A company wants to implement a strategy that maintains product neutrality and customization possibilities for as long as possible in its supply chain.
Which postponement strategy is most suitable for achieving this goal?
- A . Manufacturing postponement
- B . Logistics postponement
- C . Material flow postponement
- D . Information flow postponement
A
Explanation:
In the given scenario, the company wants to maintain product neutrality and customization possibilities for as long as possible. This aligns with the concept of manufacturing postponement, where a standard product is produced, but customization and personalization are delayed until customer requirements are confirmed or an order is placed. This strategy allows for flexibility in product design and customization while reducing the risk of producing unnecessary variations prematurely. [P-60]
Which of the following factors may influence plant performance within the supply chain network? (Select all that apply)
- A . Employee attitudes and mentality
- B . Plant structure and infrastructure
- C . Geographic location
- D . Standardization of operations
- E . Trade-offs between different performance metrics
A, B, C, E
Explanation:
Geographic location: Can influence plant performance based on its proximity to raw material sources or distribution centers.
Plant structure and infrastructure: Differences in structure and infrastructure can impact productivity. Employee attitudes and mentality: Cultural variations and employee behavior can significantly affect plant performance.
Trade-offs between different performance metrics: Organizations may have to balance cost efficiency with responsiveness, impacting performance. [P 46-47]
Which of the following methods help reduce price and currency fluctuations in a global supply chain? (Select all that apply)
- A . Currency choice
- B . Supply chain optimization
- C . Just-in-time inventory
- D . Currency options
A, D
Explanation:
There are five methods for reducing price and currency fluctuations in a global supply chain. Among these methods, the following two are mentioned:
Currency choice: Setting transaction pricing in the currency of the buyer to transfer foreign exchange risk to the customer.
Currency options: Buying contracts that give the organization the right to buy or sell currency at an agreed price within a specific time period, reducing the risk of unfavorable fluctuations.
The other options (B and C) are not mentioned as methods for reducing currency fluctuations in the text. [P-21]
An organization with a cost leadership strategy is considering choosing a supply partner.
What is the trade-off that this organization needs to consider?
- A . A trade-off between cost margins and compensation claims
- B . A trade-off between cost efficiency and responsiveness
- C . A trade-off between digital platforms and Lean processes
- D . A trade-off between robotics and batch processes
B
Explanation:
An organization with a cost leadership strategy must balance cost efficiency with responsiveness. This trade-off involves economies of scale within the supply chain while ensuring that logistics systems maintain cost margins without causing delays due to excessive focus on economies of scale. [P-31]
A multinational company is expanding its operations globally and considering the benefits and challenges of sourcing, outsourcing, and offshoring.
Which challenge is likely to be hard to overcome due to trade across borders and geographic, time, and language differences?
- A . Compliance issues
- B . Logistics and production scheduling
- C . Quality expectations
- D . Lead time factors
D
Explanation:
Global expansion introduces challenges such as geographic, time, and language differences that significantly impact lead times. Managing long distances and coordinating activities across different time zones and languages make lead time factors one of the most difficult challenges to overcome. [P-63]
Which key performance objective focuses on maintaining products at their manufactured specification and ensuring the accuracy of inventory information?
- A . Quality
- B . Speed
- C . Dependability
- D . Flexibility
A
Explanation:
The key performance objective Quality ensures that inventory is maintained at its manufactured specification and that all inventory-related information remains accurate, emphasizing product
integrity and data accuracy in inventory management. [P-6]
What is a key factor that organizations need to consider when making decisions about the location of distribution centers (DC) as part of their global logistics strategy?
- A . The size of the distribution centers
- B . The impact on inventory flow and efficiency
- C . The choice of transportation modes
- D . The availability of skilled labor in the region
B
Explanation:
Decisions about distribution center locations must consider how they facilitate storage and transportation, affecting inventory flow and efficiency within the logistics operation. [P-6]
What does the management of global logistics involve beyond examining physical assets and locations in the supply chain operational system?
