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50) The level of output at which most plant-level scale economies are exhausted is referred to as
the
A) minimum efficient scale of output.
B) downstream supply chain.
C) flexible machine.
D) upstream supply chain.
51) An advantage of a ________ allows a firm to hedge against currency risks.
A) low TQM
B) low minimum efficient scale
C) high TQM
D) high minimum efficient scale
52) ________ covers a range of manufacturing technologies designed to reduce setup times for
complex equipment.
A) ISO 9000
B) TQM
C) Lean production
D) JIT
53) A flexible machine cell is
A) a component of a source factory.
B) used to perform a standardized operation.
C) a component of a lead factory.
D) a grouping of various types of machinery, a common materials handler, and a centralized cell
controller.
54) Products such as refined sugar, certain bulk chemicals, paint, and petroleum products
A) cannot travel through a global supply chain.
B) have low value-to-weight ratios.
C) come from offshore factories.
D) have high value-to-weight ratios.
55) Which of the following is the main concept of economies of scale?
A) Productivity declines when firms attempt to reduce costs.
B) Total costs increase as firms increase production.
C) Unit costs decrease as a plant's output expands.
D) Utilization of capital declines when firms grow in size.
56) ________ implies that a firm may be able to customize its product range to suit the needs of
different customer groups without bearing a significant cost penalty.
A) Assembly-line production
B) Mass customization
C) Six Sigma production
D) Product standardization
57) The typical ________ is dedicated to the production of a family of parts or products through
the use of four to six machines capable of performing various operations.
A) minimum efficient scale
B) flexible machine cell
C) just-in-time machine
D) assembly line
58) Decentralization of production is appropriate when
A) a product's value-to-weight ratio is high.
B) the product serves universal needs.
C) barriers to trade are low.
D) volatility in key exchange rates is expected.
59) Which of the following is a hidden cost associated with basing production in a foreign
location?
A) cost of labor within the location
B) high employee turnover
C) transportation costs
D) differences in the value of currency
60) The idea that valuable knowledge does not reside just in a firm's domestic operations but can
also be found in its foreign subsidiaries is called
A) global learning.
B) global production processes.
C) global economics.
D) global factors.
61) ________ makes the most sense when differences among countries in factor costs have a
substantial impact on the costs of manufacturing in various countries.
A) Decentralized production
B) Just in time (JIT)
C) Concentration of production
D) Total quality management (TQM)
62) Decentralization of production is appropriate when
A) the product's value-to-weight ratio is high.
B) location externalities are important.
C) the product serves universal needs.
D) volatility in important exchange rates is expected.
63) This type of factory—often with the same standards as the top factories in the global firm's
system—is set up to overcome intangible and tangible barriers in the global marketplace.
A) contributor factory
B) source factory
C) lead factory
D) server factory
64) ________ is often placed near a competitor's headquarters or main operations, near the most
demanding customers, or near key suppliers of unique and critically important parts.
A) An outpost factory
B) A source factory
C) A contributor factory
D) A lead factory
65) This is where cutting-edge production should take place, or at least be tested for
implementation in other parts of the firm's production network.
A) source factory
B) lead factory
C) contributor factory
D) outpost factory
66) Which of the following would lead a firm to choose a concentration of production?
A) Trade barriers are high.
B) Location externalities are not important.
C) Important exchange rates are expected to remain relatively stable.
D) The product's value-to-weight ratio is low.
67) Which of the following situations would lead a firm to choose to decentralize production?
A) The product serves universal needs.
B) The production technology has high fixed costs and high minimum efficient scale relative to
global demand or flexible manufacturing technology exists.
C) Trade barriers are low.
D) The production technology has low fixed costs and low minimum efficient scale, and flexible
manufacturing technology is not available.
68) RSA is a bicycle manufacturing company. Which of the following is a make-or-buy decision
that the company will have to make?
A) Should the company increase its responsiveness toward the retailers?
B) What are the products that the company should manufacture?
C) Should the company outsource production to a low-cost vendor?
D) What should be the pricing strategy for the company's product?
69) Make-or-buy decisions are decisions about
A) the components to be used in the manufacturing process.
B) procuring raw materials for a production process.
C) procuring the capital equipment for production.
D) whether or not to outsource value creation activities.
