Question 1

Which of the following is an objective of lean production?

Accepted Answer

One of the main objectives of lean production is to reduce waste, and setup times for equipment are considered a form of waste. By reducing setup times, production can become more efficient and costs can be reduced. The other options are not objectives of lean production - reducing product quality, replacing variety with standard output, and decreasing machine utilization all go against the idea of producing high-quality goods efficiently, and increasing the level of minimum efficient scale is not a specific objective of lean production.

Question 2

As the global market for hearing products has become extremely competitive in recent months,Rinker Audio Products' newly appointed CFO,Neha Patel believes that the company should address its minimum efficient scale and attempt to lower it.Which of the following is a consequence of a low minimum efficient scale?

Accepted Answer

A low minimum efficient scale allows a firm to produce efficiently at smaller volumes, enabling it to manufacture in multiple locations, which can help hedge against currency risk.

Question 3

Uvicon Inc.and Bionor Inc.are firms that compete against each other in the global market.Uvicon has a high level of fixed costs and high minimum efficient scale,whereas Bionor has a low level of fixed costs and low minimum efficient scale.In this scenario,which of the following is true?

Accepted Answer

Uvicon, with high fixed costs and high minimum efficient scale, benefits from centralizing production to achieve economies of scale, while Bionor, with low fixed costs and low minimum efficient scale, can benefit from decentralizing to be more flexible and responsive to local markets.

Question 4

Adopting flexible manufacturing technology to produce a wide variety of end products results in

Accepted Answer

Adopting flexible manufacturing technology allows for a wide variety of end products to be produced using the same equipment, resulting in increased utilization of individual machines. This means that the machines are being used more frequently, leading to higher efficiency and productivity. However, there may be increased setup times for complex equipment, but this is offset by the benefits of increased utilization. Quality control may also be maintained with proper monitoring and maintenance. A decrease in unit cost is also possible with increased efficiency. Scheduling may also become more important to optimize production.

Question 5

Which of the following includes a grouping of various types of machinery,a common materials handler,and a computer to control the production of a family of parts or products?

Accepted Answer

A flexible machine cell is a grouping of various types of machinery that includes a common materials handler and a computer to control the production of a family of parts or products. This allows for more efficient and adaptable production processes.

Question 6

Uniway Technologies Inc.has based its manufacturing units in the country of Lanthania.The country's stable economic and political environment has helped the firm gain competitive advantage by lowering its production costs and improving product quality.Other things being equal,the benefits realized from such a strategy can be typically referred to as

Accepted Answer

Uniway Technologies Inc. has benefited from the stable economic and political environment of Lanthania, which has helped the firm lower its production costs and improve product quality. This suggests that Uniway Technologies Inc. has achieved location economies, which refer to the advantages that firms can realize from locating various value chain activities in the optimal geographic location.

Question 7

Which of the following is an implication of a mass production system?

Accepted Answer

Mass production systems often lead to the creation of large inventories due to the production of goods in large quantities, which then require storage in large warehouses.

Question 8

Producing a standardized product in large volumes will

Accepted Answer

Producing a standardized product in large volumes leads to an increase in production efficiency due to economies of scale. As the volume of production increases, the unit cost of production decreases, leading to lower production costs. However, if production volumes become too large, there might be diseconomies of scale due to issues such as coordination problems and communication breakdowns.

Question 9

Ronen Argo,the head of manufacturing of Rinker Audio Products wants the company to centralize its manufacturing in one location in a single country.In contrast,Neha Patel,the company's CFO wants the company to operate several manufacturing facilities in various countries.Which of the following statements is true about performing a manufacturing activity in several locations at once?

Accepted Answer

Dispersing manufacturing plants to different locations can act as a hedge against currency fluctuations, as it allows firms to balance costs and revenues in different currencies.

Question 10

The level of output at which most plant-level scale economies are exhausted is known as

Accepted Answer

The minimum efficient scale is the level of output at which most plant-level scale economies are exhausted. At this point, the plant can no longer achieve significant cost savings through further increases in scale, and may actually become less efficient if it tries to produce even more.

Question 11

Mass customization reconciles the two goals of

Accepted Answer

Mass customization allows for low costs by using technology and automation to efficiently produce customized products. It reconciles this with the goal of product customization, which traditionally would lead to higher costs.

Question 12

In entering the European market,Rinker Audio Products is aware that each country in Europe is different and that the company has to be responsive to local needs.The company's CFO,Neha Patel,believes that the company has to address its minimum efficient scale of output to be successful in Europe.Which of the following statements is true about minimum efficient scale of output?

Accepted Answer

A low minimum efficient scale allows the firm to accommodate demands for local responsiveness, as mentioned in the question. Option A is incorrect as the statement suggests the opposite. Option B is incorrect as operating at the minimum efficient scale can help to realize plant-level scale economies. Option C is incorrect as a low minimum efficient scale does not necessarily translate to it being economical to manufacture a product at a single location. Option E is incorrect as a low minimum efficient scale does not necessarily increase the risk of adverse fluctuations in exchange rates.

