Question 1

Vertical integration, whether forward or backward, requires the firm to become more specialized.

Accepted Answer

Vertical integration, whether forward or backward, involves a firm expanding its operations either closer to the raw materials (backward) or closer to the end consumers (forward), rather than becoming more specialized in one particular area.

Question 2

Developing long-term, "partnering" relationships with a few suppliers is a long-standing American purchasing strategy.

Accepted Answer

Historically, American companies often pursued a strategy of sourcing from multiple suppliers to foster competition and reduce costs, rather than developing long-term, "partnering" relationships with a few suppliers. This approach has evolved, and more companies now recognize the benefits of closer partnerships with fewer suppliers for strategic items.

Question 3

McDonald's was able to utilize existing plants and transportation systems in preparing the supply chain for opening its stores in Moscow.

Accepted Answer

McDonald's had to build its supply chain from scratch in Moscow, including farms, processing plants, and distribution systems, due to the lack of existing infrastructure that met its standards.

Question 4

When using the low-cost strategy for supply chain-management, the firm should invest aggressively to reduce production lead time.

Accepted Answer

The low-cost strategy focuses on minimizing costs, and aggressive investments to reduce production lead time may not align with this goal as they can be expensive and the primary focus is on cost minimization rather than speed or flexibility.

Question 5

A fast-food retailer that acquired a spice manufacturer would be practicing backward integration.

Accepted Answer

Backward integration involves a company acquiring a supplier or manufacturer. In this case, the fast-food retailer is acquiring a spice manufacturer, which is a supplier of one of its key ingredients.

Question 6

Outsourcing is a form of specialization that allows the outsourcing firm to focus on its key success factors.

Accepted Answer

Outsourcing allows a company to delegate non-core activities to a specialized third-party vendor, which enables the company to focus on its core competencies and key success factors.

Question 7

Outsourcing refers to transferring a firm's activities that have traditionally been internal to external suppliers.

Accepted Answer

Outsourcing involves delegating internal activities of a company to external suppliers.

Question 8

The objective of the make-or-buy decision is to help identify the products and services that can be obtained externally.

Accepted Answer

The make-or-buy decision is made to determine whether to produce a product or service in-house or to purchase it from an external vendor. Its objective is to identify which products or services can be procured from external sources.

Question 9

The key to effective supply-chain management is to get many suppliers to compete with each other, in order to drive down prices.

Accepted Answer

Effective supply-chain management focuses on building long-term relationships with a few reliable suppliers rather than constantly switching among many to drive down prices. This approach ensures stability, quality, and can lead to cost savings through efficiencies and collaboration.

Question 10

Even though a firm may have a low cost strategy, supply-chain strategy can select suppliers primarily on response or differentiation.

Accepted Answer

The answer of Even though a firm may have a...

Question 11

Keiretsus offer a middle ground between few suppliers and vertical integration.

Accepted Answer

Keiretsus are a form of strategic alliance where a group of companies, typically in the same industry, join together under a parent company. This allows for collaboration and coordination between companies without the need for vertical integration or relying on a few suppliers.

Question 12

Savings in the supply chain exert more leverage as the firm has a lower net profit margin.

Accepted Answer

When a firm has a lower net profit margin, savings in the supply chain can have a greater impact on overall profitability. This is because there is less room for error and every cost savings opportunity can help improve the bottom line. Therefore, savings in the supply chain can exert more leverage in situations where a firm's net profit margin is low.

Question 13

Supply-chain management faces additional challenges, such as those related to quality production and distribution systems, when companies enter growing global markets.

Accepted Answer

As companies expand their reach to global markets, they must navigate cultural, legal, and logistical differences that can affect the quality of production and distribution systems, as well as the overall supply chain management.

Question 14

Because the supply chain has become so electronic and automated, opportunities for unethical behavior have been greatly reduced.

Accepted Answer

Although electronic and automated supply chains have increased efficiency and transparency, they have not completely eliminated opportunities for unethical behavior. For example, cyber attacks and data breaches can still occur, and unethical actions such as insider trading and fraud can still be carried out through electronic means. Additionally, supplier relationships and labor practices can still be impacted by unethical behavior in the supply chain.

Question 15

A firm that employs a "response strategy" should minimize inventory throughout the supply chain.

Accepted Answer

A "response strategy" focuses on being responsive and flexible to customer needs, which may involve holding more inventory to ensure quick delivery times and high service levels, rather than minimizing inventory.

Question 16

The supply chain for a brewery would include raw ingredients such as hops and barley but not the manufactured goods such as bottles and cans.

Accepted Answer

The supply chain for a brewery includes both the raw ingredients such as hops and barley, and the manufactured goods such as bottles and cans, as all are essential components for the production and packaging of the final product.

Question 17

Supply-chain decisions are not generally strategic in nature, because purchasing is an ordinary expense to most firms.

Accepted Answer

Supply-chain decisions can have a significant impact on a company's overall strategy and competitiveness, and therefore should be considered strategic decisions. While purchasing may be a regular expense for the firm, the decisions related to procurement, logistics, and distribution can have far-reaching consequences for the organization.

Question 18

Operations managers are finding online auctions a fertile area for disposing of discontinued inventory

Accepted Answer

Many operations managers are turning to online auctions as a way to dispose of discontinued inventory quickly and efficiently. This allows them to recoup some value from unwanted stock and free up space for more profitable products. Additionally, online auctions can provide a larger audience of potential buyers, increasing the chances of a successful sale.

Question 19

With the many-suppliers strategy, the order usually goes to the supplier that offers the best quality.

Accepted Answer

With the many-suppliers strategy, the order usually goes to the supplier that offers the best price, rather than the best quality. This strategy is based on having multiple suppliers compete on price, which can lead to lower costs for the buyer. However, it can also result in lower quality or inconsistent quality if the chosen supplier is not able to deliver on quality standards.

Question 20

Because service firms do not acquire goods and services externally, their supply-chain management issues are insignificant.

Accepted Answer

Service firms may not acquire physical goods, but they do acquire various inputs such as labor, expertise, transportation, and technology from external sources. Thus, they still have to manage their supply chain to ensure timely delivery and quality of inputs.

Quiz 13: Supply-Chain Management