CPSM Global & International Supply Management

Question 1

Under Incoterms 2020, which term places the MAXIMUM responsibility on the seller by requiring delivery to the buyer's named destination with all duties and taxes paid?

Accepted Answer

DDP (Delivered Duty Paid)

Answer

EXW (Ex Works)

Answer

FOB (Free on Board)

Answer

CIF (Cost, Insurance and Freight)

Question 2

A U.S. company sourcing components from a foreign supplier is MOST exposed to transaction currency risk when:

Accepted Answer

The contract is denominated in the supplier's local currency with 90-day payment terms

Answer

The contract is denominated in U.S. dollars and payment is immediate

Answer

The buyer uses a letter of credit in U.S. dollars

Answer

The contract includes a fixed exchange rate clause

Question 3

A Harmonized System (HS) code is used in international trade PRIMARILY to:

Accepted Answer

Classify traded goods for customs duties, tariffs, and trade statistics

Answer

Calculate the landed cost of goods including freight and insurance

Answer

Identify the country of origin for preferential trade agreements

Answer

Determine the credit terms offered by foreign suppliers

Question 4

When selecting a foreign supplier, a supply manager conducting a total landed cost analysis should include all of the following EXCEPT:

Accepted Answer

The supplier's internal marketing and advertising budget

Answer

Import duties and customs brokerage fees

Answer

Ocean or air freight charges

Answer

Port handling and warehousing costs at the destination

Question 5

The U.S. Export Administration Regulations (EAR) and Export Control Classification Numbers (ECCN) are MOST relevant to a supply manager when:

Accepted Answer

Determining whether technology or goods being exported from the U.S. require a license

Answer

Negotiating payment terms with domestic suppliers

Answer

Assessing whether goods or technology being purchased abroad require an export license to return to the U.S.

Answer

Calculating import tariffs on goods entering the United States

Question 6

A key advantage of using a Letter of Credit (L/C) in international transactions compared to open-account terms is that it:

Accepted Answer

Guarantees payment to the seller provided documentary conditions are met, reducing seller risk

Answer

Eliminates all currency exchange risk for both parties

Answer

Allows the buyer to inspect goods before any payment obligation arises

Answer

Removes the need for shipping insurance on international shipments