Deck 5: Network Design in the Supply Chain

Question 1

Decisions concerning the role of each facility are significant because they determine the amount of rigidity the supply chain has in changing the way it meets demand.

Answer 1

FALSE

Question 2

The allocation of supply sources and markets to facilities has a significant impact on performance because it affects total production, inventory, and transportation costs incurred by the supply chain to satisfy customer demand.

Answer 2

TRUE

Question 3

If facilities have higher fixed costs, many local facilities are preferred because this helps lower transportation costs.

Answer 3

FALSE

Question 4

If facilities have lower fixed costs, many local facilities are preferred because this helps lower transportation costs.

Question 5

High tariffs lead to more production locations within a supply chain network, with each location having a lower allocated capacity.

Question 6

If the technology is flexible, it becomes more difficult to consolidate manufacturing in a few large facilities.

Question 7

Capacity allocation decisions have a significant impact on supply chain performance because they tend to stay in place for several years.

Question 8

The supply chain network is designed to maximize total profits, taking into account the expected margin and demand in each market, various logistics and facility costs, and the taxes and tariffs at each location.

Question 9

Network design decisions have a significant impact on performance because they determine the supply chain configuration and set constraints within which the other supply chain drivers can be used either to decrease supply chain cost or to increase responsiveness.

Question 10

A firm may increase the number of facilities beyond the point that minimizes total logistics cost to improve the response time to its customers.

Question 11

Decisions concerning the role of each facility are significant because they determine the amount of flexibility the supply chain has in changing the way it meets demand.

Question 12

When faced with a network design decision, the goal of a manager is to design a network that minimizes the firm's costs while satisfying customer needs in terms of demand and responsiveness.

Question 13

Facility location decisions have a long-term impact on a supply chain's performance because it is cost effective to shut down a facility or move it to a different location.

Question 14

Transportation costs increase as the number of facilities is increased.

Question 15

Network design decisions have a significant impact on performance because they determine the supply chain configuration and set constraints within which inventory, transportation, and information can be used to either decrease supply chain cost or increase responsiveness.

Question 16

If production technology displays significant economies of scale, many local locations are the most effective.

Question 17

When designing supply chain networks, companies must build appropriate flexibility to help counter fluctuations in exchange rates and demand across different countries.

Question 18

Supply chain network design decisions include the location of manufacturing, storage, or transportation-related facilities and the allocation of capacity and roles to each facility.

Question 19

Inventory and facility costs increase as the number of facilities in a supply chain increase.

Question 20

Firms focusing on cost leadership tend to find the lowest cost location for their manufacturing facilities, but only if that means locating very far from the markets they serve.

Question 21

Supply chain network design decisions classified as capacity allocation are concerned with

A) what processes are performed at each facility.
B) where facilities should be located.
C) how much capacity should be allocated to each facility.
D) what markets each facility should serve and which supply sources should feed each facility.

Question 22

A facility located primarily to obtain access to knowledge or skills that may exist within a certain region is

A) an offshore facility.
B) a source facility.
C) a server facility.
D) an outpost facility.

Question 23

Supply chain network design decisions include

A) only the location of manufacturing, storage, or transportation-related facilities.
B) only the allocation of capacity and roles to each facility.
C) both the location of manufacturing, storage, or transportation-related facilities and the allocation of capacity and roles to each facility.
D) neither the location of manufacturing, storage, or transportation-related facilities nor the allocation of capacity and roles to each facility.

Question 24

Capacity allocation decisions have a significant impact on supply chain performance because

A) capacity decisions tend to be permanent.
B) capacity decisions tend to be changed frequently.
C) capacity decisions do not tend to stay in place for several years.
D) capacity decisions tend to stay in place for several years.

Question 25

A facility that also has low cost as its primary objective, but its strategic role is broader than that of an offshore facility is

A) an offshore facility.
B) a source facility.
C) a contributor facility.
D) an outpost facility.

Question 26

Network design decisions have a significant impact on performance because they

A) determine the customer demand.
B) determine the supply chain conflagration.
C) set constraints within which inventory, transportation, and information can be used to either decrease supply chain cost or increase responsiveness.
D) set constraints within which inventory, transportation, and information can be used to either increase supply chain cost or decrease responsiveness.

Question 27

Supply chain network design decisions classified as market and supply allocation are concerned with

A) what processes are performed at each facility.
B) where facilities should be located.
C) how much capacity should be allocated to each facility.
D) what markets each facility should serve and which supply sources should feed each facility.

Question 28

Facility location decisions have a long-term impact on a supply chain's performance because

A) it is very expensive to shut down a facility or move it to a different location.
B) it is not expensive to shut down a facility or move it to a different location.
C) it is advisable to shut down a facility or move it to a different location.
D) it is cost effective to shut down a facility or move it to a different location.

