Global Business Today, 11e (Hill)
1) In recent years, the trend among U.S. firms is to outsource the “production” of some service
activities to developing nations to take advantage of lower labor costs.
2) Supply chain management involves the coordination of the logistics, purchasing, operations,
and market channel activities of a company.
3) A business that supplies parts to a manufacturer would be part of the downstream supply chain.
4) W. Edwards Deming believed that achieving better quality requires the commitment of
everyone in a company.
5) When applying the Six Sigma approach, the lower the number of “sigmas,” the greater the
number of errors.
6) The ISO 9000 system used in the European marketplace provides small companies with
information regarding export opportunities.
7) In recent years, time-based competition has become less important in international business.
8) In international business, when consumer demand is prone to large and unpredictable shifts, the
firm that can adapt most quickly to these shifts will gain an advantage.
9) Location externalities, such as the presence of a skilled labor pool, affect a company’s foreign
direct investment decision.
10) In international business, a relatively high level of fixed costs make it economical for a
company to perform a particular activity in several locations at once.
11) According to the concept of economies of scale, as plant output expands, unit costs decrease.
12) Minimum efficient scale refers to the supply levels a company produces based on consumer
demand.
13) In terms of minimum efficient scale of output, the “unit cost curve” rises with output until a
certain output level is reached, at which point further increases in output realize little reduction in
unit costs.
14) An advantage of a low minimum efficient scale is it allows a company to accommodate
demands for local responsiveness.
15) Flexible manufacturing technologies allow a company to produce a wider variety of end
products at a unit cost that at one time could be achieved only through the mass production of a
standardized output.
16) Flexible machine cells enhance a company’s ability to provide mass customization.
17) One downfall of flexible manufacturing technology is that it does not help a company
customize products for different national markets.
18) Flexible manufacturing technologies force a company to establish manufacturing facilities in
each major national market in order to meet demand.
19) Industrial products have few national differences in consumer taste and preference, hence the
need for local responsiveness is reduced for such products.
20) Since refined sugar has a low value-to-weight ratio, even if it is shipped halfway around the
world, the transportation costs would account for a very small percentage of total costs.
21) Source factories should be located where production costs are low.
22) A lead factory would typically be located near a competitor’s headquarters to function as the
intelligence-gathering unit of the company.
23) A “make” decision is favored when there is a chance that supply cannot be guaranteed if the
firm moves production overseas.
24) The inform function of packaging refers to the package’s ability to contain the products
properly.
25) A JIT system provides a company with enough buffer stock to meet any product demands.
26) Katrine works for a major audio components manufacturer. It is her job to plan and control
how the raw materials used to make the components come into the company and how the finished
parts are shipped to end-users. Which part of the supply chain does Katrine work in?
A) promotion
B) recruitment
C) logistics
D) benchmarking
E) offshoring
27) The Cell Inc., a microbiology research laboratory headquartered in the United States, has been
losing money. The CEO decides to outsource some production to companies in developing
countries. This decision to shift functions or processes to less developed countries is most likely
due to their
A) strong intellectual property rights laws.
B) lower labor costs.
C) accessibility to better technology.
D) sophisticated infrastructure.
E) currency appreciation.
28) 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.
29) A second strategic objective shared by production and supply chain management is to increase
product quality. In this context, quality means
A) affordability.
B) flexibility.
C) reliability.
D) adaptability.
E) patentability.
30) Centex Systems sources cables and wires from The Wrapper Corp. In this situation, The
Wrapper Corp. is part of the ________ portion of the global supply chain.
A) downstream
B) marketing
C) upstream
D) differential
E) process
31) Rattle Auto Corp. ships its products to 465 retail stores all across the United States. These
retail stores are part of the ________ portion of the global supply chain.
A) upstream
B) horizontal
C) downstream
D) differential
E) process
32) The effect of improved quality control is to lower the costs of value creation by reducing
production costs 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.
33) 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.
34) Kyle accepted a job at Brenton Manufacturing. During his training, he was told that defective
and poor-quality products were unacceptable, and the goal is to manufacture goods that met 100
percent of standards. What methodology does this company use?
A) TQM
B) lean manufacturing
C) JIT
D) ISO 9000
E) mass customization
35) What philosophy was widely adopted first by Japanese companies and then American
companies during the 1980s and early 1990s, and from which the Six Sigma methodology directly
descended?
A) total quality management
B) enterprise resource planning
C) business process reengineering
D) just-in-time
E) business process outsourcing
36) What action did Deming suggest management take in order to achieve total quality
management?
A) create an environment where employees did not fear reporting problems
B) import more component parts from countries having factor endowments
C) increase the pay rate of all employees to establish credibility
D) purchase machinery that replaced human interaction with production
E) eliminate middle management positions from the chain of command
37) One of W. Edwards Deming’s beliefs about the total quality management philosophy is that
A) quality of supervision should be improved by allowing more time for supervisors to work with
employees.
B) management should embrace the philosophy that mistakes are often acceptable.
C) work standards should be defined only as numbers or quotas.
D) achieving better quality requires commitment more at the top management than at any other
level.
E) management should create an environment in which employees will follow orders rather than
recommend changes.
38) Which company is using the total quality management steps identified by W. Edwards
Deming?
A) Mercury Inc. believes in reducing interactions between employees and their supervisors.
B) Neptune Inc. empowers its employees to report problems or recommend improvements without
any fear.
C) Hudson Inc. bases its work standards solely on numbers or quotas.
D) Ontario Inc. believes that management is not responsible for training employees in new skills.
E) Huron Inc. asserts that achievement of better quality is solely dependent on lower management.
39) The relationship between the number of “sigmas” and the number of errors in the Six Sigma
approach is best described as
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 a negative value, then the number of errors is always positive.
40) ________ is a statistically based philosophy that aims to reduce defects, boost productivity,
eliminate waste, and cut costs throughout a company.
A) ISO 9000
B) Just-in-time
C) Six Sigma
D) Lean production
E) Upstreaming
41) A business would incorporate the Six Sigma philosophy as a way to
A) locate customers.
B) distribute product internationally.
C) organize financial data.
D) eliminate waste.
E) count inventory.
42) What is an accurate depiction of Six Sigma?
A) The higher the number of “sigmas,” the higher the number of errors.
B) When using 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 necessary to achieve balanced supply and demand.
43) SuspendHers Inc., a maker of fashionable belts and accessories for women, plans to expand in
the EU marketplace. To do so, the EU requires the company to
A) adopt techniques of total quality management.
B) achieve Six Sigma.
C) use just-in-time inventory system.
D) patent its designs and technology.
E) certify its products under ISO 9000.