Scenario: Global Manufacturing, Inc. (GMI)
GMI is a fast-growing U.S. company that wants a production system that makes each of its product's two components in the location where the cost of production is lowest. The components will then be taken to maquiladoras for final assembly. GMI purchased an existing company in Brazil to produce component A and built a subsidiary in Thailand to produce component B.
-GMI's production system can best be described as ________.
A) greenfield production
B) centralized production
C) rationalized production
D) market power production

Question

Quizplus · Accepted Answer

GMI's production system is rationalized production, which involves locating each stage of production where it can be done most efficiently and cost-effectively. This approach helps to minimize production costs and achieve economies of scale. This is different from centralized production (where all production is done in one location) and greenfield production (where a new facility is built from scratch in a new location). Market power production is not a relevant term in this scenario.