MKTG 372 Ch 5

________ costs increase as the number of facilities in a supply chain increases. A) Inventory B) Transportation C) Retail operation D) Information

Inventory

A firm may increase the number of facilities beyond the point that minimizes total logistics cost to improve the response time to its customers.

TRUE

Capacity allocation decisions have a significant impact on supply chain performance because they tend to stay in place for several years.

TRUE

Decisions concerning the role of each facility are significant because they determine the amount of flexibility the supply chain has in changing the way it meets demand.

TRUE

High tariffs lead to more production locations within a supply chain network, with each location having a lower allocated capacity.

TRUE

If facilities have lower fixed costs, many local facilities are preferred because this helps lower transportation costs.

TRUE

If the production technology is very inflexible and product requirements vary from one country to another, a firm has to set up local facilities to serve the market in each country.

TRUE

Inventory and facility costs increase as the number of facilities in a supply chain increase.

TRUE

Network design decisions have a significant impact on performance because they determine the supply chain configuration and set constraints within which the other supply chain drivers can be used either to decrease supply chain cost or to increase responsiveness.

TRUE

When designing supply chain networks, companies must build appropriate flexibility to help counter fluctuations in exchange rates and demand across different countries.

TRUE

Which of the following is not a factor influencing network design decisions in supply chains? A) Strategic factors B) Tactical factors C) Macroeconomic factors D) Political factors E) Infrastructure factors

Tactical factors

A facility that also has low cost as its primary objective, but its strategic role is broader than that of an offshore facility is A) an offshore facility. B) a source facility. C) a server facility. D) a contributor facility. E) an outpost facility.

a source facility

A facility that serves the role of being a low-cost supply source for markets located outside the country where the facility is located is A) an offshore facility. B) a source facility. C) a server facility. D) a contributor facility. E) an outpost facility.

an offshore facility

Macroeconomic factors influencing network design decisions would typically NOT include A) tarriffs. B) exchange rates. C) shipping costs. D) available production technologies.

available production technologies.

Which of the following is the first phase in the design of a global supply chain network? A) Define a supply chain strategy B) Define the regional facility configuration C) Select desirable sites D) Location choices E) Implement supply chain strategy

Define a supply chain strategy

Decisions concerning the role of each facility are significant because they determine the amount of rigidity the supply chain has in changing the way it meets demand.

FALSE

Capital, growth strategy, existing networks and global competition mostly affect which of the four Global Network Design Decisions? A) Phase I - Supply Chain Strategy B) Phase II - Regional Facility Configuration C) Phase III - Desirable Sites D) Phase IV - Location Choices

Phase I - Supply Chain Strategy

A facility that creates new products, processes, and technologies for the entire network is A) an offshore facility. B) a source facility. C) a server facility. D) a lead facility. E) an outpost facility.

a lead facility

Decisions concerning the role of each facility are significant because A) they determine the amount of flexibility the supply chain has in demanding change. B) they determine the amount of flexibility the supply chain has in changing the way it meets demand. C) they determine the amount of capacity the supply chain has in changing the way it meets demand. D) they determine the amount of inventory the supply chain has in demanding change. E) None of the above are true.

they determine the amount of flexibility the supply chain has in changing the way it meets demand.

Which of the following is not a phase in the design of a global supply chain network? A) Define a supply chain strategy B) Define the regional facility configuration C) Select desirable sites D) Location choices E) Implement supply chain strategy

Implement supply chain strategy

Which of the following is NOT a classification for Supply Chain Network Design Decisions? A) Facility role B) Inventory allocation C) Facility location D) Market and supply allocation

Inventory allocation

Network design decisions have a significant impact on performance because they determine the supply chain configuration and set constraints within which inventory, transportation, and information can be used to either decrease supply chain cost or increase responsiveness.

TRUE

Supply chain network design decisions include the location of manufacturing, storage, or transportation-related facilities and the allocation of capacity and roles to each facility.

