MAN 3600 - Chapter 15
What are the considerations that help determine where an international firm will locate its production facilities?
Ability to minimize costs and improve quality.
A firm is considering two countries as sites for production facilities. Both countries have similar factor costs and political climates. Country A has poor infrastructure; Country B has access to technology and relatively easy transport of raw materials. Country ______ seems to offer better location economies.
B
Which of these products would have a low value-to-weight ratio?
Bulk chemicals
Cost and marketing functions are the two critical factors determining the make-or-buy decision.
False Reason: Most make-or-buy decisions are based on two critical factors: cost and production capacity.
The term production is only used to denote a physical product.
False Reason: Production refers to the activities involved in creating a physical product or a service.
ISO 9000 is the principal tool that most managers now use to increase the reliability of the product offering.
False Reason: The principal tool that most managers now use to increase the reliability of the product offering is the Six Sigma quality improvement methodology.
Garrison Electric Corp. redesigned its manufacturing area and has a dozen large machines that are controlled by a computer. Each machine is able to switch quickly between the types of parts it produces based on the computer command it receives. What type of technology is Garrison Electric Corp. using?
Flexible machine cells
Artisan Inc. needs to find a company that will store its products and when requested provide customization—then ship the products to the final customer. What type of facility can help Artisan Inc. with this?
Global distribution center
Which aspect of global logistics is concerned with the decision-making process on the raw materials, work-in-progress, and finished goods inventory for a multinational corporation?
Global inventory management
Jamie's company is interested in doing business in South America but they have been unsuccessful because of formal trade barriers that make it too costly to do business there. In this situation, which entity is affecting country attractiveness?
Government
Which action should a company take if it wants to hedge against potentially adverse moves in currency rates?
Have manufacturing plants in different locations.
What are two potential "hidden" costs of outsourcing production to a foreign location?
High employee turnover Poor product quality
Which two factors would lead a firm to choose a concentrated production configuration?
High fixed costs High minimum efficient scale of production
Which three decisions are part of global inventory management?
How much inventory to hold In what form to hold inventory Where to locate inventory in the supply chain
What two benefits can a company derive from flexible manufacturing technologies?
Improve efficiency Lower costs
Flexible manufacturing involves a range of manufacturing technologies designed to do what three things?
Improve quality control Reduce setup times Increase utilization of machines
What are two major strategic objectives of logistics and production?
Increase product quality Lower costs
An advantage of ______ inventory systems is that parts enter the production process immediately. In that way, defective parts can be spotted quickly.
JIT
The inventory model used to decrease costs by having inventory arrive at a manufacturing plant only when it is needed is called ______ inventory.
JIT
In which type of factory should cutting-edge production take place or be tested?
Lead
A company that engages in international purchasing, but does so in a reactive and uncoordinated way, is at which level of global purchasing?
Level II
A company that engages in global purchasing activities that are integrated across worldwide locations and functional groups is at which level of global purchasing?
Level V
What term is given to the activities that encompass the movement of physical materials through the supply chain?
Logistics
Which three factors would lead a company to adopt a decentralized production configuration strategy?
Low fixed costs Low value-to-weight ratio High trade barriers
Select the three methods by which improved quality control can reduce costs.
Lower re-work and scrap costs Increased productivity Reduced warranty costs
Which type of factory can be viewed as an information-gathering unit?
Outpost
What are three strategic roles a foreign factory might have?
Outpost factory Server factory Offshore factory
What are two examples of high value-to-weight products that should be produced at the most optimal production location?
Pharmaceuticals Electronic components
What are two advantages of flexible manufacturing technology?
Produce at the lowest unit cost Produce a wider variety of end products
What are three factors that would lead a company to establish a concentrated production configuration?
Product serves universal needs. Value-to-weight ratio is high. High fixed costs
What are the three broad groups of factors that a company should consider when making decisions on where to produce its products?
Production factors Country factors Technological factors
Kendrik ordered a sweater online. When it was delivered, the box holding the sweater had a large hole in it and as a result, the sweater had gotten wet and was ruined. In this situation, what function did the package fail to perform?
