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ISM Supply Management Core Exam Sample Questions (Q75-Q80):

NEW QUESTION # 75
A machine that costs $200,000 is expected to realize an annual savings of $35,000. What is the simple ROI for this piece of equipment?

A. 57.5%
B. 31.5%
C. 20.0%
D. 17.5%

Answer: D

Explanation:
To calculate the simple Return on Investment (ROI), we use the formula:
ROI = left( rac{ ext{Net Return on Investment}}{ ext{Cost of Investment}} ight) imes
100%ROI=(Cost of InvestmentNet Return on Investment)×100%
Given that the cost of the machine is $200,000 and the expected annual savings (which can be considered as the net return) is $35,000, we can plug these values into the formula:
ROI = left( rac{35,000}{200,000} ight) imes 100% = 17.5%ROI=(200,00035,000)×100%=17.5% Therefore, the simple ROI for this piece of equipment is 17.5%1.

NEW QUESTION # 76
The chief executive officer (CEO) of a candy company directs the firm to source, produce and market a line of organic clothing. The firm's internal stakeholders are not in agreement with the CEO. In this situation, which of the following courses of action should supply management take?

A. Select the best source of supply
B. Perform cost regression analysis (CRA)
C. Poll external stakeholders for input
D. Create a steering committee

Answer: D

NEW QUESTION # 77
A shop owner wants to determine the effect of a new marketing strategy on the number of customers visiting the shop. What information should the shop owner consider when deciding whether to conduct a one-sided or two-sided hypothesis testing?

A. The calculated one-sided and two-sided p-values
B. The objective of the hypothesis test
C. The significance level
D. Analysis of the actual samples collected

Answer: B

NEW QUESTION # 78
An individual has recently inherited an antique car and decides to sell it via an auction. When the seller brings the car to an auctioning service, the auctioneer asks if it should be sold via an English (open outcry) auction, a Vickrey (sealed second-price) auction, or a sealed first-price auction. Which type of auction will result in the highest sale price?

A. A sealed first-price auction
B. A Vickrey or an English auction, both of which will result in the same sale price
C. All three auctions types result in the same sale price
D. An English auction

Answer: C

NEW QUESTION # 79

Which of the following situations requires dummy variables to be used in the regression model?

A. A study to examine the relationship between age and weight on the probability of breast cancer
B. A study to examine the relationship between the season and amount of water pollution on the number of sea-turtles
C. A study to examine the relationship between stock prices and interest rates on company revenue
D. A study to examine the relationship between average salary and age of buyer on the amount spent on housing

Answer: B

NEW QUESTION # 80
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