Ch. 15

Which of the following is a disadvantage of outsourcing production to independent suppliers? A. It makes it necessary for firms to invest in specialized assets. B. It reduces the strategic flexibility of a firm by limiting its ability to adapt during changes in exchange rates. C. It increases the risk of suppliers expropriating a firm's proprietary product technology for their own use. D. It increases the bureaucratic inefficiencies and costs associated with transfer pricing decisions. E. It makes it difficult to achieve coordination in an organization by increasing the number of subunits in it.

It increases the risk of suppliers expropriating a firm's proprietary product technology for their own use.

Which of the following holds true for products with low value-to-weight ratios? A. They are relatively expensive. B. They do not weigh very much. C. Their transportation costs account for a very small percentage of total costs. D. It is advisable to manufacture them in multiple locations close to major markets. E. Examples of these products are electronic components and pharmaceuticals.

It is advisable to manufacture them in multiple locations close to major markets.

Which of the following statements is true of Six Sigma? A. The higher the number of "sigmas," the higher the number of errors. B. At Six Sigma, a production process would be 90 percent accurate. C. Six Sigma work standards are based solely on numbers or quotas. D. It is almost impossible for a company to achieve Six Sigma perfection. E. Six Sigma is the modern successor to ISO 9000.

It is almost impossible for a company to achieve Six Sigma perfection.

Which of the following is a drawback of ISO 9000 certification? A. It is bureaucratic and costly for many firms. B. It is an impossible standard to achieve. C. It is losing its prominence in international business. D. It is ineffective in Europe. E. It is ineffective in bringing about quality improvement.

It is bureaucratic and costly for many firms.

Which of the following is a disadvantage of vertical integration? A. It fails to protect a firm's proprietary product technology. B. Firms lose out on the opportunities to build dynamic capabilities. C. It is difficult to determine appropriate prices for goods transferred to subunits within a firm. D. It fails to facilitate investments in highly specialized assets. E. It does not allow a firm to exercise tight control over its production process.

It is difficult to determine appropriate prices for goods transferred to subunits within a firm.

Which of the following is an argument that supports vertical integration? A. It makes planning, coordination, and scheduling of adjacent processes easy. B. It facilitates the transfer of proprietary product technology. C. It increases the number of subunits in an organization. D. It eliminates the need to invest in specialized assets. E. It prevents a firm from maintaining flexibility.

It makes planning, coordination, and scheduling of adjacent processes easy.

Which of the following is a disadvantage of a firm that enters long-term alliances? A. It may lose the ability to realize economies of scale. B. It does not have the authority to terminate the alliance if partners fail to perform. C. It loses the capability to capture the benefits of vertical integration. D. It may limit its strategic flexibility by the commitments it makes to its alliance partners. E. It risks losing opportunities to build on its skills and capabilities.

It may limit its strategic flexibility by the commitments it makes to its alliance partners.

Which of the following firms should concentrate its production in a centralized location? A. Jupiter Inc. operates in an industry where the fixed costs are high and services of supporting industries are of prime importance. B. Star Goal Inc. manufactures consumer products like processed food, apparel, and cosmetics for which national differences in consumer taste and preference are wide. C. Uranious Inc. operates in an economy where volatile fluctuations in exchange rates are frequently expected. D. Earth Ventures Inc. is a mining company that exports iron ore—a product with low value-to-weight ratio—to various countries. E. Silver Times Inc. customizes heavy machines without the use of flexible manufacturing technologies.

Jupiter Inc. operates in an industry where the fixed costs are high and services of supporting industries are of prime importance.

Which of the following is a recent trend among international businesses regarding make-or-buy decisions? A. Foreign facilities are considered nothing more than low-cost production facilities. B. Research and design operations are restricted to home-country production facilities. C. Manufacturing facilities are being based in each major national market. D. Firms are avoiding time-based competition with each other. E. Outsourcing decisions are expanding to embrace the production of service activities.

Outsourcing decisions are expanding to embrace the production of service activities.

Which of the following firms should concentrate its production in a decentralized location? A. Univion Inc. operates in an industry where national differences in political economy and culture have a substantial impact on its cost of production. B. Saturn Inc. operates in an industry where volatile fluctuations in important exchange rates are expected. C. Brew Technology manufactures industrial machines and equipment that serve universal needs. D. Gold Dreams Inc. customizes jewelry in precious metal and stones with the aid of flexible manufacturing technologies. E. Uniton Inc. uses a production technology that has high fixed costs and high minimum efficient scale.

