SCM Chapter 11
18. A certain organization trying to decide where to locate their future factory is considering three locations. They are taking into account three factors: labor costs, currency stability, and proximity to market. Using the weights for each factor listed below and the scores achieved by each of the three considered locations, determine which location should be chosen for the new facility based on the weighted factory location model. SCORES (Maximum 100) FACTOR WEIGHT SITE A SITE B SITE C Labor Cost 0.30 90 80 80 Currency Stability 0.40 80 85 80 Proximity to Market 0.30 80 80 80 a. Site A b. Site B c. Site C d. All sites are equally attractive
A
21. The following facility location technique uses fixed and variable costs to analyze potential locations: a. Break-even model b. Business cluster analysis model c. Weighted-factor rating model d. Mean absolute deviation model
A
24. When a number of interconnected companies and institutions from a particular field are located in a single geographic location, that location is referred to is a(n): a. Business cluster b. Metroplex c. Regional business center d. Industrial point
A
3. Which of the following strategic foreign facilities is set-up primarily produce products at a low cost with minimal technical and managerial resources? The items produced at these factories are often exported to countries where costs to produce similar items would be higher. a. Offshore factory b. Server factory c. Source factory d. Outpost factory
A
1. Organizations that primarily compete on speed of delivery, such as FedEx and UPS, utilize which of the following approaches for location determination: a. Sourcing center b. Hub and spoke c. Air and ground d. LTL consolidation
B
12. Some companies import components, use them in the production of their end items, and ultimately export them to other countries. If a company wanted to import the components duty-free, use those components in the production of their end items, and then export them to other countries, they would most likely utilize a(n): a. Duty-free Territory b. Foreign Trade Zone c. International Cross Docking Zone d. International Processing Center
B
17. Use the breakeven model to determine which of the statements below is TRUE according to the information provided in the table relating to two different locations considered for a new manufacturing facility. LOCATION ANNUAL FIXED COSTS UNIT VARIABLE COSTS Site A $50,000 $10 Site B $20,000 $30 a. Site A is the desired location if the production rate is 1000 units per year b. The breakeven point for these two locations is 1500 units per year c. Site B is the desired location if the production rate is 2000 units per year d. The breakeven point for these two locations is 500 units per year
B
2. Which of the following strategic foreign facilities is set-up primarily to avoid tariff barriers, minimize exchange risk, and/or take advantage of government incentives? Ultimately the factory operates as most normal factories making only minor improvements in either the products or processes. a. Offshore factory b. Server factory c. Source factory d. Outpost factory
B
25. The Bruntland Commission defines ____ as the ability to meet the needs of the present without compromising the ability of future generations to meet their own needs. a. Lean manufacturing b. Sustainable development c. Six Sigma manufacturing d. Progressive design
B
4. According to the text, when the location of a factory is dictated by low production costs, fairly developed infrastructure and availability of skilled workers the factory is referred to as a(n): a. Offshore factory b. Source factory c. Server factory d. Lead factory
B
9. Which of the following trade agreements was set up after WWII and originally consisted of six countries? a. Association of Southeast Asian Nations (ASEAN) b. European Union (EU) c. Association of African Markets (AAM) d. Southern Common Market (MERCOSUR)
B
10. Which of the following regional trade agreements is paired with the appropriate region of the world? a. NAFTA − Southeast Asian Nations b. COMESA − United States, Canada, and Mexico c. MERCOSUR − Argentina, Brazil, Paraguay, and Uruguay d. EU − Middle East nations, not including Israel
C
15. Certain states in the United States have laws that secure the rights of employees to decide for themselves whether or not to join or financially support a labor union. These laws are called: a. Employee freedom acts b. Free trade laws c. Right-to-work laws d. Sanctioned union acts
C
20. The following facility location technique uses quantitative and qualitative dimensions and is subject to interpretation and bias by the analyst: a. Break-even model b. Business cluster analysis model c. Weighted-factor rating model d. Mean absolute deviation model
C
23. All of the following are considered components of variable costs EXCEPT: a. Labor b. Materials c. Property Taxes d. Utilities
C
5. Your company needs to determine the appropriate location of a factory in order to take advantage of government incentives and avoid tariff barriers, the type of factory needed can be referred to as a(n): a. Offshore factory b. Source factory c. Server Factory d. Lead Factory
C
7. Examples of regional trade agreements include all of the following EXCEPT: a. Association of Southeast Asian Nations (ASEAN) b. European Union (EU) c. Association of African Markets (AAM) d. Southern Common Market (MERCOSUR)
C
11. The World Economic Forum creates International Competitive Rankings that are ranked on their Pillars of Competitiveness. How many Pillars of Competitiveness does the World Economic Forum have? a. Three b. Five c. Ten d. Twelve
D
13. Which of the following is a factor in choosing a location? a. Currency Stability b. Proximity to Markets c. Access to Suppliers d. All of these