- A . Developing competitive relationships with suppliers
- B . Managing the information flow throughout the supply chain network
- C . Coordinating production facilities across different regions
- D . Reducing supply chain complexity
B
Explanation:
Global logistics management involves more than just physical assets―it includes managing information flow and coordinating activities across the supply chain to optimize efficiency and decision-making. [P-33]
A large organization wants to reduce its logistics costs and increase productivity by implementing economies of scale and batching in its operations.
What is the potential negative consequence they should be cautious about?
- A . Decreased cost efficiency
- B . Bullwhip effect
- C . Increased information flow
- D . Reduced automation
B
Explanation:
The bullwhip effect is a potential risk when implementing economies of scale and batching. It occurs when demand variability is amplified across the supply chain, leading to inefficiencies and information distortions. [P-18]
What are potential causes of transportation and/or pipeline breakdowns? (Select all that apply)
- A . Currency fluctuations
- B . Law & disputes
- C . Corruption
- D . Natural disasters
- E . Weather events
A, C, D, E
Explanation:
Natural disasters and weather events disrupt transportation and facilities.
Corruption can lead to inefficiencies and breakdowns in transportation networks.
Currency fluctuations may cause financial disruptions affecting logistics operations.
Law & disputes are not listed as key factors affecting transportation breakdowns. [P-72]
A multinational corporation is considering expanding its operations to low-wage economies in developing countries to reduce labor costs and gain access to proprietary knowledge.
Which of the following best describes this strategy?
- A . Pursuit of cost efficiency in the supply chain
- B . Global consolidation of transportation
- C . Centralized distribution centers
- D . Environmental and safety standards compliance
A
Explanation:
Expanding operations to low-wage economies aligns with a cost efficiency strategy, aiming to reduce labor costs and maximize purchasing leverage in the global supply chain. [P-14]
A global organization is considering implementing a tiered supply chain network.
What would be the primary benefit of this approach?
- A . To centralize production facilities in one location
- B . To eliminate competition among suppliers
- C . To increase demand uncertainty
- D . To reduce the complexity of the supply chain
D
Explanation:
A tiered supply chain network reduces complexity by structuring supplier relationships while maintaining consistent information flows and coordination. [P-34]
What is the purpose of the "order picking" stage in storage and handling practices?
- A . To physically unload incoming transportation
- B . To assemble and prepare inventory for dispatch according to orders
- C . To move goods received inventory to identifiable locations
- D . To manage the quality control of incoming inventory
B
Explanation:
The order picking stage involves retrieving and preparing inventory for dispatch based on order requirements, ensuring efficient fulfillment. [P-9]
What is a key benefit of increasing supply chain visibility?
- A . Receiving real-time information about supply chain performance
- B . Minimizing the role of digital technology
- C . Reducing the need for dual sourcing
- D . Eliminating the need for strategic planning with supply partners
A
Explanation:
Supply chain visibility allows real-time tracking of supply chain performance, enhancing decision-making and responsiveness during disruptions. [P-67]
What is a key factor considered when choosing between centralized and regionalized inventory handling?
- A . Transportation cost savings
- B . Customer service measurements
- C . Distribution efficiency
- D . Total cost concept
D
Explanation:
The total cost concept considers the overall impact on inventory management costs, prioritizing end-to-end cost reduction over isolated savings. [P-7]
What is the primary challenge addressed by a global logistics strategy?
- A . Navigating the world trade system effectively
- B . Managing and upgrading logistics and distribution channels
- C . Competing in the global market
- D . Maximizing profitability through cost-effective execution of orders
D
Explanation:
A global logistics strategy focuses on delivering products and services efficiently while maximizing profitability through cost-effective order execution. [P-3]
A company is looking to improve cost efficiency while remaining responsive to customer demands in its supply chain operations.
Which practice involves outsourcing core logistics capabilities to specialist providers like DHL and FedEx?
- A . Total external asset management
- B . Third-party logistics (3PL)
- C . Fourth-party logistics (4PL)
- D . Stock and inventory management
B
Explanation:
Third-party logistics (3PL) involves outsourcing logistics functions to specialized providers such as DHL and FedEx to improve efficiency and responsiveness. [P-38]
The quarterly Global Supply Chain Risk Report measures strategic logistical risks across industry sectors using four key risk metrics.