Saturn Inc. operates in an industry where volatile fluctuations in important exchange rates are expected.

A statistically based philosophy that aims to reduce defects, boost productivity, eliminate waste, and cut costs throughout a company is known as _____. A. ISO 9000 B. just-in-time C. Six Sigma D. lean production E. total quality management

Six Sigma

The principal tool that most managers now use to increase the reliability of their product offering is _____, a statistically based methodology for improving product quality. It is a direct descendant of the total quality management philosophy. A. Six Sigma B. lean manufacturing C. just-in-time inventory D. ISO 9000 E. mass customization

Six Sigma

Which of the following has caused proprietary software solutions to implement electronic data interchange systems obsolete? A. Just-in-time inventory system B. Flexible machine technology C. The Internet D. Dynamic capabilities E. Social Networking

The Internet

Which of the following is a drawback of entering into strategic alliances with independent suppliers? A. The firm loses out on many of the benefits arising from investments in specialized assets. B. The strategic relationship between a firm and each of its essential suppliers is not market-mediated. C. The firm risks giving away key technological know-how to a potential competitor. D. It cannot be terminated even if the supplier fails to perform. E. They are short-term relationships in which firms have stronger bargaining power than their suppliers.

The firm risks giving away key technological know-how to a potential competitor.

Which of the following is a result of pressure from the headquarters of a company to customize a product to the demands of consumers in a particular nation at a foreign production site? A. Development of additional capabilities B. Centralization of production activities C. Long production runs of standardized output D. Low demand for local responsiveness. E. Basing production facilities in a single location.

Development of additional capabilities

Which of the following is a consequence of improved quality control? A. Greater warranty costs B. Higher scrap costs C. Direct reduction in unit costs D. Decreased productivity E. Reduced inventory turnover

Direct reduction in unit costs

Which of the following refer(s) to skills of a corporation that become more valuable over time through learning? A. Global learning B. Accrued interests C. Dynamic capabilities D. Learning effects E. Universal needs

Dynamic capabilities

Which of the following is a step taken by automobile companies in situations where either centralization or decentralization of production is not feasible? A. Outsourcing production to developing countries B. Inshoring production into the home country C. Selling product patents and technology to competitors D. Refraining from international trade E. Establishing top-to-bottom manufacturing operations

Establishing top-to-bottom manufacturing operations

Which of the following is true according to the transnational strategy? A. Foreign facilities are viewed as nothing more than low-cost production facilities. B. Valuable knowledge resides only in a firm's domestic operations. C. Foreign sites can take the lead role for the design of products to serve important regional markets. D. Local managers should not be empowered to enhance their factories strategic standing within the corporation. E. The strategy opposes the empowerment of local managers to enhance their factories strategic standing within the corporation.

Foreign sites can take the lead role for the design of products to serve important regional markets.

Which of the following companies adheres to the total quality management steps identified by W. Edward Deming? A. Unisorn Inc. believes in empowering employees by reducing interactions between them and their supervisors. B. Galaxy Inc. empowers its employees to report problems or recommend improvements without any fear. C. New Run Inc. bases its work standards solely on numbers or quotas. D. Ovion Inc. believes that the management is not responsible for training employees in new skills. E. Tirex Inc. endorses that the achievement of better quality is solely dependent on the lower management.

Galaxy Inc. empowers its employees to report problems or recommend improvements without any fear.

Which of the following increase(s) under just-in-time (JIT) inventory system? A. Amount of working capital for inventory B. Inventory turnover C. Number of defective parts D. Inventory holding costs E. Storage costs

Inventory turnover

Which of the following is a consequence of a low minimum efficient scale? A. It prevents a firm from utilizing capital equipment fully. B. It enhances the need to centralize production in a single location or a limited number of locations. C. It prevents a firm from accommodating demands for local responsiveness. D. It increases the unit cost of products. E. It allows a firm to hedge against currency risk by manufacturing the same product in several locations.

It allows a firm to hedge against currency risk by manufacturing the same product in several locations.

