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Free CPSM Practice Questions

10 free, exam-style Certified Professional in Supply Management (CPSM) practice questions with answers and explanations. No signup required. Work through them below, then take the full free CPSM practice test to study every exam domain.

Question 1

According to the Kraljic Portfolio Matrix, an item with HIGH profit impact and LOW supply risk is classified as:

  1. Strategic
  2. Leverage
  3. Bottleneck
  4. Non-critical
Show answer & explanation

Correct answer: B - Leverage

Question 2

What is the PRIMARY purpose of establishing a BATNA before entering a negotiation?

  1. To determine the exact opening price offer the buyer should present to the supplier
  2. To identify the best alternative if negotiations fail, establishing a clear walk-away point
  3. To calculate the maximum price the buyer can afford based on the approved project budget
  4. To research the supplier's cost structure and profit margins before the first meeting
Show answer & explanation

Correct answer: B - To identify the best alternative if negotiations fail, establishing a clear walk-away point

Question 3

A supplier delivers goods that are 95% compliant with specifications. Under the UCC's perfect tender rule, the buyer:

  1. Must accept the shipment since 95% compliance substantially meets the contract requirements
  2. May reject the entire shipment, accept all of it, or accept conforming goods and reject the rest
  3. Must accept the goods but is entitled to negotiate a proportional price reduction for the shortfall
  4. Must provide the supplier with a reasonable cure period to correct the deficiency before rejecting
Show answer & explanation

Correct answer: B - May reject the entire shipment, accept all of it, or accept conforming goods and reject the rest

Question 4

A supplier offers payment terms of 2/10, Net 30. The approximate annualized cost of NOT taking the early payment discount is:

  1. 18%
  2. 15%
  3. 30%
  4. 37%
Show answer & explanation

Correct answer: D - 37%

Question 5

The bullwhip effect in supply chains refers to:

  1. The gradual increase in delivery lead times as orders pass through multiple supply chain stages
  2. The progressive amplification of demand variability moving upstream from customer to supplier
  3. The tendency for product quality to deteriorate as goods pass through each distribution tier
  4. The escalation of transportation costs when shipments are expedited across multiple carriers
Show answer & explanation

Correct answer: B - The progressive amplification of demand variability moving upstream from customer to supplier

Question 6

Which category of the Cost of Quality includes warranty claims and product returns?

  1. Prevention costs
  2. Appraisal costs
  3. Internal failure costs
  4. External failure costs
Show answer & explanation

Correct answer: D - External failure costs

Question 7

A buyer purchasing goods under CIF terms discovers the shipment was damaged during ocean transit. Who bears the financial risk of the damage?

  1. The seller, since they arranged and paid for insurance and remain responsible until destination
  2. The buyer, because risk transfers at the port of shipment - the buyer files the insurance claim
  3. The ocean carrier, because they have custody of the goods and are liable for damage in transit
  4. The insurance company directly, since CIF terms automatically transfer all liability to the insurer
Show answer & explanation

Correct answer: B - The buyer, because risk transfers at the port of shipment - the buyer files the insurance claim

Question 8

In Situational Leadership, a highly competent but unmotivated employee would MOST benefit from which leadership style?

  1. Directing - providing detailed instructions and closely supervising all task completion
  2. Supporting - providing encouragement, active listening, and involving them in decisions
  3. Delegating - giving full autonomy to independently plan and complete their own work
  4. Coaching - explaining each decision, soliciting their suggestions, and guiding execution
Show answer & explanation

Correct answer: B - Supporting - providing encouragement, active listening, and involving them in decisions

Question 9

A procurement audit reveals that the same person creates purchase orders and approves invoices for payment. This violates which internal control principle?

  1. Dual authorization - requiring two independent approvals for all financial transactions
  2. Segregation of duties - separating ordering, receiving, and payment across individuals
  3. Management override - allowing supervisors to bypass established approval workflows
  4. Physical access controls - restricting who can enter secure areas and sensitive systems
Show answer & explanation

Correct answer: B - Segregation of duties - separating ordering, receiving, and payment across individuals

Question 10

Scope 3 emissions in greenhouse gas reporting include:

  1. Direct emissions from sources the organization owns or controls, such as company vehicles
  2. Indirect emissions from purchased electricity, steam, heating, and cooling consumed on-site
  3. All other indirect value chain emissions including purchased goods, transportation, and business travel
  4. Only emissions from the organization's on-site manufacturing processes and fuel combustion
Show answer & explanation

Correct answer: C - All other indirect value chain emissions including purchased goods, transportation, and business travel

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