Question 13

Pink Polka Fashion Inc.,a multinational clothing brand,has plans to expand in the European Union (EU)marketplace.To do so,the EU requires the company to

Accepted Answer

The best choice for Pink Polka Fashion Inc. to expand in the EU marketplace is to certify its products under ISO 9000. This certification ensures that the company’s products meet the EU’s standards of quality and safety. It also helps in building trust with customers and suppliers in the marketplace. While the other choices can be beneficial for the company’s overall operations, ISO 9000 certification is a specific requirement for entering the EU marketplace.

Question 14

Rinker Audio Products wants to enter the European market but realizes that European consumer tastes are not uniform across countries.To be able to accommodate demands for local responsiveness,Rinker should

Accepted Answer

Decentralizing production activities to the major national or regional markets allows Rinker Audio Products to adapt to local demand and consumer tastes. This approach provides the necessary flexibility to meet the needs of different markets and enables the company to be more responsive to changes in the market. Ignoring national differences, ensuring identical manufacturing processes, standardizing products, or refraining from hiring host country managers would not address the issue of local responsiveness and may limit the company's success in the European market.

Question 15

Which of the following is a consequence of using flexible machine cells?

Accepted Answer

Flexible machine cells improve capacity utilization and reduce wastes by allowing for quick changeovers and adjustments to produce different products without the need for extensive setup times or reconfigurations. They also allow for better use of resources and easier implementation of lean manufacturing principles. Therefore, C is the correct answer.

Option A is incorrect because flexible machine cells are designed to be adaptable to various production needs.

Option B is incorrect because flexible machine cells allow for just-in-time production, which minimizes the amount of inventory that needs to be stockpiled.

Option D is incorrect because flexible machine cells are designed to reduce setup times, and complex equipment can often be programmed and adjusted quickly.

Option E is incorrect because flexible machine cells can ultimately reduce costs by improving efficiency and reducing wastes.

Question 16

In studying various European countries to identify the one where Rinker Audio Products can manufacture and use as the base for a pan-Europe launch,the company found out that the country of Marunia changed its foreign exchange rate that resulted in a significant appreciation of the Marun,its local currency.Which of the following is a consequence of Marunia's change in exchange rate that results in appreciation of the local currency?

Accepted Answer

An appreciation of the local currency means that the exports of Marunia become more expensive, making it less attractive as a manufacturing base. This may result in companies shifting their production to other countries with lower costs. Additionally, it may lead to a decrease in the competitiveness of Marunia's exports, which may ultimately reduce foreign investment in the country. Therefore, option C is the most appropriate choice. Option A is incorrect because an increase in foreign direct investment is unlikely in the event of an appreciation of the local currency. Option B is incorrect because an increase in currency value would result in an increase in export costs in dollar terms. Option D is incorrect because an appreciating currency typically makes a country more expensive, not less expensive. Option E is incorrect because an appreciation in the local currency may result in a decrease in imports, but it is not guaranteed.

Question 17

In an effort to enter the European market,Rinker Audio Products wants to get ISO 9000 certification.However,a segment of the company's top management team is not supportive of this and to make their case,they cite various drawbacks of ISO 9000 certification.Which of the following is a drawback of ISO 9000 certification?

Accepted Answer

One of the drawbacks of ISO 9000 certification is that it can be bureaucratic and costly for many firms. This is because the certification process involves a lot of documentation and can require significant resources to implement and maintain the necessary quality management system.

Question 18

Rinker Audio Products is looking to enter Europe.Toward this,the company is studying various European countries to see which ones to invest in.Which of the following location externalities is favorable for Rinker's foreign direct investment in a country?

Accepted Answer

Presence of supporting industries can provide Rinker Audio Products with the necessary infrastructure and resources to establish itself in the European market. This can include suppliers, skilled labor, and distribution networks that can support the company's operations and reduce its costs.

Question 19

The cost to manufacture one unit of Rinker Audio Products' bestselling hearing aid,the Magnifier,is $87.50.The CFO of the company,Neha Patel,has determined that if the company expands the output of its biggest U.S.plant by 20 percent,the unit cost would be only $82.50.The concept that as plant output expands,unit costs decrease,is known as

Accepted Answer

The concept that as plant output expands, unit costs decrease is known as economies of scale. This occurs because fixed costs such as overhead, equipment, and facilities are spread over a larger number of units, resulting in lower unit costs.

Question 20

Rinker Audio Products has wide product variety in its product line.A firm with a wide product variety will find it

Accepted Answer

The answer of Rinker Audio Products has wide product variety...

Quiz 15: Global Production and Supply Chain Management