Deck 18: Appendix C: Global Operations and Supply Chain Management

Question 1

The primary reason for sourcing globally is to obtain lower prices.

Answer 1

True
Explanation: The primary reason for sourcing globally is to obtain lower prices, but there can be other reasons as well. Perhaps certain products the company requires are not available locally and must be imported. Another possibility is that the firm's foreign competitors are using components of better quality or design than those available in the home country. To be competitive, the company may have to source these components or production machinery in foreign countries.

Question 2

According to the text,a concurrent engineering approach to design promotes cross-functional participation in the design process and thereby helps to identify and avoid many of the potential sourcing,manufacturing,and other difficulties that can be associated with a particular design.

Answer 2

True
Explanation: An alternative approach to design is to promote cross-functional participation in the design stage, thereby identifying and avoiding many potential sourcing, manufacturing, and other difficulties. Many companies also pull key customers into their design activities, to ensure that designs are consistent with the customers' needs. Using this type of concurrent engineering approach allows the proposed designs to undergo earlier assessments on cost, quality, and manufacturability dimensions, thereby enhancing the efficiency and effectiveness of subsequent manufacturing and supply chain management activities. Indeed, design decisions must often be integrated with assessment of the various supply chain considerations, such as whether and where the company can obtain the inputs needed for its operations, whether it will source locally or from foreign locations, and whether it has the capability to produce and deliver the product or service in a competitive manner.

Question 3

Companies engage in outsourcing when they make the decision to source internationally.

Answer 3

False
Explanation: The term offshoring describes a company's decision to relocate some or all of its activities or processes to a foreign location. Outsourcing involves hiring others to perform some of the noncore activities and decision making in a company's value chain, rather than having the company and its employees continue to perform those activities. A firm can move activities offshore to a location that is part of the company, which means it can be offshore without being outsourced.

Question 4

For just-in-time (JIT)to be successful,manufacturers have to have the cooperation of their suppliers.

Question 5

The "over-the-wall" approach to product design involves an initial step in which the designers prepare the product's design,followed by sending the newly created design to the company's manufacturing engineers.

Question 6

Three-dimensional (3D)printing facilitates just-in-time production close to the place of assembly or sale and reduces the need for large production runs and the time and money required for transporting and warehousing of products.

Question 7

Because inventory is carried at each stage in the supply chain,and because inventory ties up money,it has been argued that the ultimate goal of effective supply chain management systems is to reduce inventory.

Question 8

While indirect production-oriented goods have been the focus of management attention for many years,the purchasing of goods and services that are part of finished goods-termed indirect procurement-is also critical.

Question 9

Mass customization is usually appropriate in situations where there is the potential for delaying the task of differentiating the product for a particular customer until the last possible point in the supply network.

Question 10

Logistics refers to managerial functions associated with the movement of raw materials and work in progress,but not finished goods.

Question 11

According to the text,the process of coordinating and integrating the flow of materials,information,finances,and services within and among companies in the value chain is called operations management.

Question 12

Total quality management is a companywide management approach to ensure quantity products throughout the organization.

Question 13

For purchases of capital goods such as manufacturing equipment,many U.S.buying organizations now use "business-cycle costing" to analyze purchasing decisions.

Question 14

Synchronous production is superior to the just-in-time production system because it is a balanced system in which the capacities of all operations are equal.

Question 15

According to the text,shorter and less predictable product life cycles have placed reduced emphasis on supply chains and their performance.

Question 16

International freight,insurance,and packing can add as much as 25 to 30 percent to the quoted price,depending on the sales term used.

Question 17

In U.S.industry,the proportion of purchased materials in the overall cost of goods sold has been rising for several decades.

Question 18

When possible,it is better for companies to initially outsource complex activities to achieve better cost benefits.

Question 19

Emerging industry-based business-to-business (B2B)exchanges can help optimize the supply chain across an entire network of organizations,not merely within a single company.

Question 20

According to the text,outsourcing is hiring others to do noncore activities.

Question 21

Measurement of supply chain performance varies by industry and company,but typical measures include all of the following metrics except

A) the number of times inventory turns over in a year.
B) the number of orders that are fulfilled perfectly.
C) the level of defects per million.
D) the percentage of orders delivered on time.
E) the ratio of in-stock inventory versus the level of debt.

