Scenario: Hafstrom Motors
Based in Kentucky, Hafstrom Motors has always used spare parts made in America for its automobiles. However, sales and profits have slumped over the past three years. A senior manager at the company comes up with new strategies for improving the firm's production activities.
-The top management of the company contends that Hafstrom would benefit most from manufacturing its own parts,rather than sourcing it from elsewhere,even if they are made at another location overseas.Which of the following is being recommended in this approach?
A) just-in-time manufacturing
B) location economies
C) vertical integration
D) outsourcing

Question

Quizplus · Accepted Answer

The approach being recommended here is vertical integration, which involves a company taking on activities previously performed by suppliers (in this case, manufacturing its own parts instead of sourcing them from other companies). This can be done to improve control over the production process, reduce costs, and improve efficiency in the supply chain. The other options listed (just-in-time manufacturing, location economies, outsourcing) may be related to production strategies, but they do not address the specific recommendation being made in this scenario.

Scenario: Hafstrom Motors Based in Kentucky, Hafstrom Motors Has Always Used Spare Parts