TRUE

The allocation of supply sources and markets to facilities does not need to be reconsidered on a regular basis so that the allocation can be changed as market conditions or plant capacities change.

TRUE

The allocation of supply sources and markets to facilities has a significant impact on performance because it affects total production, inventory, and transportation costs incurred by the supply chain to satisfy customer demand.

TRUE

A facility that serves the market where it is located but also assumes responsibility for product customization, process improvements, product modifications, or product development is A) an offshore facility. B) a source facility. C) a server facility. D) a contributor facility. E) an outpost facility.

a contributor facility

Network design decisions have a significant impact on performance because they A) determine the supply chain configuration. B) determine the supply chain conflagration. C) set constraints within which inventory, transportation, and information can be used to either decrease supply chain cost or increase responsiveness. D) set constraints within which inventory, transportation, and information can be used to either increase supply chain cost or decrease responsiveness. E) A and C only

A and C only

Facility location decisions have a long-term impact on a supply chain's performance because it is cost effective to shut down a facility or move it to a different location.

FALSE

Firms focusing on cost leadership tend to find the lowest cost location for their manufacturing facilities, but only if that means locating very far from the markets they serve.

FALSE

If facilities have higher fixed costs, many local facilities are preferred because this helps lower transportation costs.

FALSE

If production technology displays significant economies of scale, many local locations are the most effective.

FALSE

If the technology is flexible, it becomes more difficult to consolidate manufacturing in a few large facilities.

FALSE

Tariffs have a minor influence on location decisions within a supply chain.

FALSE

Transportation costs increase as the number of facilities is increased.

FALSE

When faced with a network design decision, the goal of a manager is to design a network that minimizes the firm's costs while satisfying customer needs in terms of demand and responsiveness.

FALSE

Which of the following is not one of Kasra Ferdows' classifications of possible strategic roles for various facilities in a global supply chain network? A) Offpost facility B) Source facility C) Server facility D) Contributor facility E) Outpost facility

Offpost facility

Tariffs, economies of scale and aggregate factor costs mostly affect which of the four Global Network Design Decisions? A) Phase I - Supply Chain Strategy B) Phase II - Regional Facility Configuration C) Phase III - Desirable Sites D) Phase IV - Location Choices

Phase II - Regional Facility Configuration

Available infrastructure, skill needs and response time mostly affect which of the four Global Network Design Decisions? A) Phase I - Supply Chain Strategy B) Phase II - Regional Facility Configuration C) Phase III - Desirable Sites D) Phase IV - Location Choices

Phase III - Desirable Sites

The availability of suppliers, transportation services, communication, utilities, and warehousing infrastructure mostly affect which of the four Global Network Design Decisions? A) Phase I - Supply Chain Strategy B) Phase II - Regional Facility Configuration C) Phase III - Desirable Sites D) Phase IV - Location Choices

Phase III - Desirable Sites

The supply chain network is designed to maximize total profits, taking into account the expected margin and demand in each market, various logistics and facility costs, and the taxes and tariffs at each location.

TRUE

Managers should keep certain issues in mind when making network design decisions for a supply chain. Which of these would NOT be on that list? A) Quality of life B) Tarriffs and tax incentives C) Cultural implications D) The life span of most facilities is getting shorter and shorter.

The life span of most facilities is getting shorter and shorter.

A facility built because of tax incentives, local content requirement, tariff barriers, or high logistics cost to supply the region from elsewhere with the objective to supply the market where it is located is A) an offshore facility. B) a source facility. C) a server facility. D) a contributor facility. E) an outpost facility.

a server facility

A facility located primarily to obtain access to knowledge or skills that may exist within a certain region is A) an offshore facility. B) a source facility. C) a server facility. D) a contributor facility. E) an outpost facility.

an outpost facility

The facilities in a supply chain network must A) at least maximize total logistics cost. B) at least equal the number that maximizes total logistics cost. C) at least equal the number that minimizes total logistics cost. D) at least minimize total logistics cost. E) none of the above

at least equal the number that minimizes total logistics cost.