Which of the following is an advantage for a firm that buys component parts from independent suppliers? A. It makes planning, coordination, and scheduling of adjacent processes easier. B. It protects a firms proprietary production technology. C. It facilitates investments in highly specialized assets. D. It allows a firm to maintain its flexibility by switching orders between suppliers. E. It provides the opportunity to build dynamic capabilities in production activities.

It allows a firm to maintain its flexibility by switching orders between suppliers

Which of the following is a consequence of adverse changes in exchange rates? A. It brings more foreign direct investment into the country. B. It decreases the dollar cost of products exported from the country. C. It alters a country's attractiveness as a manufacturing base. D. It transforms the country into a low-cost location. E. It decreases the amount of imports brought into the country.

It alters a country's attractiveness as a manufacturing base.

Which of the following is a consequence of using just-in-time inventory systems? A. It slows down inventory turnover. B. It increases inventory holding costs. C. It increases the amount of working capital a firm needs. D. It can help firms improve product quality. E. It does not allow defective inputs to be spotted immediately.

It can help firms improve product quality

Which of the following is an implication of a mass production system? A. It results in short production runs B. It fails to realize economies of scale C. It reduces the number of defects and eliminates waste. D. It helps to accommodate consumer preferences for product diversity E. It creates massive inventories that have to be stored in large warehouses.

It creates massive inventories that have to be stored in large warehouses.

Which of the following is a result of using electronic data interchange systems? A. It helps a firm decentralize materials management decisions to the plant level. B. It helps achieve longer productions runs in manufacturing units. C. It excludes customers from the system. D. It helps firms in reducing their inventory turnover. E. It delays the realization of economies of scale.

It helps a firm decentralize materials management decisions to the plant level.

Which of the following is a consequence of using flexible machine cells? A. It fails to adapt to the production of different products. B. It generally results in stockpiles of partly finished products. C. It improves capacity utilization and reduces wastes. D. It increases setup time for complex equipment. E. It adds to the cost structure of a firm.

It improves capacity utilization and reduces wastes

Which of the following is true of a product that serves universal needs? A. It becomes necessary to customize the product to suit small consumer groups. B. It becomes necessary to accommodate demands for local responsiveness. C. It increases the attractiveness of concentrating production at an optimal location. D. It is difficult to serve national differences in consumer taste and preference. E. It is attractive to globally disperse production to all major markets.

It increases the attractiveness of concentrating production at an optimal location.

Flexible manufacturing technologies enable companies to: A. establish multiple manufacturing facilities in each major national market. B. build large inventories. C. achieve product standardization across markets. D. increase their work in progress. E. produce customized products without a significant cost penalty.

produce customized products without a significant cost penalty

Manufacturing firms should typically aim at lowering the costs of value creation by: A. decreasing inventory turnover. B. stocking huge amounts of inventory. C. lowering the quality of products. D. increasing after-sales services cost. E. reducing production costs.

reducing production costs

A second strategic objective shared by production and logistics is to increase product quality by eliminating defective products from both the supply chain and the manufacturing process. In this context, quality means _____, implying that the product has no defects and performs well. A. affordability B. flexibility C. reliability D. adaptability E. patentability

reliability

One way to reduce the risks associated with a global supply chain that operates on just-in-time principles is to: A. depend on one supplier for an important input. B. outsource the production of inputs only to advanced countries. C. hold an excess buffer stock of inventory. D. source inputs from several suppliers located in different countries. E. avoid using electronic data interchange.

source inputs from several suppliers located in different countries

A(n) _____ refers to an asset designed to perform a specific task, whose value is significantly reduced in its next-best use. A. fixed asset B. specialized asset C. intangible asset D. liquid asset E. deferred asset

specialized asset

A major cost saving from just-in-time inventory systems comes from: A. a shift in focus away from quality. B. increasing productivity of workers. C. speeding up inventory turnover. D. creating a buffer stock of inventory. E. writing off excess unsold inventory against earnings.

speeding up inventory turnover

A firm should make a component internally rather than contracting it out to a supplier when: A. substantial investments in specialized assets can be avoided. B. the firm uses proprietary product technology that helps in gaining competitive advantage. C. it wants to reduce the number of subunits in the organization. D. the optimal location for manufacturing a product is beset by political risks. E. different tax regimes and exchange rate movements increase the complexity of transfer pricing decisions.