Which metric examines the impact of the exchange rate when transactions occur between the buying organization and supply partners who use different currencies?
- A . Global sourcing risk
- B . Supplier criticality
- C . Supplier financial risk
- D . Foreign exchange risk
D
Explanation:
Foreign exchange risk measures the impact of currency fluctuations when conducting transactions in different currencies, affecting supply chain costs. [P-63]
What does the consideration of "health and safety for the movement of hazardous material" and "security where a product is of high value and low weight" fall under in the selection of a suitable mode of transport?
- A . Operational factors
- B . Transport mode characteristics
- C . Cost and service requirements
- D . Consignment factors
D
Explanation:
Consignment factors include considerations such as safety, security, and handling requirements for different types of goods. [P-25]
An organization is seeking to reduce inventory supply in its supply chain while benefiting from economies of scale and batching.
To achieve this goal, which of the following strategies should the organization consider implementing?
- A . Keeping long resupply lead times
- B . Implementing electronic data interchange (EDI)
- C . Increasing safety stock levels
- D . Offering frequent discounts to customers
B
Explanation:
Electronic data interchange (EDI) provides real-time data on customer demand, reducing artificial ordering fluctuations and improving inventory efficiency. [P-19]
A company relies heavily on a seasonal raw material, and price fluctuations are a concern due to the dependence on the success of the crop.
Which factor primarily influences cost planning in this situation?
- A . Rapid economic growth in China
- B . Currency exchange rates
- C . Seasonal demand
- D . Speculation in core commodities
C
Explanation:
Seasonal demand affects cost planning due to fluctuations in raw material availability and pricing based on seasonal cycles. [P-22]
A procurement professional is tasked with optimizing the global pipeline for a multinational organization. They want to eliminate non-value-adding processes and improve efficiency.
What technique should they consider using?
- A . Increasing the number of supply partners
- B . Value stream mapping
- C . Implementing cloud-based technologies
- D . Conducting physical visits to suppliers
B
Explanation:
Value stream mapping helps identify and eliminate non-value-adding processes, optimizing the global supply chain pipeline. [P-58]
ABC company operates in the global supply chain and wants to manage price and currency fluctuations effectively.
Which surcharge could help them account for difficulties in navigating poor infrastructure, backlogs, and delays in transportation?
- A . Peak season surcharge
- B . Bunker adjustment factor
- C . War risk surcharge
- D . Currency adjustment factor
A
Explanation:
Peak season surcharge accounts for transportation challenges such as backlogs, delays, and infrastructure limitations during high-demand periods. [P-22]
What actions should a procurement professional take to protect the supply chain from transportation and/or pipeline breakdowns? (Select all that apply)
- A . Increasing inventory
- B . Information sharing with supply partners
- C . Ignore the economic impact
- D . Introduction of EDI
- E . Collaborative planning with supply partners
B, D, E
Explanation:
EDI (Electronic Data Interchange) improves communication and reduces delays.
Collaborative planning ensures proactive risk management.
Information sharing enhances visibility and coordination across the supply chain. Increasing inventory and ignoring economic impact are not recommended solutions. [P-73]
A company is experiencing difficulties in managing supply chain complexity and information flow across multiple tiers of suppliers.
Which strategy can help them address these challenges?
- A . Eliminating all lower-tier suppliers
- B . Implementing layering and tiering in the supply chain network
- C . Increasing the use of subcontractors
- D . Focusing on competitive relationships with suppliers
B
Explanation:
Layering and tiering help manage supply chain complexity by structuring supplier interactions and improving information flow. [P-34]
Which technology in distribution centers involves using augmented reality to overlay graphical images over employees’ line of vision, providing a digital interface capability?
- A . Adaptive robots
- B . Semi-autonomous machines
- C . Vision picking
- D . Voice picking
C
Explanation:
Vision picking uses augmented reality to overlay information onto employees’ vision, streamlining picking processes in distribution centers. [P-48]
In a scenario where an organization operates in a fast-turnaround industry and needs to launch a new product quickly, what is a critical factor for success in terms of time to market?
