CPM Study Guide ENG

C.P.M.STUDYGUIDESeventhEdition–2000ISMCertifiedPurchasingManagerProgramEditedby:AlanR.Raedels,Ph.D.,C.P.M.AssociateEditors:LeeBuddress,Ph.D.,C.P.M.CarolynGordon,C.P.M.,A.P.P.GeneKeel,C.P.M.CarlaLallatin,C.P.M.EugeneW.Muller,Ed.D.ScottR.Sturzl,C.P.M.,A.P.P.Publishedby:InstituteforSupplyManagement™,Inc.Publishedby:InstituteforSupplyManagement™,Inc.PaulNovak,C.P.M.,A.P.P.,ChiefExecutiveOfficer©2001InstituteforSupplyManagement™,Inc.2055EastCentennialCircleP.0.Box22160TempeAZ85285-2160USAAllrightsreserved.NopartofthispublicationmaybereproducedwithoutwrittenpermissionfromtheInstituteforSupplyManagement™,Inc.PurposeoftheStudyGuideTheC.P.M.StudyGuideisageneraloverviewofthematerialcoveredintheC.P.M.examination.Itismeanttoprovidethecandidatewithanintroductiontothemajortopicscoveredinthetest,andtoprovidedirectionforfurtherstudy.TheGuideisconstructedaccordingtotheC.P.M.testspecifications.Therefore,theGuidelargelymirrorsthematerialcoveredintheC.P.M.exam.WhiletheGuideprovidesagoodoverviewofthetypesofmaterialcoveredontheC.P.M.exam,thecandidateshouldbeawarethattheStudyGuideisNOTmeanttoserveasasubstituteforanyofthemajortextbooksinthefieldofpurchasing.CandidatesarestronglyurgedtoreadatleastoneofthemajorpurchasingtextsinadditiontotheStudyGuidewhenpreparingfortheC.P.M.exam.ReadingtheStudyGuidealone,withoutanyotherresources,isnotconsideredtobesufficientpreparationfortheC.P.M.exam.Also,pleasebeawarethattheactualexammaycontainmaterialthatisnotnecessarilycoveredintheStudyGuide.EditorAlanR.Raedels,Ph.D.,C.P.M.,ProfessorofSupplyandLogisticsManagementatPort-landStateUniversity,holdsaB.S.M.E.fromColoradoStateUniversity,anM.B.A.fromPortlandStateUniversity,andadoctoratefromPurdueUniversity.Hehastaughtcoursesinavarietyofareasincludingpurchasing,materialsmanagement,production/operationsman-agement,andqualitycontrol.Dr.RaedelshastaughtseminarsonavarietyofsupplyandoperationsmanagementtopicsincludingCertifiedPurchasingManagementReviewCourses;consultedintheareasofpurchasing,distribution,andinventorycontrolsystems;publishedinavarietyofjournalsincludingTheJournalofPurchasingandMaterialsManagementandNAPMInsights;andisauthorofthebookValue-FocusedSupplyManagement.Dr.RaedelshasbeenactiveinISMasformerDistrictXIDirector,Vice-ChairoftheBusinessSurveyAdvisoryCommittee,andChairoftheEducationalResourcesCommittee;intheNAPM—OregonaffiliateinavarietyofrolesincludingAffiliatePresident,andChairmanoftheNAPM—OregonBusinessSurveyCommitteesince1984;administerstheNationalAssociationofEducationalBuyersMarketIndexsurvey;andisthe1999recipientofISM'shighestaward,theJ.ShipmanGoldMedal.AssociateEditorsLeeBuddress,Ph.D.,C.P.M.,isCo-DirectoroftheSupplyandLogisticsManagementPro-gramatPortlandStateUniversity.HeholdsaB.S.inOperationsManagementandEconomicsfromtheUniversityofCaliforniaatBerkeleyandaPh.D.fromMichiganStateUniversityinPurchasingandSupplyManagementwithminorsinlogisticsandinternationalbusiness.Heteachescoursesinpurchasingandsupplymanagement,operationsandqualitymanagement,productionplanningandcontrol,transportationandlogistics,andnegotiations.His20yearsofindustrialexperienceinoperationsandsupplyandlogisticsmanagementprovidethefoundationforhisresearchinterestsinthesefieldsandinforecasting.HeisactiveinISMatthelocalandnationallevelsaswellasseveralotherprofessionalassociations.Hehasreceivednumerousawardsforhiscontributionstotheoperationsandpurchasingprofessions.Heconsultsandspeaksinternationally.CarolynGordon,C.P.M.,A.P.P.,wasaSeniorCommoditySpecialistwithSabre,Inc.CarolynpreviouslywasacontractadministratorforATUTelecommunicationsinAnchorage,Alaska,andprofessional-developmentchairforNAPMDistrictXI.CarolynwasalsoChairoftheNAPMProfessionalDevelopmentCommittee.GeneKeel,C.P.M.,isaretiredU.S.DefenseDepartmentagencyexecutivewith30yearspurchasingandcontractadministrationexperienceininternational,national,federal,andlocalgovernmentareas.HeiscurrentlythecontractsadministratorforCharlestonCountygovernmentinCharleston,SC,andisadjunctprofessorofmanagementattheCharlestoncampusofSouthernWesleyanUniversityteachingcoursesinmanagementandinternationalbusiness.HeisalifetimeCertifiedPurchasingManagerhavingreceivedhisoriginalcertificationin1984.HehasaB.B.A.inMarketingfromtheUniversityofGeorgiaandanM.B.A.,magnacumlaude,fromDallasBaptistUniversityinDallas,Texas.CarlaS.Lallatin,C.P.M.,CPPO,directsaconsultingfirm,Lallatin&Associates,whosemis-sionistopromotetheunderstandingandimprovementofpurchasersandsupplier.PreviouslyvicepresidentofDun&Bradstreet’sBidNet,Lallatinhasover25yearsexperienceinallphasesofpurchasingandmaterialsmanagement.Herbackgroundinexecutivepurchasingmanage-mentincludesD&B,UnitedComputingSystems,Inc.,theCityofNewYork,andthestateofWyoming,givingheruniqueinsightsintobothcommercialandpublicsectorprocurement.ShewasoneofthefiveoriginalmembersofNewYorkCity’sProcurementPolicyBoardandisanadvisortothecurrentBoard.SheservesasadjunctfacultyatNewYorkUniversityandisafre-quentlecturerattheUniversityofTexas.Inaddition,shespendsseveraldayseachmonthcon-ductinglecturesandseminars.Lallatinhaschair