the firm uses proprietary product technology that helps in gaining competitive technology

The Six Sigma methodology is a direct descendant of the _____ philosophy that was widely adopted, first by Japanese companies and then American companies during the 1980s and early 1990s. A. total quality management B. enterprise resource planning C. business process reengineering D. just-in-time E. business process outsourcing

total quality management

Concentration of production makes most sense when: A. trade barriers are low. B. the product's value-to-weight ratio is low. C. important exchange rates are volatile. D. flexible manufacturing technology does not exist. E. the production technology has low fixed costs.

trade barriers are low.

A product's value-to-weight ratio affects location decision primarily because of its influence on: A. transportation costs. B. shelf life. C. work-in-progress. D. inventory turnover. E. capacity utilization.

transportation costs

Technological factors are making it feasible for firms to concentrate manufacturing facilities at optimal locations. The major brakes on this trend are: A. differences in endowment factors. B. transportation costs and trade barriers. C. rising national differences in consumer tastes and preferences. D. growing free trade areas and democracy. E. declining fluctuations in exchange rates.

transportation costs and trade barriers

The Maroon Apparel company controls the weaving, dyeing, cutting, and sewing of its merchandise. Apart from these activities, it also manufactures buttons, zips, buckles, and other accessories for its apparel. This is done in order to exercise tight control over its manufacturing processes and to reduce production costs. This strategy of the company is known as _____. A. vertical integration B. unrelated diversification C. horizontal integration D. mass customization E. conglomerate diversification

vertical integration

Two product factors impact location decisions. They are the product's value-to-weight ratio and: A. whether the product serves universal needs. B. the product's life cycle. C. the product's packaging. D. the availability of flexible manufacturing technology. E. whether the product is produced using environmental friendly methods.

whether the product serves universal needs

Uvicon Inc. and Bionor Inc. are firms that compete against each other in the global market. Uvicon Inc. has a high level of fixed costs and high minimum efficient scale, while Bionor Inc. has a low level of fixed costs and minimum efficient scale. In this scenario, which of the following is true? A. Uvicon Inc. will be better prepared to hedge against potential adverse moves in currencies than Bionor Inc. B. Uvicon Inc. will benefit from centralizing its production activities and Bionor Inc. from decentralizing. C. Uvicon Inc. will have more bargaining power over contract manufacturers than Bionor Inc. D. Uvicon Inc. will be better enabled to adapt to changes in consumer demand in regional markets than Bionor Inc. E. Uvicon Inc. will be better prepared to accommodate demands for local responsiveness than Bionor Inc.

Uvicon Inc. will benefit from centralizing its production activities and Bionor Inc. from decentralizing.

Amber Engineers Inc. wants to be able to customize products for different national markets and in turn increase its customer responsiveness. However, the fixed costs associated with its production are high. Hence, these functions will be performed most efficiently if Amber Engineers Inc.: A. sets up a production facility that is well suited for mass production. B. establishes multiple manufacturing facilities in each major national market. C. increases each manufacturing unit's minimum efficient scale of output. D. adopts flexible manufacturing technologies to help achieve mass customization. E. locates its production unit in countries that have drastic fluctuations in exchange rates.

adopts flexible manufacturing technologies to help achieve mass customization.

Under a more traditional system as opposed to a just-in-time inventory system, warehousing parts for weeks before they are used: A. reduces the total working capital required by a firm. B. allows many defective parts to be produced before a problem is recognized. C. results in a near error-free production process. D. reduces the costs related to inventory holding. E. reduces the need to write off excess unsold inventory against earnings.

allows many defective parts to be produced before a problem is recognized.

Flexible manufacturing technologies help a company achieve mass customization, which increases its _____. A. cost structure B. waste C. customer responsiveness D. learning effects E. externalities

customer responsiveness

To be able to accommodate demands for local responsiveness, a firm should: A. ignore national differences in consumer tastes and preferences. B. decentralize production activities to the major national or regional markets. C. ensure that the manufacturing processes in all units are inflexible. D. standardize the product coming out of all manufacturing units. E. refrain from hiring host country managers.

decentralize production activities to the major national or regional markets.