Supply chain network design decisions include A) only the location of manufacturing, storage, or transportation-related facilities. B) only the allocation of capacity and roles to each facility. C) both the location of manufacturing, storage, or transportation-related facilities and the allocation of capacity and roles to each facility. D) neither the location of manufacturing, storage, or transportation-related facilities nor the allocation of capacity and roles to each facility. E) none of the above

both the location of manufacturing, storage, or transportation-related facilities and the allocation of capacity and roles to each facility.

Capacity allocation decisions have a significant impact on supply chain performance because A) capacity decisions tend to be permanent. B) capacity decisions tend to be changed frequently. C) capacity decisions do not tend to stay in place for several years. D) capacity decisions tend to stay in place for several years. E) none of the above

capacity decisions tend to stay in place for several years.

If a country has very high tariffs, A) companies either do not serve the local market or set up manufacturing plants within the country to save on duties. B) companies do not serve the local market. C) companies set up manufacturing plants within the country to save on duties. D) companies will not serve the local market or set up manufacturing plants within the country to save on duties. E) companies will serve the local market by setting up regional manufacturing plants.

companies either do not serve the local market or set up manufacturing plants within the country to save on duties.

Developing countries often create free trade zones where A) duties and tariffs are imposed as long as production is used primarily for export. B) duties and tariffs are imposed as long as production is used primarily for import. C) duties and tariffs are relaxed as long as production is used primarily for export. D) duties and tariffs are relaxed as long as production is used primarily for import. E) duties and tariffs are increased as long as production is used primarily for export.

duties and tariffs are relaxed as long as production is used primarily for export.

It is very important that long-term consequences be thought through when making facility decisions, because A) network designers can use this fact to influence the role of the new facility and the focus of people working there. B) facilities last a long time and have an enduring impact on a firm's performance. C) it is astounding how often tax incentives drive the choice of location. D) the location of a facility has a significant impact on the extent and form of communication that develops in the supply chain network. E) the quality of life at selected facility locations has a significant impact on performance.

facilities last a long time and have an enduring impact on a firm's performance.

Production technology displays significant economies of scale, A) many high-capacity locations are the most effective. B) few high-capacity locations are the most effective. C) few high-capacity locations are the least effective. D) few low-capacity locations are the most effective. E) few low-capacity locations are the least effective.

few high-capacity locations are the most effective.

Firms focusing on cost leadership tend to A) locate facilities close to the market they serve. B) locate facilities very far from the market they serve. C) find the lowest cost location for their manufacturing facilities. D) select a high-cost location to be able to react quickly. E) none of the above

find the lowest cost location for their manufacturing facilities.

Supply chain network design decisions classified as capacity allocation are concerned with A) what processes are performed at each facility. B) where facilities should be located. C) how much capacity should be allocated to each facility. D) what markets each facility should serve and which supply sources should feed each facility. E) none of the above

how much capacity should be allocated to each facility.

The objective of the second phase of network design is to A) maximize total profits, taking into account the expected margin and demand in each market. B) select a precise location and capacity allocation for each facility. C) select a set of desirable sites within each region where facilities are to be located. D) identify regions where facilities will be located, their potential roles, and their approximate capacity. E) specify what capabilities the supply chain network must have to support a firm's competitive strategy.

identify regions where facilities will be located, their potential roles, and their approximate capacity.

Total logistics costs are a sum of the A) inventory and facility costs. B) transportation and facility costs. C) inventory and transportation costs. D) inventory, transportation, and facility costs. E) inventory, transportation, and faculty costs.

inventory, transportation, and facility costs.