- A . Focusing on long-term customer relationships
- B . Implementing advanced automation systems
- C . Developing a complex supply chain
- D . Sourcing and integrating new raw materials efficiently
D
Explanation:
Efficient sourcing and integration of raw materials ensure faster production and time-to-market, which is critical in fast-moving industries. [P-12]
Why might an organization opt for centralized inventory handling instead of regionalized handling?
- A . To increase the speed of deliveries
- B . To reduce the amount of capital tied up in distribution infrastructure
- C . To minimize transportation costs
- D . To improve customer service in specific regions
B
Explanation:
Centralized inventory handling reduces capital investment in regional distribution facilities, allowing for cost efficiency. [P-7]
When selecting a location for logistics and supply chain operations, what are the key factors that an organization must consider? (Select all that apply)
- A . Proximity to transportation hubs
- B . Laws and regulations related to climate change
- C . Access to energy supply
- D . Environmental impact
- E . Number of retail points
A, C, D
Explanation:
Proximity to transportation hubs ensures efficient distribution and logistics operations.
Access to energy supply is critical for operational sustainability.
Environmental impact influences sustainability and regulatory compliance.
Laws and regulations related to climate change and number of retail points are not listed as key selection criteria. [P-26]
What is the primary focus of managing transportation in the context of global logistics?
- A . Minimizing transportation costs
- B . Directly contacting customers or end users during transportation
- C . Creating opportunities for improving operational systems
- D . Maximizing the value of transportation assets
A
Explanation:
Minimizing transportation costs is a key focus, as it is a non-value-adding activity in the supply chain, and reducing costs improves overall efficiency. [P-4]
A company is experiencing an increase in customer orders for a particular product, which exceeds the forecasted demand.
What stage within the supply chain network activities is most relevant for addressing this situation?
- A . Preparation
- B . Shipment
- C . Delivery
- D . Finalisation
D
Explanation:
The finalisation stage of the supply chain involves making tactical adjustments to meet unexpected demand surges by increasing resources and capacity. [P-43]
What is the primary purpose of adopting a strategy of "localisation" in global logistics?
- A . Reducing transportation costs
- B . Increasing product availability in foreign markets
- C . Expanding the organization’s capital equipment capacity
- D . Adapting products and processes to suit target locations
D
Explanation:
Localisation ensures products and processes are adapted to suit target markets based on political, social, and cultural norms. [P-11]
Which technology is increasingly being used in storage and handling systems to manage material flows and operations efficiently?
- A . Manual labor
- B . Traditional inventory management software
- C . Artificial intelligence (AI) and machine learning
- D . Paper-based systems
C
Explanation:
AI and machine learning enhance efficiency in storage and handling by automating decision-making and optimizing material flows. [P-9]
In the context of managing an extended transportation pipeline, what is the primary concern associated with implementing a "just in time" (JIT) inventory system?
- A . Minimizing the reliance on warehousing and storage
- B . Reducing the cost of inventory holding
- C . Increasing the risk of disruptions if material flow or labor is interrupted
- D . Reducing transportation costs through last-minute logistics planning
C
Explanation:
JIT inventory systems reduce storage costs but increase vulnerability to supply chain disruptions due to material flow or labor interruptions. [P-13]
What forms can governmental incentives take to encourage investment in infrastructure and export industries in a region?
- A . Grants and subsidies
- B . Tax credits and tax rebates
- C . Tax holidays and investment allowances
- D . All of the above
D
Explanation:
Governmental incentives can take multiple forms, including grants, subsidies, tax credits, tax rebates, tax holidays, and investment allowances to promote infrastructure and export growth. [P-53]
A procurement professional is tasked with optimizing logistics processes for an organization where extended transportation pipelines are causing concerns about product obsolescence and increased inventory holding costs.
What strategy might the procurement professional consider?
- A . Increasing transportation costs to expedite product delivery
- B . Purchasing inventory from high-wage economies
- C . Reducing the transportation pipeline length by sourcing products locally
- D . Expanding the organization’s capital equipment capacity
C
Explanation:
Sourcing locally shortens the transportation pipeline, reduces inventory holding costs, and minimizes the risk of product obsolescence. [P-11]
In the context of original equipment manufacturers (OEMs) and their strategic choices, what is a key
factor that may influence whether an OEM chooses to build their own brand or work as a supply partner to a major buyer?