The effect of improved quality control is to lower the costs of value creation by reducing production and: A. decreasing inventory turnover. B. decreasing after-sales service costs. C. increasing scrap costs. D. increasing warranty costs. E. increasing time spent on fixing defects.

decreasing after-sales service costs

A firm with a wide product variety will find it: A. difficult to achieve shorter product runs. B. difficult to increase its product sales. C. difficult to reduce its unit costs. D. easy to realize economies of scale. E. easy to reach optimum production efficiency.

difficult to reduce unit costs.

The concept of _____ tells us that as plant output expands, unit costs decrease. One reason is the greater utilization of capital equipment. A. minimum efficient scale B. lean production C. Six Sigma D. economies of scale E. total quality management

economies of scale

The basic philosophy behind just-in-time (JIT) inventory systems is to: A. economize on inventory holding costs. B. reduce inventory turnover. C. create a buffer stock of inventory. D. reduce costs by reducing quality. E. increase the total working capital requirement.

economize on inventory holding costs

Firms now typically use _____ via the Internet to coordinate the flow of materials into manufacturing, through manufacturing, and out to customers. A. flexible manufacturing technology B. lean production C. computer-aided manufacturing D. electronic data interchange E. just-in-time inventory systems

electronic data interchange

Six Sigma refers to a statistically based philosophy that aims to: A. increase defects. B. lower productivity. C. increase the costs of value creation. D. eliminate waste. E. increase cost per unit.

eliminate waste

Pink Polka Fashion Inc., a multinational clothing brand, has plans to expand in the European Union (EU) marketplace. In order to be able to do so, the EU requires that the: A. firm adopt techniques of total quality management. B. firm achieve six sigma. C. firm uses just-in-time inventory system. D. firm patents its designs and technology. E. firm's products be certified under ISO 9000.

firm's products be certified under ISO 9000

A _____ includes a grouping of various types of machinery, a common materials handler, and a computer to control the production of a family of parts or products. A. specialized asset B. dynamic capability C. turnkey project D. flexible machine cell E. just-in-time inventory

flexible machine cell

The flow of skills and product offerings from foreign subsidiary to home country and from foreign subsidiary to foreign subsidiary is known as _____. A. dumping B. reverse mentoring C. cultural relativism D. global learning E. learning effects

global learning

Due to the upward migration in the strategic role of foreign production sites, they are now viewed as: A. centers that do not generate valuable knowledge. B. globally dispersed centers of excellence. C. liabilities that add to the cost structure of the company. D. sweatshops where unskilled labor churns out low-cost goods. E. low quality manufacturing centers.

globally dispersed centers of excellence

Producing a standardized product in large volumes will: A. result in diseconomies of scale. B. increase production efficiency. C. increase production costs. D. result in shorter production runs. E. result in a high minimum efficient scale of output.

increase production efficiency

Adopting flexible manufacturing technology to produce a wide variety of end products results in: A. increased setup times for complex equipment. B. increased utilization of individual machines. C. reduced quality control. D. increased unit cost of products. E. diseconomies of scale.

increased utilization of individual machines

The arrangement of strategic alliances with suppliers was pioneered by the: A. retail industry of America. B. large auto companies of Japan. C. large electronics firms of Germany. D. information technology companies of India. E. large scale manufacturing units of China.

large auto companies of Japan

The drawback of a just-in-time inventory system is that it: A. increases the total capital required by a firm. B. leaves a firm without a buffer stock of inventory. C. increases inventory holding costs, such as warehousing and storage costs. D. is less efficient than traditional system in spotting and fixing defective inputs. E. lowers a company's profitability as measured by return on capital invested.

leaves a firm without a buffer stock inventory

Uniway Technologies Inc. has based its manufacturing units in the country of Lanthania. The country's stable economic and political environment has helped the firm gain competitive advantage by lowering its production costs and improving product quality. Other things being equal, the benefits realized from such a strategy can be typically referred to as _____. A. economies of scope. B. location economies. C. diseconomies of scale. D. economies of power. E. learning economies.

location economies

Mass customization reconciles the two goals of: A. mass production and long production runs. B. standardization and economies of scale. C. high fixed costs and single production facility. D. low cost and product customization. E. local responsiveness and decentralized production.

low cost and product customization

An important objective shared by both production and logistics functions of an international firm is to: A. increase profits by lowering quality. B. increase foreign competition. C. lower costs by dispersing production activities. D. decrease inventory turnover. E. stock excess inventory on hand.

lower costs by dispersing production activities.

