus safety stock
The reorder point is the inventory threshold that triggers replenishment to avoid stockouts. It accounts for lead time demand and safety stock. Proper calculation balances service levels with holding costs. .
What does Total Cost of Ownership (TCO) include beyond the purchase price?
Maintenance, transportation, storage, and disposal costs
Supplier marketing expenses
Sales team commissions
Only transportation costs
TCO encompasses all costs associated with the lifecycle of a product: acquisition, operation, maintenance, and end-of-life disposal. Considering TCO prevents hidden costs from undermining initial price savings. It supports more informed procurement decisions. .
Which matrix is used to classify suppliers based on risk and impact on the business?
Kraljic Matrix
BCG Matrix
SWOT Analysis
Porter's Five Forces
The Kraljic Matrix segments suppliers into strategic, bottleneck, leverage, and non-critical categories based on supply risk and profit impact. It guides sourcing strategy for each quadrant. Strategic items require collaboration, while leverage items focus on cost reduction. .
Which contract type fixes the price at the time of agreement, regardless of actual costs incurred?
Fixed Price Contract
Cost-Reimbursable Contract
Time and Materials Contract
Blanket Purchase Agreement
A Fixed Price Contract establishes a set price for deliverables, transferring cost risk to the supplier. It's suitable when requirements are clear and stable. Suppliers must manage costs to protect margins. .
Which forecasting technique uses past data trends and statistical models to predict future demand?
Market Research Surveys
Brainstorming
Time Series Analysis
Delphi Method
Time Series Analysis applies statistical methods to historical data to identify patterns and forecast future demand. Techniques include moving averages and exponential smoothing. Accurate forecasting reduces inventory costs and stockouts. .
What is the concept of economy of scale in procurement?
Higher volume always increases unit costs
Costs remain constant irrespective of volume
Unit costs decrease as volume increases
Cost savings only from supplier consolidation
Economies of scale occur when average costs per unit fall as production or purchase volumes increase, due to fixed cost distribution and supplier discounts. Buyers leverage larger orders for better pricing. Overordering risks obsolescence, so balance is key. .
Which activity is a key element of strategic sourcing?
Supplier segmentation and category analysis
Paying suppliers earlier than terms
Issuing purchase orders daily
Processing invoices manually
Strategic sourcing involves deep category analysis and segmenting suppliers by capabilities and risks. It aligns procurement activities with business goals, enabling tailored strategies per segment. This drives value beyond transactional purchasing. .
What does Continuous Replenishment mean in supply chain management?
Manufacturers produce in large batches only
Buyers place orders at fixed intervals regardless of demand
Buyers hold safety stock equal to lead time usage
Suppliers deliver stock based on real consumption data
Continuous Replenishment relies on actual consumption data to trigger supplier deliveries, reducing inventory and improving service levels. It fosters collaboration and data sharing across partners. Efficiency gains come from minimized stock and better demand visibility. .
Which U.S. law prohibits bribery of foreign officials by companies?
Sarbanes-Oxley Act
Sherman Antitrust Act
Dodd-Frank Act
Foreign Corrupt Practices Act
The Foreign Corrupt Practices Act (FCPA) prohibits U.S. entities from bribing foreign officials to obtain or retain business. It enforces anti-bribery provisions and accounting transparency requirements. Non-compliance can result in heavy fines and reputational damage. .
Which inventory valuation method assigns the cost of the most recently purchased items to cost of goods sold?
Weighted Average Cost
Specific Identification
Last In, First Out (LIFO)
First In, First Out (FIFO)
LIFO values ending inventory at older costs and assigns the latest purchase costs to COGS, which can lower taxable income during inflation. It's permitted under U.S. GAAP but not IFRS. LIFO can distort inventory valuation in times of price volatility. .
What is should-cost analysis in supplier negotiations?
Analyzing historical purchase orders only
Asking suppliers for their cost breakdown directly
Using market indices to set contract terms
Estimating the supplier's true production cost to negotiate price
Should-cost analysis breaks down materials, labor, overhead, and profit to estimate a supplier's true costs, providing leverage in negotiations. It uncovers inefficiencies and areas for cost reduction. Accurate models drive fair pricing discussions. .
What phenomenon describes demand variability amplification as it moves up the supply chain?
Just-in-Time
Bullwhip Effect
Price Gouging
Lean Manufacturing
The bullwhip effect refers to small fluctuations in consumer demand causing increasingly larger variances upstream in the supply chain. Causes include order batching, price promotions, and lead time delays. Mitigation requires information sharing and demand smoothing. .
What is supplier development?
Collaborative efforts to improve supplier capabilities and performance
Penalizing suppliers for late deliveries
Switching suppliers frequently to get better rates
Auditing supplier financial statements annually
Supplier development involves helping suppliers enhance processes, quality, and capacity to meet buyer requirements. It may include training, investments, and joint improvement projects. Strong programs lead to innovation and long-term value. .
Which ISO standard focuses specifically on quality management systems?
ISO 45001
ISO 14001
ISO 27001
ISO 9001
ISO 9001 sets out criteria for a quality management system and is the only standard in the ISO 9000 family to which organizations can be certified. It emphasizes customer focus, leadership, and continual improvement. Certification signals commitment to quality. .
What is the primary objective of spend analysis?
To negotiate payment terms only
To process invoices faster
To track supplier delivery performance
To classify and analyze spending patterns for strategic sourcing
Spend analysis compiles, cleanses, and categorizes expenditure data to uncover savings opportunities, reduce maverick spending, and inform sourcing strategies. It drives cost reduction and risk management decisions. .
In international logistics, what does demurrage refer to?
Penalty for late purchase orders
Fee for expedited shipping
Charges for cargo detention beyond the allowed free time
Charge for temperature-controlled goods
Demurrage charges apply when cargo stays at a port or container terminal beyond the agreed free time. They compensate the carrier or terminal for equipment and space usage. Managing demurrage reduces supply chain costs and delays. .
How do digital twins support risk management in supply chains?
By increasing purchase order frequency
By automating invoice payments
By replacing physical warehouses entirely
By simulating disruptions and testing mitigation scenarios in a virtual model
Digital twins create virtual replicas of supply chain networks to simulate disruptions, assess impacts, and evaluate mitigation strategies before real-world implementation. This enhances preparedness and decision-making. They integrate real-time data for dynamic risk assessments. .
Which theory underpins network governance in multi-tier supply chains by explaining transaction costs and governance structures?
Transaction Cost Economics
Maslow's Hierarchy of Needs
Resource-Based View
Game Theory
Transaction Cost Economics analyzes the costs of coordinating transactions and suggests governance structures (markets, hierarchies, hybrids) to minimize these costs. It guides decisions on outsourcing, integration, and contracts. The theory informs supply chain governance design. .
What impact does a reverse auction typically have on price discovery during supplier selection?
Prevents suppliers from adjusting bids once submitted
Guarantees premium pricing for quality suppliers
Enables real-time competitive bidding, often reducing final prices
Increases administrative effort without affecting prices
Reverse auctions allow suppliers to bid lower in real time, intensifying competition and driving down prices. Buyers gain transparency on cost drivers and market rates. However, they must balance price focus with quality and service considerations. .
0
{"name":"What does CPSM stand for?", "url":"https://www.quiz-maker.com/QPREVIEW","txt":"What does CPSM stand for?, Which process involves assessing and improving supplier performance over time?, In procurement, what does lead time refer to?","img":"https://www.quiz-maker.com/3012/images/ogquiz.png"}

