Chapter 17
Global Production, Outsourcing, and
Logistics
True / False Questions
- Lowering the costs is one of the objectives of the production and logistics function of an international firm.
True False
- The firm that improves its quality control will also reduce its costs of value creation.
True False
- Deming, the proponent of total quality management, suggested that management shouldn't attempt to train employees in new skills.
True False
- A production process would create just 1 defect per six thousand products at Six Sigma.
True False
- Other things being equal, a firm should locate its various manufacturing activities where the relative factor costs are conducive to the performance of those activities.
True False
- The level of output at which most plant-level scale economies are exhausted is referred to as the minimum efficient scale of output.
True False
- The argument for centralizing production will be greater if the minimum efficient scale of a plant relative to total global demand is low.
True False
- Maintaining high minimum efficient scale allows a firm to hedge against currency risks.
True False
15 are under pressure to produce products in the optimal location and to serve the world market from there if their products have low value-to-weight ratios.
True False
16 such as refined sugar, certain bulk chemicals, paint, and petroleum products have low value-to-weight ratios.
True False
17 consumer products such as personal computers serve universal needs. True False
18 production is favored if differences between countries in factor costs have a substantial impact on the costs of manufacturing in various countries.
True False
19 of production is not favored when important exchange rates are expected to remain relatively stable.
True False
20 of production is appropriate when location externalities are important.
True False
21 of production is appropriate when the product does not serve universal needs.
True False
22 product quality and low productivity are hidden costs associated with basing production in a foreign location.
True False
23 migration in the strategic role of foreign production sites arises when they upgrade their own capabilities.
True False
24 learning refers to the idea that valuable knowledge does not reside just in a firm's domestic operations.
True False
31 some manufacturing to independent suppliers based in other countries would help firms capture more orders from that country.
True False
32 benefits of making all or part of a product in-house is minimal when highly specialized assets are involved.
True False
33 a product from external vendors is highly appropriate when a firm intends to protect proprietary technology.
True False
34 all or part of a product in-house is beneficial when the firm intends to build valuable capabilities over time.
True False
35 alliances build trust between the firm and its
suppliers. True False
36 of technologies such as just-in-time inventory systems and computer-aided design has reduced pressures for firms to establish long-term relationships with their suppliers.
True False
37 objectives of logistics are to manage a firm's global supply chain at the lowest possible cost and in a way that best serves customer needs.
True False
38-in-time systems are used to economize on inventory holding costs by having materials arrive at a manufacturing plant just in time to enter the production process and not before.
True False
39-in-time systems reduce product quality although it brings about huge cost savings.
True False
40-in-time systems help a firm respond quickly to increases in
demand. True False
44 a firm is allowed access to the European marketplace, the European Union requires that the quality of the firm's manufacturing processes and products be certified under a quality standard known as _____.
A Sigma B 9000 C D quality management
45 Six Sigma, a production process would be highly accurate and create just _____.
A.3 defects per hundred thousand units B.6 defects per million units C.3 defects per million units D.6 defects per hundred thousand units
46 of the following statements is true of Six Sigma?
A is a statistically based philosophy to reduce defects and boost productivity. B Six Sigma, a production process will have 6 defects per million units. C Six Sigma, a production process would be 100 percent accurate.
D company can achieve Six Sigma perfection by reducing the number of defects to one in six thousand.
49 of the following is a technological factor that affects international business?
A rates that govern the business B factors costs in the locality C of a skilled labor pool D costs of setting up a production plant
50 of the following makes being dependent on one location particularly risky?
A intervention in exchange rates B exchange rates C exchange rates D treatment of domestic industries
51 to the concept of economies of scale, as plant output expands, _____.
A decline B costs decrease C costs decrease D of capital decline
52 an advantage of adopting a low minimum efficient scale.
A helps companies reduce the level of initial capital required for business. B allows the firm to accommodate demands for local responsiveness. C allows firms discount political risks and other global capital risks. D minimum efficient scale of a plant allows decentralization of production.
53 to the concept of economies of scale is the idea that the best way to achieve high efficiency, and hence low unit costs, is through the _____.
A of products for each individual market B production of a standardized output C of goods that are different from each other D of small volumes of high-quality products
54 manufacturing technology is also known as _____.
A sigma production B production C D production
57 term _____ has been coined to describe the ability of companies to use flexible manufacturing technology to reconcile the goals of low cost and product personalization.
A-line production B standardization C customization D Sigma production
58(n) _____ is a grouping of various types of machinery, a common materials handler, and a centralized cell controller.
A machine cell B Sigma C line D efficient scale
59 of the following statements is true of products with high value-to-weight ratios?
A costs usually account for a large percentage of their total costs. B are relatively inexpensive and weigh a lot. C are usually produced in multiple locations close to major markets.
D transportation account for a very small percentage of the total costs.
63 of production is appropriate when _____.
A product serves universal needs B product does not serve universal needs C product's value-to-weight ratio is low D in important exchange rates is expected
64 of production is appropriate when _____.
A product's value-to-weight ratio is high B product serves universal needs C to trade are low D in key exchange rates is expected
65 of the following is a hidden cost associated with basing production in a foreign location?
A of labor within the location B employee turnover C costs D in the value of currency
66 of the following is a major source of the improvement in the capabilities of a foreign site?
A abundance of advanced factors of production in the nation where the factory is located B in the labor costs associated with the foreign site C in the quality of the product coming out of the foreign site D changes in the currency exchanges rates with the nation in which the factory is located
67 is a bicycle manufacturing company. Which of the following is a make-or-buy decision that the company will have to make?
A the company increase its responsiveness toward the retailers? B are the products that the company should manufacture? C the company outsource production to a low-cost vendor? D should be the pricing strategy of the company's product?
68-or-buy decisions are decisions about _____.
A components to be used in manufacturing process B raw materials for a production process C the capital equipments for production D or not to outsource value creation activities