Question 22

According to the text,increased emphasis on the achievement of effective supply chain performance has resulted from all of the following except

A) shorter, more predictable product life cycles.
B) the impact of unplanned political and social events.
C) web-enabled tools for planning, executing, and optimizing supply chains.
D) the impact of unplanned economic events.

Question 23

Production methods between capital- and labor-intensive methods are classified as intermediate technology.

Question 24

Standards are documented agreements containing general guidelines,rules,or definitions of the characteristics of a product,process,or service.

Question 25

Worldwide uniformity or standardization in manufacturing methods hinders headquarters' effectiveness in keeping production specifications current.

Question 26

A typical company's supply chain costs can represent more than ____ percent of assets.

A) 20
B) 35
C) 50
D) 60
E) 80

Question 27

Hiring others to perform some of the noncore activities and decision making in a company's value chain,rather than having the company and its employees continue to perform these tasks,is

A) offshoring.
B) outsourcing.
C) supply chain management.
D) subcontracting.

Question 28

Unless a product or service is purchased from a company that is registered to the appropriate ISO 9000 standard,a buyer cannot be assured that the quality of what was received will be what was expected.

Question 29

The process of coordinating and integrating the flow of materials,information,finances,and services within and among companies in the value chain from suppliers to the ultimate consumer is often referred to as

A) offshoring.
B) international strategy.
C) outsourcing.
D) supply chain management.
E) logistics.

Question 30

Backward vertical integration establishes facilities to manufacture inputs used in the production of a firm's final product.

Question 31

According to the text

A) design is an important factor in the structure of a company's global supply chain.
B) design determines the extent to which a company's strategy will be standardized across nations.
C) common approaches to design are concurrent engineering and "over the top."
D) new approaches to design include Starbucks' use of bars in China to promote community interactions.

Question 32

Which of the following is not true about 3D printing?

A) It is sometimes called additive manufacturing.
B) The most common current application of this technology is in producing prototypes.
C) It provides the technology for increased use of large production runs when companies need inventory of important parts.
D) It may change supply chains toward more focus on raw materials.
E) It may revolutionize the logistics of spare parts and service activities.

Question 33

The local manufacturing organization is usually integrated vertically to a greater extent than is the parent company.

Question 34

Activities that are involved in producing a company's products and services and how these activities are linked together are often referred to as

A) value chains.
B) supply chains.
C) organization design.
D) operations management.
E) logistics.

Question 35

According to the text,it has been argued that the ultimate goal of effective supply chain management systems is to

A) reduce costs.
B) improve quality.
C) reduce inventory.
D) increase sales.
E) increase standardization.

Question 36

When production equipment is similar,home office control of quality in foreign affiliates is more difficult because management must ensure that all plants adhere to the same standard.

Question 37

Packaging and transportation requirements for a product can significantly influence logistics costs,and these factors should be addressed during the post-design steps in a company's value chain.

Question 38

A typical company's supply chain costs can represent more than ____ percent of a company's revenues.

A) 20
B) 35
C) 50
D) 60
E) 80

Question 39

Generally,it is easier for international firms to standardize the concepts of total quality management and synchronous manufacturing in their foreign plants than it is to standardize the actual production facilities.

Question 40

According to the text,Zara's strategy of speed and flexibility has enabled the company to eliminate inventory.

Question 41

A recent design process innovation,such as Dell's IdeaStorm site or Starbucks' MyStarbucksIdea.com site,involves what?

A) Participation of designers with representatives of suppliers.
B) Many iterative cycles of design and testing.
C) Selling products that have been produced in lot sizes of one.
D) Encouraging very broad input, including from general customers.

Question 42

According to the text,investigation of export and import data shows

A) there is a strong relationship between global sourcing and ownership of the foreign sources.
B) there is no relationship between global sourcing and ownership of the foreign sources.
C) that American firms, but not Japanese firms, buy from their U.S. subsidiaries.
D) American firms import twice as much from their overseas subsidiaries than foreign firms import from their U.S. affiliates.

Question 43

It has been estimated that at about ____ of products currently on the market were not available 5 years ago,creating additional pressure to locate suppliers worldwide that can provide inputs at competitive prices and quality and with quick responsiveness to market changes.

A) 10 percent
B) one-quarter
C) one-third
D) 60 percent
E) three-quarters

Question 44

Outsourcing has become an increasingly common option for companies for all of the following reasons except

A) the cost of communications is plummeting.
B) more automation of a company's operational activities.
C) more companies are competing for outsourcing business.
D) reduced quality and capital investments.

