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

DDP (Delivered Duty Paid) obligates the seller to bear all costs and risks, including import duties and taxes, until the goods are delivered to the named destination. EXW is the opposite extreme, placing maximum burden on the buyer from the seller's premises.

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

Transaction currency risk arises when a contract is in a foreign currency and settlement occurs in the future. If the foreign currency appreciates against the dollar over 90 days, the buyer pays more in dollar terms. A fixed exchange rate clause or USD-denominated contract eliminates this exposure.

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

The Harmonized System is an internationally standardized nomenclature for classifying traded products. Customs authorities use HS codes to apply the correct duty rates and enforce trade regulations. Country of origin is a separate determination that may interact with HS codes but is not defined by them.

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

Total landed cost encompasses all expenses incurred to bring goods to the buyer's facility: product price, freight, insurance, duties, brokerage, port handling, and local delivery. The supplier's internal marketing budget is not a cost borne by the buyer and is irrelevant to landed cost.

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

EAR and ECCNs govern the export of U.S.-origin goods, software, and technology to foreign destinations, requiring licenses for controlled items destined for restricted countries or end-uses. Import tariffs fall under U.S. Customs and Border Protection regulations, not EAR.

(CPSM) Certified Professional in Supply Management Practice Test

(CPSM) Certified Professional in Supply Management Practice Test

CPSM Global & International Supply Management