Question 1

According to the concept of economies of scale, as plant output expands

Accepted Answer

The concept of economies of scale tells us that as plant output expands, unit costs decrease. The reasons include the greater utilization of capital equipment and the productivity gains that come with specialization of employees within the plant.

Question 2

Which of the following is a factor that transforms a low-cost location to a high-cost location?

Accepted Answer

Adverse changes in exchange rates can quickly alter a country's attractiveness as a manufacturing base. Currency appreciation can transform a low-cost location into a high-cost location.

Question 3

Just-in-time systems reduce product quality although it brings about huge cost savings.

Accepted Answer

In addition to the cost benefits, just-in-time systems can also help firms improve product quality.

Question 4

Logistics is the activity that controls the

Accepted Answer

Logistics is the part of the supply chain that plans, implements, and controls the effective flows and inventory of raw material, component parts, and products used in manufacturing.

Question 5

Which of the following statements is true of the country factors that govern international business?

Accepted Answer

Other things being equal, a firm should locate its various manufacturing activities where the economic, political, and cultural conditions, including relative factor costs, are conducive to the performance of those activities.

Question 6

Just-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.

Accepted Answer

The basic philosophy behind just-in-time (JIT) systems is 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.

Question 7

The Six Sigma methodology

Accepted Answer

The Six Sigma methodology is a direct descendant of the total quality management (TQM) philosophy that was widely adopted, first by Japanese companies and then American companies during the 1980s and early 1990s. While it is almost impossible for a company to achieve such perfection, Six Sigma quality is a goal to strive toward. The Six Sigma program is particularly informative in structuring global processes that multinational corporations can follow in quality and productivity initiatives. As such, increasingly companies are adopting Six Sigma programs to try to boost their product quality and productivity.

Question 8

The term distribution center is rarely used today in a global context.

Accepted Answer

When warehousing shifted from passive storage of products to strategic assortments and processing, the term distribution center became more widely used to capture this strategic and dynamic aspect of not only storing but also of adding value to products that are being warehoused or staged. A DC is at the center of the global supply chain; specifically, the order-processing part of the order-fulfillment process.

Question 9

At six sigmas, a production process would be highly accurate and create just

Accepted Answer

At six sigmas, a production process would be 99.99966 percent accurate, creating just 3.4 defects per million units. While it is almost impossible for a company to achieve such perfection, Six Sigma quality is a goal to strive toward.

Question 10

Which of the following makes being dependent on one location particularly risky?

Accepted Answer

Being too dependent on one location is particularly risky in a world of floating exchange rates. Many firms disperse their manufacturing plants to different locations as a "real hedge" against potentially adverse moves in currencies.

Question 11

Central 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

Accepted Answer

Central 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 mass production of a standardized output. The trade-off implicit in this idea is between unit costs and product variety.

Question 12

Which of the following statements is true of Six Sigma?

Accepted Answer

Six Sigma is a statistically based philosophy that aims to reduce defects, boost productivity, eliminate waste, and cut costs throughout a company. At Six Sigma, a production process would be 99.99966 percent accurate, creating just 3.4 defects per million units.

Question 13

In the context of a tube of toothpaste, the box in which the toothpaste is shipped to the store from the warehouse is the primary packaging.

Accepted Answer

Primary packaging holds the product itself, so in this case it would be the tube or the box the tube in sold in.

Question 14

In global purchasing, Level I involves domestic purchasing activities only.

Accepted Answer

Level I is simply companies engaging in domestic purchasing activities only. Often, these companies stay close to their home base in their domestic market when purchasing raw materials, component parts, and the like for their operations.

Question 15

Flexible manufacturing technology is also known as

Accepted Answer

The term flexible manufacturing technology is also known as lean production.

Question 16

Identify an advantage of adopting a low minimum efficient scale.

Accepted Answer

The advantages of a low minimum efficient scale include allowing the firm to accommodate demands for local responsiveness or to hedge against currency risk by manufacturing the same product in several locations.

Question 17

One way to reduce risks associated with a JIT global supply chain is to source inputs from several suppliers located in different countries.

Accepted Answer

There are ways of reducing the risks associated with a global supply chain that operates on just-in-time principles. To reduce the risks associated with depending on one supplier for an important input, some firms source these inputs from several suppliers located in different countries.

Question 18

Before 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

Accepted Answer

The European Union requires that the quality of a firm's manufacturing processes and products be certified under a quality standard known as ISO 9000 before the firm is allowed access to the EU marketplace.

Question 19

Which of the following is a characteristic of manufacturing technology that can be pivotal in deciding where to locate an international business?

Accepted Answer

Three technological factors majorly affect international business: the level of fixed costs, the minimum efficient scale, and the flexibility of the technology.

Question 20

Deming argued that to keep pace with changes in the workplace

Accepted Answer

Deming argued that management has the responsibility to train employees in new skills to keep pace with changes in the workplace. In addition, he believed that achieving better quality requires the commitment of everyone in the company.

Quiz 17: Global Production and Supply Chain Management