Study Outcomes

  1. Understand Strategic Sourcing -

    Learn how to identify and prioritize sourcing strategies and align them with organizational goals for effective supply chain management.

  2. Apply Contract Management Techniques -

    Master key contract negotiation and administration practices to ensure compliance, cost control, and value delivery.

  3. Analyze Supplier Performance -

    Interpret performance metrics and scorecards to evaluate supplier reliability and drive continuous improvement.

  4. Evaluate Risk Mitigation Strategies -

    Assess potential supply chain risks and apply proactive measures to minimize disruptions and safeguard operations.

  5. Identify Knowledge Gaps -

    Pinpoint critical areas for further study by reviewing quiz results and understanding the CPSM exam question formats.

  6. Build Exam-Ready Confidence -

    Gain familiarity with CPSM certification quiz mechanics, boosting your readiness and confidence for the actual CPSM practice test.

Cheat Sheet

  1. Strategic Sourcing Lifecycle -

    Familiarize yourself with the five stages of strategic sourcing - category profiling, market research, development, implementation, and ongoing performance monitoring - to ensure consistent value delivery (Institute for Supply Management). Use the mnemonic "P-R-I-M-M" (Profile, Research, Innovate, Mobilize, Monitor) to keep these steps top of mind. This structured approach drives cost savings and supplier alignment across the organization.

  2. Total Cost of Ownership (TCO) Analysis -

    TCO goes beyond purchase price to include acquisition costs, operating expenses, maintenance, and disposal fees (Harvard Business Review). Use the formula TCO = Acquisition + Operating + End-of-Life to compare supplier bids on a true cost basis. Incorporating hidden costs like training or shipping helps you make better-informed sourcing decisions.

  3. Contract Management Essentials -

    Master the five core elements of a valid contract - offer, acceptance, consideration, capacity, and legality (American Bar Association) - to safeguard your agreements. Remember the mnemonic "OACL²" for Offer, Acceptance, Consideration, Capacity, Legality, and Compliance. Solid contract foundations reduce risk, prevent disputes, and ensure enforceability.

  4. Supplier Performance Evaluation -

    Develop a supplier scorecard focusing on key metrics like on-time delivery, quality defect rate, cost variance, and responsiveness (APICS). Use a weighted scoring system to objectively rank suppliers and drive continuous improvement. Regular reviews foster collaboration and early issue resolution, boosting overall supply chain resilience.

  5. Supply Chain Risk Management -

    Implement a risk framework aligned with ISO 31000: identify potential disruptions, assess likelihood and impact, define mitigation actions, and continuously monitor outcomes. Leverage FMEA (Failure Mode and Effects Analysis) to quantify risk severity, occurrence, and detection. Proactive risk management helps you anticipate challenges and maintain supply continuity.

Make a Quiz (FREE) Copy & Edit This Quiz Create a Quiz with AI

Marketing & Management Quizzes

Powered by: Quiz Maker