Champion Works Inc. is an animation company, headquartered in the U.S. The CEO of the company has decided to outsource some of the production to companies in developing countries, as the firm seems to be losing out on its competitive advantage. This decision to shift functions or processes to less developed countries is due to their: A. strong intellectual property rights laws. B. lower labor costs. C. accessibility to better technology. D. sophisticated infrastructure. E. currency appreciation.

lower labor costs

If a firm possesses proprietary product technology, the best option for that firm would be to: A. manufacture the product in-house so that it does not lose its competitive advantage. B. outsource the production activities to independent suppliers in order to realize economies of scale. C. merge with competitors to reduce investments on technology. D. share the technology to make the industry more competitive. E. transfer the technology to less developed countries.

manufacture the product in-house so that it does not lose its competitive advantage

The level of output at which most plant-level scale economies are exhausted is known as _____. A. mass customization B. breakeven point C. minimum efficient scale D. just-in-time E. lean production

minimum efficient scale

The government of Lithaya placed a large order for buses with Blue Ace Inc., a manufacturing company in Lodesia. In return, it asks the company to subcontract some work to Lithayan manufacturers. This is an example of a(n) _____ in international business. A. consortium agreement B. cartel arrangement C. offset agreement D. monopoly arrangement E. collective bargaining agreement

offset agreement

Which of the following is a source of improvement in the capabilities of foreign factories? A. The need to manufacture a product that serves universal needs B. Market stagnation in the country in which the factory is located C. Apathy of the headquarters of a company toward the foreign production facility D. Abundance of advanced factors of production in the nation in which the factory is located E. Decline in the education level of the country's population where the factory is located

Abundance of advanced factors of production in the nation in which the factory is located.

Which of the following statements is true about minimum efficient scale of output? A. With lesser utilization of capital equipment, the chances of a firm realizing economies of scale increases. B. A plant must avoid operating at the minimum efficient scale of output to realize all major plant-level scale economies. C. When the minimum efficient scale of production is low relative to global demand, it will be economical to manufacture a product at a single location. D. An advantage of a low minimum efficient scale is that it allows the firm to accommodate demands for local responsiveness. E. A low minimum efficient scale increases the risks against potentially adverse fluctuations in exchange rates.

An advantage of a low minimum efficient scale is that it allows the firm to accommodate demands for local responsiveness.

Geminia System, manufacturer of car components, wants to set up a system that will help in sending invoices to its customers once orders for input supply are placed. Which of the following should the company use to perform this function? A. Computer-aided design system B. Lean production C. Just-in-time inventory system D. Electronic data interchange E. Social networking

Electronic data interchange

Which of the following allows suppliers, shippers, and the purchasing firm to communicate with each other via the Internet with no time delay? A. Electronic data interchange system B. Data warehousing system C. Batch processing system D. Skills inventory system E. Just-in-time inventory system

Electronic data interchange system

Which of the following is true of W. Edward Deming's beliefs about the total quality management philosophy? A. He suggested that the quality of supervision should be improved by allowing more time for supervisors to work with employees. B. He argued that management should embrace the philosophy that mistakes, defects, and poor-quality materials are acceptable. C. He believed that work standards should be defined as numbers or quotas. D. He believed that achieving better quality requires the commitment of only the top management. E. He recommended that management should create an environment in which employees will fear recommending improvements.

He suggested that the quality of supervision should be improved by allowing more time for supervisors to work with employees.

Which of the following statements is true about make-or-buy decisions? A. Make-or-buy decisions are applicable only to physical products and not service activities. B. Historically, most outsourcing decisions have involved the manufacture of physical products. C. Information technology companies in the United States are testing code in-house and outsourcing the code writing process. D. Domestic businesses do not suffer from problems regarding outsourcing decisions. E. Volatile exchange rate movements complicate outsourcing decisions.

Historically, most outsourcing decisions have involved the manufacture of physical products.