- A . The size of the OEM’s manufacturing capability
- B . The availability of new market opportunities
- C . The strength of the OEM’s marketing and distribution capabilities
- D . The relationship between the OEM and the buyer
D
Explanation:
The relationship between the OEM and the buyer influences strategic decisions, as a weak partnership may push the OEM to develop its own brand. [P-40]
What is the significance of end-to-end integration in capturing efficiencies from new technologies?
- A . It reduces the need for global logistics
- B . It allows companies to focus solely on domestic markets
- C . It increases production costs
- D . It helps companies realize the full potential of new technologies in production and logistics
D
Explanation:
End-to-end integration ensures that companies can maximize efficiencies from new technologies across supplier networks and logistics operations. [P-2]
How has the nature of competition in today’s globalized markets evolved?
- A . Competition is supply chain versus supply chain, rather than company versus company
- B . Competition is limited to domestic markets
- C . Competition is now primarily between companies within the same industry
- D . Competition is no longer a significant factor in global markets
A
Explanation:
Global competition now occurs at the supply chain level rather than between individual companies,
emphasizing strategic partnerships and efficiency. [P-3]
Why is it important for organizations to balance their inventory levels effectively?
- A . To avoid the expense of unsold stock and warehousing costs
- B . To maximize the value of their inventory assets
- C . To prevent damage to perishable items during transportation
- D . To maintain a constant flow of raw materials and packaging
A
Explanation:
Balancing inventory levels is crucial to prevent unnecessary costs from excess stock and warehousing while ensuring supply chain efficiency. [P-4]
Which of the following technologies are transforming the role of distribution centers within the supply chain network? (Select all that apply)
- A . Facility management
- B . Blockchain technology
- C . Voice picking
- D . Detection systems
- E . Semi-autonomous machines
A, C, D, E
Explanation:
Voice picking: Uses speech recognition for efficient order picking.
Semi-autonomous machines: Enhance automation and predictive maintenance.
Facility management: Manages distribution center systems for efficiency.
Detection systems: Improve safety and machine monitoring.
Blockchain technology is not listed as a transformative technology for distribution centers. [P-48]
In the context of virtual centralization for information dissemination in a global supply chain, what is one of the challenges commonly associated with this approach?
- A . Reduced risk of duplication
- B . Perception of the virtual team as ‘gatekeepers’
- C . Greater recognition of value delivered by the team
- D . Increased ease of establishing information technology standards
B
Explanation:
One of the challenges associated with virtual centralization is that the virtual team can be perceived as ‘gatekeepers’ rather than partners in timely information dissemination. This perception can affect the effectiveness of the approach. [P-104]
What are common methods of payment used in international trade? (Select ALL that apply)
- A . Telegraphic transfer
- B . Mail transfer
- C . Banker’s draft
- D . Debit card payment
- E . Documentary letter of credit (LC/LOC)
A, B, C, E
Explanation:
Common payment methods in international trade include telegraphic transfer, mail transfer, banker’s draft, and documentary letter of credit (LC/LOC). These methods facilitate secure and efficient cross-border transactions. Debit card payments are more commonly used for domestic transactions. [P-135]
Which of the following contracts is responsible for setting out the rights and obligations of the carrier and the shipper regarding the transportation of goods?
- A . Insurance contract
- B . Contract of finance
- C . Contract of carriage
- D . Sales contract
C
Explanation:
The contract of carriage defines the rights and obligations of both the carrier and the shipper in the transportation of goods. [P-122]
ABC global firm has been primarily using a centralized organizational structure for decades. However, due to increasing competition and the need to adapt to local markets, the firm is considering restructuring.
What organizational change might align better with its current challenges?
- A . Maintain the existing centralized structure to preserve stability.
- B . Further centralize its operations to achieve economies of scale.
- C . Diversify its product offerings to address global demands.
- D . Establish virtual teams for information management and customer service.
D
Explanation:
A virtual team approach allows firms to maintain coordination while adapting to local conditions, leveraging information and communication technologies. [P-104]
How do transacting parties commonly address potential conflicts of laws in international trade agreements?