Protect
What three factors would encourage a firm to make a product in-house?
Quality control Protect proprietary technology Lower costs
What are three characteristics of the total quality management philosophy?
Quality of supervision should improve. The work environment be open to employee suggestions. Mistakes should be eliminated.
______ is the process of moving goods from their typical final destination for the purpose of capturing value or proper disposal.
Reverse logistics
Which type of packaging is designed to contain several primary packages?
Secondary
The statistically-based process used by companies today to reduce costs and boost productivity is ______.
Six Sigma
Which type of factory is used and treated the same as any factory in a global firm's home country?
Source
What are two examples of location externalities that a firm would consider when making a foreign investment decision?
Supporting industries Appropriately skilled labor pool
The Six Sigma quality improvement method evolved from the ______ system.
TQM
Which situation favors a "buy" decision?
The firm lacks the expertise to make a product.
What are the three main functions of packaging?
To contain, protect and preserve them.
A global distribution center is used to store quantities and assortments of products and allow for customization of those products.
True Reason: A DC is at the center of the global supply chain and is used to store quantities and assortments of products and allow for customization of those products.
Flexible machine technologies allow companies to customize products based on the needs of small consumer groups.
True Reason: Flexible machine technologies drive down the cost of customization even for a small quantity.
When discussing the global supply chain, production is sometimes referred to as operations.
True Reason: The terms production, manufacturing, and operations are all interchangeable when used in the global supply chain.
Which form of international transport is the least expensive?
Water/Ocean
In which situation should a firm decide to make a product in-house?
When it wants to protect proprietary technology
A benefit of flexible machine cells is
a reduction in work in progress.
The decision by many computer manufacturers to use Intel brand microchips in their computers is an example of where the importance of brand favors a(n) ______ decision.
buy
A(n) ______ factory has its own infrastructure when it comes to development, engineering, and production, and often competes with the firm's home factories for testing new ideas and products.
contributor
While mass production allows companies to produce a greater number of goods at a lower cost, flexible manufacturing technology also provides companies with these standards and at the same time allows a company to
customize its products.
When trade barriers are high, fixed costs are low, important exchange rates are unstable, and the value-to-weight ratio is low, a ______ production configuration is preferred.
decentralized
Speeding up inventory turnover can lead to a(n) ______ in warehousing and storage costs and free up working capital.
decrease
The portion of the supply chain from the production facility to the end-consumer is the ______ supply chain.
downstream
The concept that valuable knowledge does not just reside in a firm's domestic operations but can be found in foreign subsidiaries is known as ______.
global learning
A source factory ______ than an offshore factory.
has a more significant strategic role
One drawback to basing production in a foreign location is the potential for poor product quality. This is an example of a(n) ______ cost of foreign production.
hidden
Products with ______ value-to-weight ratios should be produced at the most optimal location and the global market should be served from there.
high
When there is improved performance reliability, a company's profits will ______.
increase Reason: When there is improved performance reliability, profits increase.
Review Table 15.2. A company that decides to stop outsourcing products or services and instead starts to produce them internally is ______.
insourcing
If the demand for rocking chairs is 5 million per year and the minimum efficient scale for a plant to manufacture these chairs is 100,000 per year, it ______ economically feasible for the company to manufacture rocking chairs in several locations.
is
The ______ the minimum plant scale relative to total global demand, the ______ is the argument for centralizing production.
larger; greater
A motorcycle company is establishing a new factory to create processes, products, and technologies that the firm will use throughout its global operations. This factory would best be described as being a(n) ______ factory.
lead
Flexible manufacturing technology is also referred to as ______ production.
lean
Recently, the Japanese yen has seen steady appreciation against the dollar, as a result Japan has become _____ attractive as a manufacturing location.
less
When a firm takes advantage of favorable economic, political, and cultural conditions when identifying a site for manufacturing activities, the benefits it can receive are called ______ economies.