D
14. Which of the following would be considered a quality of life factor? a. Education b. Arts, culture, and recreation c. Community safety d. All of these
D
16. Which of the following secures the right of employees to decide whether or not to join or financially support a union? a. Union shop laws b. Union planning forums c. Ethical union initiatives d. Right-to-work laws
D
19. A certain organization trying to decide where to locate their future factory is considering three locations. They are taking into account three factors: labor costs, currency stability, and proximity to market. Using the weights for each factor listed below and the scores achieved by each of the three considered locations, determine which location should be chosen for the new facility based on the weighted factory location model. SCORES (Maximum 100) FACTOR WEIGHT SITE A SITE B SITE C Labor Cost 0.20 90 65 90 Currency Stability 0.50 80 90 80 Proximity to Market 0.30 80 80 80 a. Site A b. Site B c. Site C d. All sites are equally attractive
D
22. All of the following are considered components of fixed costs EXCEPT: a. Cost of land b. Equipment c. Insurance d. Utilities
D
6. The type of factory which is the source of product and process innovation and competitive advantage for the entire organization is referred to as a(n): a. Offshore factory b. Source factory c. Server factory d. Lead factory
D
8. Which of the following issues is (are) important to consider when trying to determine the location of a firm's facilities? a. The stability in the location considered b. Environmental issues regulated by domestic laws or international trade agreements c. Access to suppliers from the location considered d. All of these
D
10. The European Union (EU) created the world's largest free trade area.
F
13. A country that imposes high tariffs encourages foreign-based companies to import goods.
F
14. While the development and proliferation of the Internet and web-based commerce has not completely eliminated the relevancy of facilities location, because of the Internet, the speed of delivery and cost in serving the customer are no longer factors in determining the strategic location of an organization's facilities.
F
16. If an organization wanted to set up a facility in an area near a number of advanced suppliers, competitors, and research facilities in order to have access to current information on materials, components, and technologies the organization would likely set up a source factory.
F
17. A list of quality-of-life factors would most likely include proximity to customers, proximity to suppliers, tariff rates, and currency stability.
F
19. According to the textbook, two models that utilize quantitative data, which can help determine the attractiveness of one location versus another, are the Break-Even Model and the Extrapolated Average Cost Model.
F
4. A lead factory is set up in a location with an abundance of advanced suppliers, competitors, research facilities and knowledge centers in order to have access to the most current information on materials, components, technologies and products.
F
7. The Americas have two primary regional trade agreements, NAFTA, an agreement between the United States, Canada, and Mexico, and COMESA, an agreement between all of the South American countries.
F
According to the text, with increasing globalization the access to global markets and corporate networks makes the role of location less important as a source of competitive advantage.
F
11. While many developing countries are attractive to companies seeking out low labor costs, there are other important factors such as productivity levels, employee skill and education levels, turnover rates, and employment trends that certain industries find just as important, if not more important, in determining facilities' location.
T
12. When trying to gauge a nation's competitiveness a manager may want to consult one of two primary world competitiveness rankings, the World Competitiveness Yearbook published by IMD and The Global Competitiveness Report prepared by the World Economic Forum.
T
15. Many multinational corporations are moving their facilities and headquarters out of Taiwan and some Southeast Asian countries in order to take advantage of the proximity to customers. The more attractive customer markets are developing in China.
T
18. A right-to-work law allows employees to decide for themselves whether or not they want to join or financially support a union.
T
20. While business clusters seem logical in well-established areas with developed economies like Silicon Valley and Hollywood, California because companies can easily collaborate, compete, and share knowledge, some high-tech clusters have developed in areas with emerging economies such as Mexico, Singapore, and India.
T
3. According to the text, the primary objective of an offshore factory is to take advantage of low labor costs.
T
5. The WTO is the only global international organization dealing with the rules of trade between nations.
T
6. China's economy is shifting from labor-intensive industries to arrears like marketing and the production of high technology products that typically provide higher levels of value.
T
8. Facility location is a business decision that will ultimately impact issues like the cost of supplies, facilities, and materials, as well as lead times and customer service levels.
T
9. Regional trade agreements and the World Trade Organization provide a framework for managers in terms of investigating important facility location elements like tariffs, costs, and the free flow of goods and services in different regions of the world.
T
According to the text, global location decisions are made to optimize the performance of the supply chain and be consistent with the firm's competitive strategy.
T