Which of the following is true about production and logistics in international businesses? A. The term production cannot be used to denote service activities. B. Developing nations are outsourcing the "production" of certain service activities to the United States. C. In an international firm, production and logistics are closely linked. D. The production functions of an international firm can only be located in its home country. E. Demands for local responsiveness create pressures to centralize production activities.

In an international firm, production and logistics are closely linked.

_____ refers to a logistics system designed to deliver parts to a production process as they are needed, not before. A. Inventory information system B. Basket trading system C. Buffer stock system D. Just-in-time inventory system E. Real-time processing system

Just-in-time inventory system

Which of the following was pioneered by Japanese firms during that country's remarkable economic transformation during the 1960s and 1970s? A. Lean production B. Flexible manufacturing technology C. Dynamic capabilities D. Just-in-time inventory systems E. Global learning

Just-in-time inventory systems

Which of the following is the initial reason for the establishment of a foreign production facility? A. Employee turnover is high. B. Product quality is low. C. Inventory turnover is low. D. Exchange rate fluctuations are high. E. Labor costs are low.

Labor costs are low

_____ refers to the activity that controls the transmission of physical materials through the value chain, from procurement through production and into distribution. A. Promotion B. Recruitment C. Logistics D. Benchmarking E. Inshoring

Logistics

Which of the following is an objective of logistics? A. Increase the cost of value creation B. Manage firms global supply chain at a low cost C. Reduce inventory turnover D. Reduce a firm's customer responsiveness E. Increase inventory holding costs

Manage firms global supply chain at a low cost

Which of the following statements is true about performing a manufacturing activity in several locations at once? A. A manufacturing activity must be performed at multiple locations when the fixed costs of setting up a production plant are high. B. Performing a manufacturing activity in several locations makes it difficult for a firm to accommodate demands for local responsiveness. C. Producing in multiple locations reduces the bargaining power of a firm against manufacturers. D. The larger the minimum efficient scale of a plant relative to total global demand, the greater the need for decentralizing production to multiple locations. E. Many firms disperse their manufacturing plants to different locations as a "real hedge" against potentially adverse moves in currencies.

Many firms disperse their manufacturing plants to different locations as a "real hedge" against potentially adverse moves in currencies.

_____ refers to the production of a variety of end products at a unit cost that could once be achieved only through bulk production of a standardized output. A. Lean production B. Just-in-time C. Mass customization D. Specialized asset E. Dynamic capability

Mass customization

Which of the following is true about firms using just-in-time (JIT) inventory system? A. A company is more likely to have excess unsold inventory that it has to write off against earnings. B. Parts enter the manufacturing process immediately; they are not warehoused. C. It is difficult to spot and fix defective inputs. D. The amount of working capital a company needs to finance inventory increases. E. A firm has ample buffer stock of inventory.

Parts enter the manufacturing process immediately; they are not warehoused.

Which of the following products is best manufactured in multiple locations close to major markets to reduce transportation costs? A. Pharmaceuticals B. Petroleum products C. Books D. Magazines E. Electronics

Petroleum products

Which of the following is a hidden cost to basing production in a foreign location? A. Low employee turnover B. Low labor costs C. Poor product quality D. Expensive higher education system E. Low inventory turnover

Poor product quality

Which of the following location externalities is favorable for foreign direct investment in a country? A. Presence of supporting industries B. Market saturated with other foreign competitors C. Lack of intellectual property rights laws D. Presence of a communist political system E. Adverse changes in currency exchange rates

Presence of supporting industries

Which of the following can a vertically integrated firm that buys its components from independent suppliers avoid? A. Problems associated with transfer pricing decisions B. The risk of losing its proprietary product technology to competitors C. The risk of losing out on the opportunities to enhance its dynamic capabilities D. Being dependent on suppliers to invest in specialized assets E. Responding to changes in exchange rates and trade barriers

Problems associated with transfer pricing decisions.