Question 29

Customer order entry is

A) the point in time when the customer has access to choices and makes a decision regarding a purchase.
B) the customer informing the retailer of what they want to purchase and the retailer allocating product to the customer.
C) the process where product is prepared and sent to the customer.
D) the process where the customer receives the product and takes ownership.

Question 30

Supply chain network design decisions classified as facility location are concerned with

A) what processes are performed at each facility.
B) where facilities should be located.
C) how much capacity should be allocated to each facility.
D) what markets each facility should serve and which supply sources should feed each facility.

Question 31

Firms focusing on cost leadership tend to

A) locate facilities close to the market they serve.
B) locate facilities very far from the market they serve.
C) find the lowest cost location for their manufacturing facilities.
D) select a high-cost location to be able to react quickly.

Question 32

A facility built because of tax incentives, local content requirement, tariff barriers, or high logistics cost to supply the region from elsewhere with the objective to supply the market where it is located is

A) an offshore facility.
B) a source facility.
C) a server facility.
D) a contributor facility.

Question 33

Firms focusing on responsiveness tend to

A) locate facilities close to the market they serve.
B) locate facilities very far from the market they serve.
C) find the lowest cost location for their manufacturing facilities.
D) select a high-cost location to be able to react slowly.

Question 34

Decisions concerning the role of each facility are significant because

A) they determine the amount of flexibility the supply chain has in demanding change.
B) they determine the amount of flexibility the supply chain has in changing the way it meets demand.
C) they determine the amount of capacity the supply chain has in changing the way it meets demand.
D) they determine the amount of inventory the supply chain has in demanding change.

Question 35

The allocation of supply sources and markets to facilities should be reconsidered on a regular basis so that

A) the allocation can be held constant as market conditions or plant capacities expand.
B) the allocation can be changed as market conditions or plant capacities stagnate.
C) the allocation can be held constant as market conditions or plant capacities change.
D) the allocation can be changed as market conditions or plant capacities change.

Question 36

Supply chain network design decisions classified as facility role are concerned with

A) what processes are performed at each facility.
B) where facilities should be located.
C) how much capacity should be allocated to each facility.
D) what markets each facility should serve and which supply sources should feed each facility.

Question 37

A facility that serves the role of being a low-cost supply source for markets located outside the country where the facility is located is

A) an offshore facility.
B) a source facility.
C) a contributor facility.
D) an outpost facility.

Question 38

Allocating too much capacity to a location results in

A) poor utilization, and as a result, higher costs.
B) high utilization, and as a result, higher costs.
C) poor utilization, and as a result, lower costs.
D) high utilization, and as a result, lower costs.

Question 39

The allocation of supply sources and markets to facilities has a significant impact on performance because

A) it cannot affect total production, inventory, and transportation costs incurred by the supply chain to satisfy customer demand.
B) it cannot affect customer demand.
C) it affects total production, inventory, and transportation costs incurred by the supply chain to satisfy customer demand.
D) it cannot satisfy customer demand.

Question 40

Allocating too little capacity results in

A) good responsiveness if demand is not satisfied or low cost if demand is filled from a distant facility.
B) good responsiveness if demand is not satisfied or high cost if demand is filled from a distant facility.
C) poor responsiveness if demand is not satisfied or low cost if demand is filled from a distant facility.
D) poor responsiveness if demand is not satisfied or high cost if demand is filled from a distant facility.

Question 41

Which of the following is the first phase in the design of a global supply chain network?

A) Define a supply chain strategy
B) Define the regional facility configuration
C) Select desirable sites
D) Location choices

Question 42

If the production technology is very inflexible and product requirements vary from one country to another, a firm has to set up

A) local facilities to serve the market in each country.
B) a few high-capacity facilities to serve the market in each country.
C) many local facilities because this helps lower transportation costs.
D) a few high-capacity facilities because this helps lower transportation costs.

Question 43

If facilities have lower fixed costs

A) a few high-capacity facilities are preferred because this helps lower transportation costs.
B) a few local facilities are preferred because this helps lower transportation costs.
C) many high-capacity facilities are preferred because this helps lower transportation costs.
D) many local facilities are preferred because this helps lower transportation costs.

Question 44

Total logistics costs are a sum of the

A) inventory and facility costs.
B) transportation and facility costs.
C) inventory and transportation costs.
D) inventory, transportation, and facility costs.

Question 45

Duties that must be paid when products and/or equipment are moved across international, state, or city boundaries are referred to as

A) taxes.
B) tax incentives.
C) tariffs.
D) incentives.