The allocation of supply sources and markets to facilities has a significant impact on performance because A) it cannot affect total production, inventory, and transportation costs incurred by the supply chain to satisfy customer demand. B) it cannot affect customer demand. C) it affects total production, inventory, and transportation costs incurred by the supply chain to satisfy customer demand. D) it cannot satisfy customer demand. E) none of the above

it affects total production, inventory, and transportation costs incurred by the supply chain to satisfy customer demand.

If the technology is flexible, A) it becomes more difficult to consolidate manufacturing in a few large facilities. B) it becomes more difficult to distribute manufacturing in many local facilities. C) it becomes easier to consolidate manufacturing in a few large facilities. D) it becomes easier to consolidate manufacturing in many local facilities. E) the firm should have one central facility.

it becomes easier to consolidate manufacturing in a few large facilities.

The quality of life at selected facility locations has a significant impact on performance because A) network designers can use this fact to influence the role of the new facility and the focus of people working there. B) facilities last a long time and have an enduring impact on a firm's performance. C) it is astounding how often tax incentives drive the choice of location. D) the location of a facility has a significant impact on the extent and form of communication that develops in the supply chain network. E) it influences the work force available and their morale.

it influences the work force available and their morale.

Managers making facility location decisions should carefully consider tariffs and tax incentives, because A) network designers can use this fact to influence the role of the new facility and the focus of people working there. B) facilities last a long time and have an enduring impact on a firm's performance. C) it is astounding how often tax incentives drive the choice of location. D) the location of a facility has a significant impact on the extent and form of communication that develops in the supply chain network. E) it influences the work force available and their morale.

it is astounding how often tax incentives drive the choice of location.

Facility location decisions have a long-term impact on a supply chain's performance because A) it is very expensive to shut down a facility or move it to a different location. B) it is not expensive to shut down a facility or move it to a different location. C) it is advisable to shut down a facility or move it to a different location. D) it is cost effective to shut down a facility or move it to a different location. E) none of the above

it is very expensive to shut down a facility or move it to a different location.

If the production technology is very inflexible and product requirements vary from one country to another, a firm has to set up A) local facilities to serve the market in each country. B) a few high-capacity facilities to serve the market in each country. C) many local facilities because this helps lower transportation costs. D) a few high-capacity facilities because this helps lower transportation costs. E) many high-capacity facilities because this helps lower transportation costs.

local facilities to serve the market in each country.

Firms focusing on responsiveness tend to A) locate facilities close to the market they serve. B) locate facilities very far from the market they serve. C) find the lowest cost location for their manufacturing facilities. D) select a high-cost location to be able to react slowly. E) none of the above

locate facilities close to the market they serve.

Firms that focus on cost leadership tend to find the lowest-cost location might A) locate far from their customers. B) locate in a higher cost area to provide faster response. C) have many facilities to take advantage of economies of scale. D) increase inventory levels to reduce stockouts.

locate far from their customers.

If facilities have lower fixed costs, A) a few high-capacity facilities are preferred because this helps lower transportation costs. B) a few local facilities are preferred because this helps lower transportation costs. C) many high-capacity facilities are preferred because this helps lower transportation costs. D) many local facilities are preferred because this helps lower transportation costs. E) one central facility is preferred because this helps lower transportation costs.

many local facilities are preferred because this helps lower transportation costs.

When faced with a network design decision, the goal of a manager is to design a network that A) maximizes the firm's profits. B) minimizes the firm's costs. C) satisfies customer needs in terms of demand and responsiveness. D) maximizes the firm's profits while satisfying customer needs in terms of demand and responsiveness. E) none of the above

maximizes the firm's profits while satisfying customer needs in terms of demand and responsiveness.

Allocating too little capacity results in A) temporary damage. B) good responsiveness if demand is not satisfied or low cost if demand is filled from a distant facility. C) good responsiveness if demand is not satisfied or high cost if demand is filled from a distant facility. D) poor responsiveness if demand is not satisfied or low cost if demand is filled from a distant facility. E) poor responsiveness if demand is not satisfied or high cost if demand is filled from a distant facility.

poor responsiveness if demand is not satisfied or high cost if demand is filled from a distant facility.