- A . By deferring the choice of law to the distributor or buyer
- B . By choosing the law of one of the transacting parties’ home states
- C . By relying on international arbitration exclusively
- D . By avoiding any legal clauses in their contracts
B
Explanation:
International trade agreements commonly specify the law of one of the transacting parties’ home states to resolve legal conflicts effectively. [P-121]
What is the practice of following precedence in national legal systems called in Common Law?
- A . Jurisprudence constant
- B . Rule of law
- C . Judicial creativity
- D . Stare decisis
D
Explanation:
In Common Law, the principle of following legal precedence is known as stare decisis. [P-119]
What technology allows consumers to check inventory online and track shipments while they are in transit?
- A . Universal product code (UPC)
- B . Barcode scanning
- C . Electronic data interchange (EDI)
- D . Internet of Things (IoT)
D
Explanation:
The Internet of Things (IoT) enables coordination across the supply chain, allowing real-time inventory tracking and shipment monitoring. [P-99]
Under what conditions does the United Nations Convention on Contracts for the International Sale of Goods (CISG) typically apply to international sales contracts?
- A . Only when both transacting parties are residents of contracting countries
- B . When the contract is exclusively for the sale of services
- C . When the transacting parties explicitly choose the CISG in their contract
- D . When the transacting parties have not specified any applicable law
D
Explanation:
The CISG applies by default when the contract does not explicitly specify an applicable legal framework. [P-125]
When an importer fills out a customs entry form, which of the following documentation must typically accompany the form?
- A . Certificate of origin
- B . Credit terms
- C . Choice of currency
- D . Documentary letter of credit
A
Explanation:
A certificate of origin verifies the origin of the goods and is crucial for tariff classification and duty assessment. [P-134]
What is the minimum shipment documentation required for shipping by sea? (Select ALL that apply)
- A . Certificate of origin
- B . Bill of lading
- C . Commercial invoice
- D . Packing list
- E . Pre-shipment inspection certificate
- F . Proforma invoice
A, B, C, D
Explanation:
Shipping by sea typically requires a bill of lading, commercial invoice, packing list, and certificate of origin. Additional documentation may be required based on trade regulations. [P-133]
In which type of global supply chain coordination and governance do suppliers take full responsibility for process technology and make capital outlays for components on behalf of customers?
- A . Relational value chains
- B . Markets
- C . Captive value chains
- D . Modular value chains
D
Explanation:
In modular value chains, suppliers provide turnkey services, making capital outlays for technology and materials while manufacturing products to customer specifications. [P-115]
A multinational technology company operates in a highly competitive industry with rapidly changing technology. They release new product versions frequently, and their products have short lifecycles.
Which of the following global logistics strategies would be most suitable for this company?
- A . Dynamic and flexible supply chain network
- B . Centralized inventory management
- C . Traditional organizational structure
- D . Static supply chain network
A
Explanation:
A dynamic and flexible supply chain network helps companies manage rapid product changes and short product lifecycles. [P-95]
Why did corporations like General Motors and DuPont shift to relatively decentralized organizational structures?
- A . To reduce the importance of technology
- B . To increase economies of scale
- C . To improve adaptability to local conditions
- D . To enhance global competition
C
Explanation:
Corporations structured business units around products and geographic markets to enhance flexibility and local adaptability. [P-102]
Why is import/export documentation more complex in international transactions compared to domestic ones?
- A . Domestic transactions involve more individuals and institutions.
- B . International transactions have fewer disputes.
- C . International transactions have fewer import/export policies.
- D . The nature of multi-modal transport requirements adds complexity.
D
Explanation:
The use of multi-modal transport in international trade requires extensive documentation to ensure compliance and smooth logistics. [P-111]
Which international convention is known as the Vienna Convention and covers the contract of sale between an exporter and an importer?
- A . Economic Commission of West African States (ECOWAS)
- B . International Chamber of Commerce rules and terms of trade
- C . United Nations Conventions on Contracts for the International Sale of Goods (CISG)
- D . Warsaw Convention
C
Explanation:
The Vienna Convention refers to the United Nations Convention on Contracts for the International Sale of Goods (CISG), which governs international sales contracts. [P-118]
What strategic questions must global firms consider when managing virtually centralized teams?
