Chapter 5

ABC automotive does not currently have the necessary technology and expertise to manufacture a mandatory component required for their exhaust systems, the cost of purchasing the machinery, tooling, training, and employees is very costly. ABC automotive should A) refuse to manufacture exhaust systems until the requirements change. B) search for a new part that is equivalent. C) purchase all needed resources and make the part. D) purchase the part from a third party vendor.

D

The types of products or services to offer are strategic ___________ decisions, while what to make or buy are strategic _________ decisions.

entrepreneurial, operational

Given the importance of insourcing and outsourcing decisions, the supply manager should be ______________

involved

Buying is favored throughout corporations today to (multiple answers) A) focus on core strengths B) increase productivity C) remain competitive D) decrease flexibility

A, B, C

The THREE types of procurement outsourcing contracts are A) procure to pay B) source to contract C) source to pay D) invoice to pay

A, B, C

Which decisions can the supply manager help provide insight? (multiple answers) A) What products or services should be outsourced. B) Negotiation of contract terms. C) Which supplier should be selected. D) Monitoring the relationships with customers.

A, B, C

True or false: Closure requirements for all subcontracts are universal.

False

True or false: Firms only need to make insourcing and outsourcing decisions during the initial setup phase.

False

A die shop has three options during production they are to make the part from a blank, buy a finished piece, or machine a partial piece from a forging. If the production manager chooses to machine an incomplete part from the purchased forging, this is known as the ___________ zone

gray

A company that needs to protect intellectual property, even with a confidentiality agreement, may choose to __________ over __________

make, buy

ABC manufacturing will start supplying a new valve with their product line starting in a few months; the management team has to make a _______________ or ______________ decision in regards to the new component.

make, buy

The subcontract cost, schedule, technical control, and configuration control are managed by the A) reliability administrator B) quality engineer C) contract program representative D) subcontract administrator

subcontract administrator

A _____________ is used to complete work that has been bid out by prime contractors.

subcontractor

The range between 100% insourcing and 100% outsourcing. that is useful for testing and learning both sides of supply without fully committing is known as A) the green zone B) the red zone C) the outsource zone D) the gray zone

the gray zone

A buyer who contracts with a supplier to deliver services directly to the buyer's customer is viewed as a service ____________

triad

What is a reason a company may choose insourcing? A) To keep core competencies in-house. B) Gaining access to larger pools of talent with more current knowledge of advancing technologies. C) Cost reduction achieved through economies of scale. D) Make up for lack of in-house resources.

A

Which of the following are reasons that a company may choose to make over buy? (multiple answers) A) To have more control of the quality of the material/product than a supplier. B) The ability to produce the material or product at a lower cost and avoid paying a 3rd party's profit margin. C) No existing supplier in the market and not enough time to spend developing one before the product is required. D) The firm is at or near capacity and subcontracting from a supplier may make better sense.

A, B, C

The THREE primary reasons to outsource logistics are A) reduced costs B) increased focus on core activities C) decreased customer service D) improved services

A, B, D

Which of the following are challenges or questions that must be addressed when an organization decides to insource? (multiple answers) A) The company must focus on how they will discontinue relationships with current suppliers. B) The company must ensure a smooth transition to avoid production interruptions. C) The company must hire a lot of new employees to produce the insourced product. D) The company must be able to provide raw materials and parts for production.

A, B, D

Which of the following are reasons that previously make or buy decisions can be reversed? (multiple answers) A) Environmental circumstances B) Organizational circumstances C) Customer service ratings D) Market circumstances

A, B, D

A subcontract performance summary is beneficial for (multiple answers) A) information for renegotiation. B) inventory of all services or goods. C) evaluation fore future selection. D) information for subsequent claims.

A, C, D

Choose the reasons a firm should purchase goods or services over making them. A) The company can make use of excess capacity by creating a material instead of letting the capacity sit idle. B) The firm wishes to take advantage of a supplier's brand image. C) The supplier can provide the benefit of economies of scale for components that are non-vital to the organization's operations. D) The firm has strict on time delivery deadlines and requires a multi-sourcing strategy using an external supplier in addition to an internal source.

B, C, D

Increased outsourcing measures can be credited to (multiple answers) A) increased inventories B) deregulations on transportation C) focusing on core competencies D) enhanced logistic technology

B, C, D

Insourcing and outsourcing decisions should be evaluated A) every 5 years B) only with new products C) continuously D) on an annual basis

Continuously

The decision to reverse functions, processes or projects that were being supported with external resources is known as A) insourcing B) buy C) make D) outsourcing

Insourcing

True or false: All make or buy decisions should emphasize the long-term goals for robust and flexible supply chains.

True

Hiring another organization to perform service to save costs, gain expertise, free up management time, and refocus on core competencies is known as ____________

outsourcing