Question 46

The facilities in a supply chain network must

A) at least maximize total logistics cost.
B) at least equal the number that maximizes total logistics cost.
C) at least equal the number that minimizes total logistics cost.
D) at least minimize total logistics cost.

Question 47

Available infrastructure, skill needs and response time mostly affect which of the four Global Network Design Decisions?

A) Phase I - Supply Chain Strategy
B) Phase II - Regional Facility Configuration
C) Phase III - Desirable Sites
D) Phase IV - Location Choices

Question 48

When faced with a network design decision, the goal of a manager is to design a network that

A) maximizes the firm's profits.
B) minimizes the firm's costs.
C) satisfies customer needs in terms of demand and responsiveness.
D) maximizes the firm's profits while satisfying customer needs in terms of demand and responsiveness.

Question 49

Developing countries often create free trade zones where

A) duties and tariffs are imposed as long as production is used primarily for export.
B) duties and tariffs are imposed as long as production is used primarily for import.
C) duties and tariffs are relaxed as long as production is used primarily for export.
D) duties and tariffs are relaxed as long as production is used primarily for import.

Question 50

If the technology is flexible

A) it becomes more difficult to consolidate manufacturing in a few large facilities.
B) it becomes more difficult to distribute manufacturing in many local facilities.
C) it becomes easier to consolidate manufacturing in a few large facilities.
D) it becomes easier to consolidate manufacturing in many local facilities.

Question 51

A facility that serves the market where it is located but also assumes responsibility for product customization, process improvements, product modifications, or product development is

A) an offshore facility.
B) a source facility.
C) a server facility.
D) a contributor facility.

Question 52

If a country has very high tariffs

A) companies either do not serve the local market or set up manufacturing plants within the country to save on duties.
B) companies do not serve the local market.
C) companies set up manufacturing plants within the country to save on duties.
D) companies will not serve the local market or set up manufacturing plants within the country to save on duties.

Question 53

Building some over-capacity in the supply chain network and making the capacity flexible allows a firm to alter production flows within the supply chain to

A) produce less in facilities that have a lower cost based on current exchange rates.
B) produce more in facilities that have a lower cost based on current exchange rates.
C) produce more in facilities that have a higher cost based on current exchange rates.
D) produce less in facilities that have the same cost based on current exchange rates.

Question 54

The availability of suppliers, transportation services, communication, utilities, and warehousing infrastructure mostly affect which of the four Global Network Design Decisions?

A) Phase I - Supply Chain Strategy
B) Phase II - Regional Facility Configuration
C) Phase III - Desirable Sites
D) Phase IV - Location Choices

Question 55

________ costs increase as the number of facilities in a supply chain increases.

A) Inventory
B) Transportation
C) Retail operation
D) Information

Question 56

A facility that creates new products, processes, and technologies for the entire network is

A) a lead facility.
B) a source facility.
C) a server facility.
D) an outpost facility.

Question 57

Tariffs, economies of scale and aggregate factor costs mostly affect which of the four Global Network Design Decisions?

A) Phase I - Supply Chain Strategy
B) Phase II - Regional Facility Configuration
C) Phase III - Desirable Sites
D) Phase IV - Location Choices

Question 58

The objective of the first phase of network design is to

A) maximize total profits, taking into account the expected margin and demand in each market.
B) select a set of desirable sites within each region where facilities are to be located.
C) identify regions where facilities will be located, their potential roles, and their approximate capacity.
D) specify what capabilities the supply chain network must have to support a firm's competitive strategy.

Question 59

Capital, growth strategy, existing networks and global competition mostly affect which of the four Global Network Design Decisions?

A) Phase I - Supply Chain Strategy
B) Phase II - Regional Facility Configuration
C) Phase III - Desirable Sites
D) Phase IV - Location Choices

Question 60

Firms that focus on cost leadership tend to find the lowest-cost location might

A) locate far from their customers.
B) locate in a higher cost area to provide faster response.
C) have many facilities to take advantage of economies of scale.
D) increase inventory levels to reduce stockouts.

Question 61

A manufacturer of cat towers wishes to locate a super assembly facility to meet their cat tower assembly needs for the next millennium. Currently, carpet, cylinders, yarn and fasteners are purchased in bulk from suppliers in North Haverbrook, Ogden, and Springfield in the quantities shown in the table. The super assembly facility would ship to distribution centers located in Seattle, Lubbock, Nashville, and Philadelphia. The locations of all of these cities on an x-y grid, outbound transportation costs on a ton per mile basis, and total tonnage are all contained in the table.
What is the minimal shipping cost that satisfies all market demand?