- A . How to improve face-to-face communication
- B . How virtual teams fulfill tasks physically
- C . How to manage information complexity
- D . What types of tasks are best fulfilled by virtual teams
D
Explanation:
When managing virtually centralized teams, firms must determine which tasks are best suited for virtual collaboration to optimize efficiency. [P-102]
What is the key enabler for global sourcing, global production, global distribution, transportation, and delivery in logistics and supply chain management?
- A . Geographical location
- B . Repetitive transactions
- C . Information and Communications Technology (ICT)
- D . Organizational affiliations
C
Explanation:
ICT (Information and Communications Technology) is essential for enabling seamless global logistics and supply chain operations. [P-105]
What is one approach Sarah, an experienced exporter, can take to minimize the risk of disputes over the interpretation of an international sales contract?
- A . Rely solely on Incoterms® without any variations or additions.
- B . Explicitly specify variations or additions to Incoterms® relevant to the trade.
- C . Avoid specifying any terms in the contract to keep it flexible.
- D . Make small changes to Incoterms® without notifying the buyer.
B
Explanation:
To minimize disputes, Sarah should explicitly specify variations or additions to Incoterms® in her contract to ensure clarity. [P-123]
What should John, an international trade lawyer, consider when deciding whether to rely on precedent in an international trade dispute?
- A . He should rely on precedent regardless of the case’s uniqueness.
- B . He should disregard precedent entirely to encourage creativity.
- C . He should consider whether the case involves entirely new circumstances.
- D . He should always rely on precedent to ensure consistency.
C
Explanation:
John should consider whether the case presents entirely new circumstances, as international precedent is not always binding. [P-120]
In the context of a global supply chain network strategy, what are some sources of disruption? (Select ALL that apply)
- A . Weather events and natural disasters
- B . Exchange rate volatility
- C . Industrial disputes and strikes
- D . Rapid product obsolescence
- E . Economic and political instability
A, B, C, E
Explanation:
Common sources of disruption in global supply chains include natural disasters, exchange rate fluctuations, industrial strikes, and political instability. Rapid product obsolescence is not a direct supply chain disruption factor. [P-95]
What is the role of precedent in the decision-making of international courts and arbitration tribunals?
- A . Precedent is binding and must be followed uniformly.
- B . Precedent is deployed inconsistently and is not binding.
- C . Precedent is the primary source of international law.
- D . Precedent is excluded and has no relevance.
B
Explanation:
Precedent in international law is used inconsistently and is not always binding, similar to domestic Common Law systems. [P-120]
What is the primary focus of the codification approach to supply chain knowledge management?
- A . Documenting historical data
- B . Personalizing knowledge access
- C . Making knowledge available centrally
- D . Extracting knowledge from individuals
C
Explanation:
The codification approach ensures that knowledge is stored centrally in repositories and databases for organizational access. [P-106]
What is the term used to describe the physical separation of different parts of a production process in global logistics?
- A . Globalization
- B . Integration
- C . Disintegration
- D . Fragmentation
D
Explanation:
Fragmentation allows different parts of production to occur in different countries, forming international production networks. [P-108]
A multinational corporation decides to divest ownership of its subsidiaries, vendors, and suppliers to focus on product strategy.
What term best describes this strategic shift?
- A . Fragmentation
- B . Vertical disintegration
- C . Outsourcing
- D . Integration
B
Explanation:
Vertical disintegration occurs when corporations divest their ownership of subsidiaries and suppliers to focus on innovation. [P-107]
What historical communication method did international shipping companies use to communicate with their ships?
- A . Telegram
- B . Fax
- C . Electronic data interchange (EDI)
- D . Internet
A
Explanation:
Historically, telegram was used for ship-to-shore communication before modern digital solutions were developed. [P-98]
Which type of packaging is suitable for palletized cargoes secured to the pallet?