Question 45

The following arrangement can provide a firm with foreign products-

A) domestic subsidiary.
B) wholly owned subsidiary.
C) foreign sales office.
D) home country production facilities.

Question 46

Electronic procurement exchanges

A) can facilitate efforts to obtain equity investments.
B) can permit bid/quote systems for buyers and suppliers.
C) protect companies from potential loss of proprietary data.
D) prevent exposure to exchange rate fluctuations.

Question 47

Which of the following are generally not included within indirect procurement?

A) Maintenance
B) Office equipment
C) Repair
D) Operating supplies
E) Components

Question 48

In the case of the United States,intrafirm trade accounts for ______ percent of exports of goods.

A) 15 to 25
B) 45 to 60
C) 30 to 40
D) 10 to 15
E) over 60

Question 49

According to the text,this activity represents an extension of the make-or-buy decisions of earlier eras.

A) Quality circles
B) JIT
C) Offshoring
D) Outsourcing
E) Supply chain management

Question 50

According to the text,indirect procurement can account for as much as what percent of the total purchasing expenditures in companies?

A) 10 to 20 percent
B) 30 to 45 percent
C) 50 to 70 percent
D) over 70 percent

Question 51

Relocating some or all of a business's activities or processes to a foreign location is

A) offshoring.
B) outsourcing.
C) supply chain management.
D) subcontracting.
E) global logistics.

Question 52

In the case of the United States,intrafirm trade accounts for _____ percent of imports of goods.

A) over 60
B) 25 to 40
C) 35 to 50
D) 10 to 15

Question 53

Which of the following is not true regarding the approach to design that promotes cross-functional participation in the design stage?

A) It helps to identify many of the potential sourcing, manufacturing, and other difficulties associated with a particular design.
B) It may involve customers in the design process.
C) It has been called "concurrent engineering."
D) It takes a sequential approach to design.

Question 54

Reasons for sourcing globally that were discussed in the text include all of the following except

A) obtaining a lower price.
B) accessing products not available locally.
C) improving the quality of a company's products.
D) avoiding taxes in the home country.

Question 55

The purchasing of goods and services that are not part of finished goods is known as

A) overhead.
B) indirect procurement.
C) peripheral purchasing.
D) e-procurement.
E) fixed costs.

Question 56

In U.S.industry,the proportion of purchased materials in the overall cost of goods sold has been rising for several decades,to a level of ________ percent today.

A) 25
B) 40
C) 45 to 60
D) 55 to 80
E) over 80

Question 57

In contrast to domestic purchasing activity,global purchasing decisions are complicated by all of the following factors except:

A) geographic distance between buyers and sellers.
B) differences in the languages of buyers and sellers.
C) differences in national laws and regulations.
D) differences in the size of buyers and sellers.

Question 58

A reason that outsourcing has become an increasingly common option for companies is

A) it helps companies to focus scarce resources away from their core competencies.
B) it avoids problems of different languages or cultures.
C) it enhances flexibility.
D) it increases capital investments.

Question 59

The following arrangement is not listed as one of the options for providing a firm with foreign products-

A) domestic subsidiary.
B) independent overseas manufacturer.
C) in-bond plant contractor.
D) overseas joint venture.

Question 60

A traditional approach to product design,which involves a sequential approach to design,has been termed

A) product-based design.
B) concurrent engineering.
C) over the wall.
D) sequenced design.
E) participative design.

Question 61

According to the text,the cost of importing a foreign sourced product,including freight,insurance,and packing

A) is insignificant.
B) may range from 26 to 110 percent of the cost of the product.
C) may range from 10 to 12 percent of the cost of the product.
D) may not be charged if the terms of sale are CIF, port of entry.

Question 62

For purchases of capital goods such as manufacturing equipment,many U.S.buying organizations now use _____ to analyze purchasing decisions,including trade-in or future estimated salvage value.

A) e-procurement
B) activity-based costing
C) total costing
D) life-cycle costing

Question 63

Synchronous production has an advantage over just-in-time in that

A) the product flow through the system is balanced without the work of balancing the output of each operation.
B) it is a balanced system.
C) it works better because it uses trial and error to put the system into effect.
D) it is a total system, whereas just-in-time is not.

Question 64

Quality circles meet to discuss ways to improve

A) production speed.
B) their functional areas.
C) product quantity.
D) pricing.

