Question 1

Orchid Inc., a consumer electronics company, has adopted a supply-chain management system. The supply-chain management system can help Orchid:

Accepted Answer

A supply-chain management system helps in optimizing operations, reducing costs, and potentially increasing revenues by improving efficiency and coordination across the supply chain.

Question 2

The practice of using a company's internal employees or other resources to accomplish a task is known as _____.

Accepted Answer

Insourcing refers to the practice of using a company's internal resources or employees to accomplish tasks or projects that could be outsourced to external providers.

Question 3

Acacia Inc., an Australian textile company, imports cotton from Lebristar, a country in Southeast Asia. It can be said that:

Accepted Answer

Importing cotton from a country like Lebristar, which might offer lower prices due to cheaper labor or raw material costs, can lead to cost savings for Acacia Inc. This, in turn, can enhance its competitiveness in the market by allowing it to offer products at more attractive prices or enjoy higher margins.

Question 4

Komelia, a country in southern Europe, imports rubber and plastic products from China. It can be said that Komelia is engaged in _____.

Accepted Answer

Global procurement refers to the process of sourcing goods and services from international markets across geopolitical boundaries, which fits the description of Komelia importing rubber and plastic products from China.

Question 5

Oasis Inc., a multinational hotel chain, uses rooms, gym facilities, swimming pools, beds, food, drinks, entertainment, and staff in its hotels worldwide to provide a hospitable environment to its guests. All these factors are components of Oasis's _____.

Accepted Answer

These components are part of Oasis Inc.'s production system, as they are used to create the service (a hospitable environment) that the company provides to its guests.

Question 6

Ivory Inc., an American publishing company, outsources content writing work to Kuber Inc., an Indian content services company. Ivory is unable to document the work that employees of Kuber do in the production process. Moreover, it finds it difficult to stipulate what the actions of these employees should be in the production process. This scenario illustrates that Ivory is subjected to high _____.

Accepted Answer

Operational risk is the correct answer because it refers to the risk of loss resulting from inadequate or failed internal processes, people, and systems, or from external events. In this scenario, Ivory Inc.'s inability to document or stipulate the actions of Kuber Inc.'s employees in the production process indicates a failure in internal processes and management of external partners, which are key components of operational risk.

Question 7

Azure Inc., an American publishing company, has business tie-ups with companies in India that provide content services to Azure. Given this information, it can be said that Azure is engaged in _____.

Accepted Answer

Outsourcing refers to the business practice of hiring a party outside a company to perform services or create goods that traditionally were performed in-house by the company's own employees and staff. Since Azure Inc. is an American company that has business tie-ups with companies in India for content services, it is engaging in outsourcing by utilizing external companies to provide services.

Question 8

Nick is the chief executive officer of Helium Inc., a smartphone manufacturing company. He is considering the time and money required to develop chipsets internally and is comparing the advantages of producing them in-house over purchasing them from a global supplier. Given this information, it can be said that Nick is involved in the _____.

Accepted Answer

Nick is evaluating whether to produce chipsets internally or buy them from an external supplier, which is a classic example of a make-or-buy decision process. This involves assessing the costs, benefits, and strategic implications of either manufacturing components in-house or purchasing them from external suppliers.

Question 9

Daffodil Inc., an American publishing company, began outsourcing content writing work to Pride Inc., a content services company in Mildrid, a country in Southeast Asia. Tensions arose between the two companies when Pride failed to deliver content to Daffodil on a predecided date. Even though Pride continues to be Daffodil's outsourcing vendor, the relationship between the two companies has become problematic. This scenario illustrates that Daffodil is subjected to high _____.

Accepted Answer

The answer of Daffodil Inc., an American publishing company, began...

Question 10

To ensure the quality of its products, Hexagon Inc., an American apparel company, produces its products in-house instead of outsourcing production. Given this information, it can be said that Hexagon is engaged in _____.