location
Morton Manufacturing decided to locate its new plant in Taiwan because there was an existing pool of labor there with experience in manufacturing the same type of products Morton produces. This existing pool of labor is an example of a(n) _____.
location externalities
Kalee works for Wolf Furniture Corp. and it is her job to control the inventory of raw materials, component parts, and products used in the manufacturing of the company's office furniture line. Kalee works in _____.
logistics
When a company makes a make-or-buy decision, the strategic level is typically focused on the ______-term, while the operational level is more focused on the ______-term.
long; short
One strategic objective of the logistics and production functions is to ______ costs, when moving from raw materials to the finished product.
lower
The snow equipment produced at Alpine Way Inc. requires specialized design and only a few craftspeople are trained to use the tools to make the products. For this reason, the company should use a _____ decision.
make
Whether a firm should perform a value creation activity themselves or outsource, it is called the _____ decision.
make-or-buy
The term used to describe a company's ability to produce a customized product at low cost is ______.
mass customization
When a company uses flexible manufacturing technology to develop a low cost, customized product, it is using the process of ______.
mass customization
After working at Toyota for five years and visiting Ford's U.S. facilities, Taiichi Ohno recognized problems with ______.
mass production
Three of the mass production problems that Ohno identified at Toyota were
mass production cannot accommodate customer preferences. massive inventories are expensive to maintain. errors in initial machine settings created large numbers of defective items.
Since unit costs decrease as plant output increases, a ______ of output is necessary for a plant to realize all major plant-level scale economies.
minimum efficient scale
The ______ is the smallest amount of production a company can achieve while still taking full advantage of economies of scale with regards to supplies and costs.
minimum efficient scale
Product returns cost manufacturers and retailers ______ per year in the United States.
more than $100 billion
A(n) _______ factory is developed and set up to assemble or manufacture products in a country where labor and/or raw materials are cheaper, for export and/or eventual import into the manufacturer's home country.
offshore
Manuel works on the assembly line at a factory in Mexico that produces component parts for a Japanese automaker. The factory is not involved in any decisions on the automobiles but is simply designed for parts production. This is an example of a(n) _____ factory.
offshore
A(n) ______ factory is placed near a competitor or the most-demanding customers and acts as an intelligence gathering unit.
outpost
Renee buys a new cell phone. It comes in a molded plastic package. This is an example of ______ packaging.
primary
All the activities involved in creating a product are known as _____.
production
It would be common to use the term ____ to refer to the manufacturing process when discussing the global supply chain.
production
In the European Union, companies must be certified under ISO 9000. This is a certification of a manufacturing firm's processes and ______.
products
A business uses the _____ function to obtain raw materials it needs to manufacture goods.
purchasing
The process of a business or organization attempting to acquire goods or services to accomplish the goals of its enterprise is called ______.
purchasing
ISO 9000 is used in the EU marketplace as a way to _____.
regulate manufacturing processes
A factory established to overcome tangible and intangible barriers in the global market place which supplies specific country or regional markets around the world is a(n) ______ factory.
server
One reason a company would use a(n) _____ factory is that it can minimize the costs that would be necessary if the production facility were further away from its customers.
server
The main difference between a contributor factory and a(n) ______ factory is that a contributor factory has responsibilities for product and process engineering and development.
server
Six Sigma is a(n)
set of techniques and tools for process improvement
The management philosophy that takes as its central focus the need to improve the quality of a company's products and services is ______.
total quality management
The movement of raw materials, component parts, and finished goods through the supply chain is referred to as ______.
transportation
A high value-to-weight ratio means that
transportation costs are low.
Terry's company will spend $4 billion to set up a production plant in China. This is a high cost for his small business to pay. This price makes it ______ to produce in several locations at once.
uneconomical
Consumers all over the world have the same preference for iPhone's and Xbox. These two products and others like them serve _____ needs.
universal
Needs that are the same all over the world are called ______ needs.
universal
The portion of the supply chain from raw materials to the production facility is the ______ supply chain.
upstream