Question 65

Problems associated with e-procurement include

A) it must be isolated from the company's overall business system.
B) it must be completed before the firm can engage in other purchasing functions, such as supplier determination and analysis.
C) it can expose the company to a wide range of potential security issues.
D) it reduces entry barriers to international market opportunities.

Question 66

Mass customization

A) refers to a company's use of standardized production systems to produce and deliver products and services.
B) is usually appropriate in situations where there is the limited potential for differentiating a product for a particular customer.
C) typically requires the company to reconceptualize the design of its products as well as the design and integration of the processes used for producing and delivering the product to customers.
D) is also known as lean production.

Question 67

Which of the following is not true about Six Sigma?

A) It is a process for reducing defects and eliminating variation.
B) It literally means a maximum of 3.4 defects per thousand occurrences.
C) It includes five steps: define, measure, analyze, improve, and control.
D) The CEO is often the driving force for implementing Six Sigma.

Question 68

Benefits of global electronic purchasing initiatives include

A) increased backward integration.
B) exposure to exchange rate fluctuations.
C) optimized supply chains across an entire network of organizations.
D) increased barriers to entry for international market opportunities.
E) elimination of potential security issues.

Question 69

The basic approaches to mass customization include all of the following except

A) transparent.
B) adaptive.
C) cosmetic.
D) concurrent.
E) collaborative.

Question 70

According to the text,when examining production activities,managers are quick to recognize that inventory costs are a major factor and getting rid of inventory can lower labor cost by ______ or more.

A) 15 percent
B) 25 percent
C) 40 percent
D) two-thirds
E) 75 percent

Question 71

Just-in-time

A) is a patented Japanese process for quality control.
B) requires materials and parts arrive at each point in the production process when they are needed.
C) requires parts and materials arrive at a manufacturing plant at least one month in advance to avoid "stockouts."
D) permits greater flexibility in Toyota's production schedule.

Question 72

Synchronous manufacturing systems

A) is a balanced system while a JIT system is unbalanced.
B) takes longer to install than a JIT system, but production capacities are larger.
C) is faster than a JIT system because no allowances are made for contingencies.
D) is also called the theory of constraints.

Question 73

Total quality management

A) is the control of quality in all areas of the organization, not just production.
B) refers to quality control in not only the production of the firm's products, but also to quality control of all suppliers.
C) refers to the control of quality in all functional areas of the firm.
D) requires adoption of concurrent engineering principles in product design.

Question 74

An entire manufacturing system with unbalanced operations that emphasizes total system performance is

A) JIT.
B) quality circles.
C) synchronous manufacturing.
D) concurrent engineering.

Question 75

The output of a synchronized manufacturing system is set

A) at the capacity of the operation with the highest output.
B) at the output of the slowest operation that is working at full capacity.
C) at the level that permits the system to be balanced.
D) so that all production operations can produce the same amount to eliminate stockpiling.

Question 76

Just-in-time requires all of the following except

A) components, whether purchased from outside suppliers or made in the same plant, have to be defect-free.
B) it is necessary to eliminate process time.
C) manufacturers have to have the cooperation of their suppliers.
D) managers attempt to get product designers, production managers, purchasing people, and marketers to work together as a team.
E) parts and components have to be delivered to each point in the production process at the time they are needed.

Question 77

Many American manufacturers made the mistake of rushing to copy parts of Japan's just-in-time production system without considering

A) that cultural differences between Japanese and Westerners would prevent the system from being transferred effectively.
B) that the American legal system and approach to unionization would not permit its successful adoption.
C) that it is a total system that focuses on covering management of people, material and relations inside the company and with suppliers.
D) that it was patented by Japan.

Question 78

A ___________ is the name given to an operation in a synchronous manufacturing system whose output sets the limit for the entire system's output.

A) limiting point
B) strangle point
C) bottleneck
D) critical operation

Question 79

"Little JIT" refers to

A) reducing the size of the production facility to make it more manageable.
B) narrowing the focus to the management of goods inventories.
C) working with designers, production managers, and marketers to simplify product design.
D) lean production.

Question 80

Which of the following is not true about "big JIT"?

A) It is a total system covering the management of people, materials, and relationships with suppliers.
B) It is called lean production.
C) It requires a thorough and companywide commitment to managing quality, of which continuous improvement is an integral part.
D) It requires concurrent engineering.