Accepted Answer

Insourcing refers to a business practice where work that could be contracted out is performed in-house. Since Hexagon Inc. produces its products in-house instead of outsourcing, it is engaged in insourcing.

Question 11

Obtaining a good or service from an external supplier, often in international markets, is known as _____.

Accepted Answer

Outsourcing refers to the practice of obtaining goods or services from an external supplier, often from companies in other countries, to reduce costs or access specialized skills.

Question 12

Magnolia Inc., an American software development company, has opened a call center in India. The company has hired Indian employees to work in the call center. This scenario is an example of _____.

Accepted Answer

Offshoring refers to the practice of a company relocating a business process or operation from one country to another. In this scenario, Magnolia Inc., an American company, has opened a call center in India and hired local employees, which is a classic example of offshoring.

Question 13

Dolphin Inc., a Spanish transportation company, purchased buses from Anderson Inc., an American automobile company. In return, the Spanish government asked Anderson to purchase parts for the buses from or assemble portions of the buses in Spain. This scenario illustrates a(n) _____ between Anderson and the Spanish government.

Accepted Answer

This scenario is an example of an offset agreement, where one party agrees to purchase goods or services with the condition that the seller will make some purchases or investments in the buyer's country.

Question 14

Cooper Inc., an American computer manufacturing company, procures motherboards for its computers from Chinese motherboard manufacturers instead of producing them internally. Given this information, it can be said that:

Accepted Answer

C) Cooper Inc. is likely to save millions of dollars of investment by outsourcing motherboard production to Chinese manufacturers instead of investing in the infrastructure, technology, and workforce required to produce them internally.

Question 15

Harrison is a manager at Delta Inc., a computer manufacturing company. He believes that Delta should produce all computer components in-house rather than buying them elsewhere. Which of the following is a true statement that supports his belief?

Accepted Answer

A) Making components in-house can help a firm maintain control of sensitive knowledge, which is a true statement supporting the belief in producing components in-house to protect proprietary information and maintain competitive advantage.

Question 16

Thistle Inc., an American steel manufacturing company, procures limestone from China. Which of the following is a challenge that Thistle is likely to face by engaging in global procurement?

Accepted Answer

Global procurement often involves high transportation costs due to the distance goods must travel, especially when sourcing materials from overseas.

Question 17

Dillon Inc., an automobile company, wants to make its supply chain efficient and avoid carrying excess inventory. Dillon can do so by using a _____.

Accepted Answer

Just-in-time (JIT) manufacturing system is designed to increase efficiency and decrease waste by receiving goods only as they are needed in the production process, thereby reducing inventory costs. This approach aligns with Dillon Inc.'s goal to make its supply chain efficient and avoid carrying excess inventory.

Question 18

Alpha Inc., a car manufacturing company, uses a just-in-time (JIT) manufacturing system. By using the JIT system, _____.

Accepted Answer

Just-in-Time (JIT) manufacturing systems focus on reducing inventory costs by producing goods only as they are needed in the production process, thereby necessitating careful planning from start to finish to avoid excess inventory. Choices A, B, and C do not directly relate to the core principles of JIT.

Question 19

Herald Inc., an American steel manufacturing company, spends significant time acquiring iron ore from China. Given this information, it can be said that Herald is involved in the _____.

Accepted Answer

Herald Inc. is involved in the procurement process, which refers to the activities and procedures necessary to acquire goods or services from external sources, in this case, iron ore from China.

Question 20

Desmond is the chief executive officer of Topaz Inc., a computer manufacturing company. He is contemplating whether to buy chipsets from external suppliers or make them in-house. Desmond's contemplation illustrates a(n) _____.

Accepted Answer

Desmond's contemplation about whether to buy chipsets from external suppliers or make them in-house is a sourcing decision. This involves determining where the materials or components needed for production will come from, whether internally produced or purchased from outside suppliers.

Quiz 18: Global Operations and Supply-Chain Management