Which of the following is an objective of lean production? A. Reducing the quality of a product to keep unit costs low B. Reducing setup times for complex equipment C. Replacing customized production with mass production D. Decreasing utilization of individual machines through scheduling E. Increasing the level of minimum efficient scale of output

Reducing setup times for complex equipment

Which of the following is a consequence of an electronic data interchange system? A. Increased in production costs B. Reduction in paperwork between suppliers, shippers, and the purchasing firm C. Helps a firm centralize materials management decisions D. Decrease in flexibility and responsiveness of the supply system E. Leaves a firm without a buffer stock of inventory

Reduction in paperwork between suppliers, shippers, and the purchasing firm

Which of the following is true of vertical integration? A. It does not provide long-term competitive advantage. B. A firm risks losing its proprietary product technology to competitors. C. A firm can leverage its dynamic capabilities to produce a range of elegantly designed products. D. Substantial investments in specialized assets are required to manufacture a component. E. The greater the number of subunits in an organization, the more problems controlling those units.

The greater the number of subunits in an organization, the more problems controlling those units.

Which of the following best describes the relationship between the number of "sigmas" and the number of errors? A. The higher the number of "sigmas," the greater the number of errors. B. If the number of "sigmas" is a positive value, then the number of errors is always a negative value. C. The higher the number of "sigmas," the smaller the number of errors. D. The number of "sigmas" is independent of the number of errors. E. If the number of "sigmas" is negative, then the number of errors is always positive.

The higher the number of "sigmas," the smaller the number of errors.

Which of the following is true of high value-to-weight ratio products? A. They tend to have greater weight than other products. B. Their transportation costs account for a very small percentage of total costs. C. They tend to be inexpensive. D. There is great pressure to produce these products in multiple locations close to major markets. E. These products gain weight as raw materials get processed during transportation.

Their transportation costs account for a very small percentage of total costs.

Which of the following statements is true about strategic alliances with suppliers? A. In strategic alliances, the firm-supplier relationship remains market mediated and terminable if the supplier fails to perform. B. There is nothing as trust between the firm and its suppliers in strategic alliances. C. Strategic alliances are short-term relationships that benefit only the independent suppliers. D. In a strategic alliance the benefits arising from investments in specialized assets and vertical integration are lost. E. A firm that enters long-term alliances is expanding its strategic flexibility by committing to its alliance partners.

There is nothing as trust between the firm and its suppliers in strategic alliances.

Which of the following statements is true of flexible manufacturing technologies? A. The idea of manufacturing in each major market is becoming attractive due to these technologies. B. They fail to produce multiple models from the same line. C. They are used to reconcile the goals of large volumes and standardized output. D. They decrease the utilization of individual machines. E. They allow firms to customize products to national differences at a single facility.

They allow firms to customize products to national differences at a single facility.

Which of the following is true of products with high value-to-weight ratios? A. They are expensive to transport. B. They tend to increase in weight after processing C. They tend to be restricted under trade barriers. D. They are expensive and do not weigh very much. E. They have a low inventory turnover.

They are expensive and do not weigh very much.

Which of the following statements is true of industrial products such as steel? A. They serve needs that are the same all over the world. B. They have drastic national differences in consumer taste and preference. C. The need for local responsiveness for these products is more than consumer products. D. It makes sense to produce these products in multiple locations close to major markets. E. A plant must operate at the highest minimum efficient scale of output for these products.

They serve needs that are the same all over the world.

The total quality management philosophy was developed by a number of American consultants. Which of the following individuals is one of them? A. W. Edward Deming B. Philip Kotler C. Michael Porter D. Henry Ford E. Valerie Zeithaml

W. Edward Deming

When should a firm concentrate its production facilities in a centralized location? A. When the production technology has a low minimum efficient scale B. When the production technology has low fixed costs C. When important exchange rates are expected to remain relatively stable D. When flexible manufacturing technologies are not available E. When the product's value-to-weight ratio is low

When important exchange rates are expected to remain relatively stable

Which of the following statements is true about specialized assets? A. The value of a specialized asset significantly increases in its next-best use. B. When one firm must invest in specialized assets to supply another, mutual dependency is created. C. When substantial investments in specialized assets are required, firms prefer to contract it out to a supplier. D. A specialized asset is a flexible manufacturing technology that can be put to multiple uses. E. Using a specialized asset allows firms to switch their orders easily between suppliers.

When one firm must invest in specialized assets to supply another, mutual dependency is created.

When is decentralization of manufacturing facilities most appropriate? A. When the product serves universal needs B. When exchange rates are expected to remain relatively stable C. When the product's value-to-weight ratio is high D. When there are few trade barriers E. When the production technology has low minimum efficient scale

When the production technology has low minimum efficient scale