A) $2,546,632
B) $2,586,342
C) $2,451,668
D) $2,522,982

Question 62

A manufacturer of cat towers wishes to locate a super assembly facility to meet their cat tower assembly needs for the next millennium. Currently, carpet, cylinders, yarn and fasteners are purchased in bulk from suppliers in North Haverbrook, Ogden, and Springfield in the quantities shown in the table. The super assembly facility would ship to distribution centers located in Seattle, Lubbock, Nashville, and Philadelphia. The locations of all of these cities on an x-y grid, transportation costs on a ton per mile basis, and total tonnage are all contained in the table.
What is the distance between the Ogden and Seattle locations?

A) 450 miles
B) 350 miles
C) 630 miles
D) 1050 miles

Question 63

The quality of life at selected facility locations has a significant impact on performance because

A) network designers can use this fact to influence the role of the new facility and the focus of people working there.
B) facilities last a long time and have an enduring impact on a firm's performance.
C) the location of a facility has a significant impact on the extent and form of communication that develops in the supply chain network.
D) it influences the work force available and their morale.

Question 64

The objective of the second phase of network design is to

A) select a precise location and capacity allocation for each facility.
B) select a set of desirable sites within each region where facilities are to be located.
C) identify regions where facilities will be located, their potential roles, and their approximate capacity.
D) specify what capabilities the supply chain network must have to support a firm's competitive strategy.

Question 65

Describe the four phases in the framework for network design decisions.

Question 66

The implications of culture should not be glossed over because

A) tariffs and tax incentives should be carefully considered.
B) facilities last a long time and have an enduring impact on a firm's performance.
C) it is astounding how often tax incentives drive the choice of location.
D) the location of a facility has a significant impact on the extent and form of communication that develops in the supply chain network.

Question 67

Describe the factors that influence supply chain network design decisions.

Question 68

Explain how supply chain network design decisions are classified.

Question 69

Managers making facility location decisions should carefully consider tariffs and tax incentives, because

A) network designers can use this fact to influence the role of the new facility and the focus of people working there.
B) facilities last a long time and have an enduring impact on a firm's performance.
C) it is astounding how often tax incentives drive the choice of location.
D) the location of a facility has a significant impact on the extent and form of communication that develops in the supply chain network.

Question 70

The objective of the third phase of network design is to

A) maximize total profits, taking into account the expected margin and demand in each market.
B) select a precise location and capacity allocation for each facility.
C) select a set of desirable sites within each region where facilities are to be located.
D) identify regions where facilities will be located, their potential roles, and their approximate capacity.

Question 71

A manufacturer of cat towers wishes to locate a super assembly facility to meet their cat tower assembly needs for the next millennium. Currently, carpet, cylinders, yarn and fasteners are purchased in bulk from suppliers in North Haverbrook, Ogden, and Springfield in the quantities shown in the table. The super assembly facility would ship to distribution centers located in Seattle, Lubbock, Nashville, and Philadelphia. The locations of all of these cities on an x-y grid, outbound transportation costs on a ton per mile basis, and total tonnage are all contained in the table.
What is the optimal location for the Super Assembly Center?

A) (550, 808)
B) (513, 772)
C) (526, 795)
D) (538, 784)

Question 72

Explain the two situations in which managers use network design models.

Question 73

It is very important that long-term consequences be thought through when making facility decisions, because

A) network designers can use this fact to influence the role of the new facility and the focus of people working there.
B) facilities last a long time and have an enduring impact on a firm's performance.
C) it is astounding how often tax incentives drive the choice of location.
D) the location of a facility has a significant impact on the extent and form of communication that develops in the supply chain network.

Question 74

A manufacturer of cat towers wishes to locate a super assembly facility to meet their cat tower assembly needs for the next millennium. Currently, carpet, cylinders, yarn and fasteners are purchased in bulk from suppliers in North Haverbrook, Ogden, and Springfield in the quantities shown in the table. The super assembly facility would ship to distribution centers located in Seattle, Lubbock, Nashville, and Philadelphia. The locations of all of these cities on an x-y grid, outbound transportation costs on a ton per mile basis, and total tonnage are all contained in the table.
What is the cost to transport 500 tons of material between the Springfield and Seattle locations?

A) $325,000
B) $192,500
C) $682,500
D) $437,500

Question 75

A manufacturer of cat towers wishes to locate a super assembly facility to meet their cat tower assembly needs for the next millennium. Currently, carpet, cylinders, yarn and fasteners are purchased in bulk from suppliers in North Haverbrook, Ogden, and Springfield in the quantities shown in the table. The super assembly facility would ship to distribution centers located in Seattle, Lubbock, Nashville, and Philadelphia. The locations of all of these cities on an x-y grid, transportation costs on a ton per mile basis, and total tonnage are all contained in the table. Formulate and solve a model that will minimize the shipping costs to the super assembly center.

Where should the new plant be located and what is the total system shipping cost?