Allocating too much capacity to a location results in A) permanent damage. B) poor utilization, and as a result, higher costs. C) high utilization, and as a result, higher costs. D) poor utilization, and as a result, lower costs. E) high utilization, and as a result, lower costs.

poor utilization, and as a result, higher costs.

Building some over-capacity in the supply chain network and making the capacity flexible allows a firm to alter production flows within the supply chain to A) produce less in facilities that have a lower cost based on current exchange rates. B) produce more in facilities that have a lower cost based on current exchange rates. C) produce more in facilities that have a higher cost based on current exchange rates. D) produce less in facilities that have the same cost based on current exchange rates. E) None of the above are accurate.

produce more in facilities that have a lower cost based on current exchange rates.

The objective of the third phase of network design is to A) maximize total profits, taking into account the expected margin and demand in each market. B) select a precise location and capacity allocation for each facility. C) select a set of desirable sites within each region where facilities are to be located. D) identify regions where facilities will be located, their potential roles, and their approximate capacity. E) specify what capabilities the supply chain network must have to support a firm's competitive strategy.

select a set of desirable sites within each region where facilities are to be located.

The objective of the first phase of network design is to A) maximize total profits, taking into account the expected margin and demand in each market. B) select a precise location and capacity allocation for each facility. C) select a set of desirable sites within each region where facilities are to be located. D) identify regions where facilities will be located, their potential roles, and their approximate capacity. E) specify what capabilities the supply chain network must have to support a firm's competitive strategy.

specify what capabilities the supply chain network must have to support a firm's competitive strategy.

Duties that must be paid when products and/or equipment are moved across international, state, or city boundaries are referred to as A) taxes. B) tax incentives. C) tariffs. D) incentives. E) none of the above

tariffs

The implications of culture should not be glossed over because A) tariffs and tax incentives should be carefully considered. B) facilities last a long time and have an enduring impact on a firm's performance. C) it is astounding how often tax incentives drive the choice of location. D) the location of a facility has a significant impact on the extent and form of communication that develops in the supply chain network. E) the quality of life at selected facility locations has a significant impact on performance.

tariffs and tax incentives should be carefully considered.

The allocation of supply sources and markets to facilities should be reconsidered on a regular basis so that A) the allocation can be held constant as market conditions or plant capacities expand. B) the allocation can be changed as market conditions or plant capacities stagnate. C) the allocation can be held constant as market conditions or plant capacities change. D) the allocation can be changed as market conditions or plant capacities change. E) none of the above

the allocation can be changed as market conditions or plant capacities change.

Customer order entry is A) the point in time when the customer has access to choices and makes a decision regarding a purchase. B) the customer informing the retailer of what they want to purchase and the retailer allocating product to the customer. C) the process where product is prepared and sent to the customer. D) the process where the customer receives the product and takes ownership. E) none of the above

the customer informing the retailer of what they want to purchase and the retailer allocating product to the customer.

Supply chain network design decisions classified as market and supply allocation are concerned with A) what processes are performed at each facility. B) where facilities should be located. C) how much capacity should be allocated to each facility. D) what markets each facility should serve and which supply sources should feed each facility. E) none of the above

what markets each facility should serve and which supply sources should feed each facility.

Supply chain network design decisions classified as facility role are concerned with A) what processes are performed at each facility. B) where facilities should be located. C) how much capacity should be allocated to each facility. D) what markets each facility should serve and which supply sources should feed each facility. E) none of the above

what processes are performed at each facility.

Supply chain network design decisions classified as facility location are concerned with A) what processes are performed at each facility. B) where facilities should be located. C) how much capacity should be allocated to each facility. D) what markets each facility should serve and which supply sources should feed each facility. E) none of the above

where facilities should be located.