- A . Wooden boxes
- B . Shrink-wrapping
- C . Stackable and nestable heavy-duty plastic crates
- D . Flat wrapping
B
Explanation:
Shrink-wrapping provides a protective covering around palletized cargo, securing goods during transportation. [P-133]
Which factors can be used to calculate the duty on imported goods in international trade? (Select ALL that apply)
- A . The weight and dimensions of the goods
- B . The value of the goods based on the invoice value
- C . The country from which the goods are imported
- D . The country’s currency used for payment
- E . The type of goods based on the harmonized system of classification
B, C, E
Explanation:
Duties on imported goods are calculated based on invoice value, country of origin, and type of goods (harmonized classification). Weight, dimensions, and currency are not primary factors. [P-134]
Which types of goods and contracts are NOT subject to the CISG? (Select ALL that apply)
- A . Sale of ships or aeroplanes
- B . The sale of stocks and shares
- C . Goods for private consumption and use such as personal effects
- D . Bonds and investment securities
- E . Auctioned goods
A, B, C, D, E
Explanation:
The CISG does not apply to personal effects, auctioned goods, stocks, bonds, or the sale of ships/aeroplanes. [P-127]
Peter, an international trade negotiator, is involved in discussions about creating a new international trade agreement. The agreement will cover emerging issues related to internet technologies and e-commerce.
In the context of Peter’s negotiations, how should the treatment of precedent be approached in new branches of international law, such as internet technologies and e-commerce?
- A . Precedent should be treated as a primary source of international law.
- B . Precedent should always be followed without exception.
- C . Variable and flexible use of precedent can be beneficial.
- D . Precedent should be disregarded entirely to encourage flexibility.
C
Explanation:
In new branches of international law, such as internet technologies and e-commerce, a flexible use of precedent helps adapt to evolving circumstances. [P-120]
Sarah, an international business consultant, is advising a company on its international arbitration strategy. The company is concerned about the confidentiality of arbitration proceedings.
In which countries would Sarah’s advice about the confidentiality of arbitration proceedings likely be different?
- A . Canada, Germany, and Japan
- B . USA, Sweden, and Australia
- C . Italy, Spain, and Brazil
- D . England, France, and New Zealand
D
Explanation:
In England, France, and New Zealand, arbitration proceedings are confidential by default, subject to exceptions, making confidentiality rules different from other jurisdictions. [P-119]
What are the two principles upon which international trade law, including international arbitration, is based?
- A . National recognition and legal independence
- B . Freedom of contract and national sovereignty
- C . Freedom of contract and international recognition
- D . National sovereignty and international recognition
C
Explanation:
International trade law is based on freedom of contract (allowing parties to set their terms) and international recognition (ensuring arbitration awards are enforceable globally). [P-122]
A manufacturing company is considering outsourcing its logistics and supply chain management operations to a third-party service provider. They want to focus on business development and sales.
Which of the following advantages is most likely to attract the company to using a third-party logistics (3PL) provider?
- A . Management of every aspect of the supply chain.
- B . Establishment of a joint venture with supply chain partners.
- C . Ability to extend services beyond transportation and warehousing.
- D . Cost savings and low capital and asset commitment.
D
Explanation:
3PL providers offer cost savings and require low capital investment, allowing companies to focus on core activities like business development. [P-97]
What distinguishes a co-located supply chain program from a distributed supply chain program?
- A . Co-located programs involve multiple activities at one location, while distributed programs operate from multiple geographical locations.
- B . Co-located programs are costlier to implement than distributed programs.
- C . Co-located programs are more environmentally friendly than distributed programs.
- D . Co-located programs focus on manufacturing, while distributed programs focus on distribution.
A
Explanation:
A co-located supply chain centralizes operations in one location, while a distributed supply chain operates across multiple locations globally. [P-105]
What does the concept of separability of the flow of goods and the flow of ownership refer to?
- A . It signifies the ability to distinguish between the ownership of goods and their physical location.
- B . It highlights the importance of independent suppliers in foreign countries.
- C . It implies that multinational firms cannot engage in foreign direct investment.
- D . It means goods and ownership must always be physically located together.
A
Explanation:
The separability of goods and ownership means that goods may be physically located in one place, while ownership remains with an entity elsewhere. [P-111]