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Indicate whether the statement is true or false.
1. The three major considerations for deciding the location of production facilities for products are: does the
product serve the needs of all customers around the world, proximity to market and proximity to suppliers, and
the effect on product’s image being produced in that location.
a.
True
b.
False
2. When a firm has been making goods and services in-house, and then decides to buy these goods and services
from suppliers is referred to as offshoring.
a.
True
b.
False
3. When considering the one-versus-many location for production facilities for components and raw materials
some of the most important considerations are: fixed costs, minimum efficient scale and its comparison to
demand, and the value-to-weight ratio.
a.
True
b.
False
4. A production system is a system that businesses use to create the goods and services or to produce the
products.
a.
True
b.
False
5. A supply chain encompasses all the activities associated with the flow and transformation of goods and
services from raw material to the end user.
a.
True
b.
False
6. The activities in operations management can be grouped into four business functions: procurement,
production, logistics, and research and development.
a.
True
b.
False
7. Boeing buying from thousands of suppliers in more than 100 countries, but only having production facilities
in the U.S. is an example of global procurement and domestic production.
a.
True
b.
False
8. When the demand is equal or lower than the minimum efficient scale, multiple production facility locations
are preferred.
a.
True
b.
False
9. The production system of a hair and nail salon would be called a manufacturing system.
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a.
True
b.
False
10. The practice of producing components and raw materials in-house AND purchasing them from suppliers is
referred to as a supply-chain malfunction.
a.
True
b.
False
11. In operations management, the acquisition of goods and services is referred to as logistics.
a.
True
b.
False
12. Software packages designed to integrate the majority of a firm’s business processes, execute all transactions
related to the firm’s business processes being integrated, store each piece of data only once in an enterprise-
wide database, allow access to data and information in real time, and operate in a client-server environment,
traditional or web-based are called enterprise resource planning systems.
a.
True
b.
False
13. One advantage of global procurement is that the firm can maximize its flexibility by allocating its orders
among suppliers in a dynamic way and the firm has access to more suppliers that can generally provide lower
costs than domestic suppliers.
a.
True
b.
False
14. A major advantage of making components and raw materials in-house is that the firm is not required to
honor protections of intellectual property.
a.
True
b.
False
15. The property of ERP systems to handle the accounting standards of multiple countries is called the multi-
currency property.
a.
True
b.
False
Indicate the answer choice that best completes the statement or answers the question.
16. ______ refers to the management of the direct resources that are involved in the production system of a
business organization.
a.
Procurement management
b.
Operations management
c.
Logistics management
d.
Research and development
e.
Marketing management
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17. The supply chains of global businesses such as Boeing, Ford, United Airlines, and the pharmaceutical
companies Merck and Pfizer are known as _____ supply chains.
a.
environmental
b.
global
c.
enterprise
d.
telecommunication
e.
multi-national
18. One production facility will usually be favored when
a.
fixed costs are low.
b.
demand is higher than the minimum efficient scale.
c.
goods have a low value-to-weight ratio.
d.
unemployment is very low.
e.
a company is extremely profitable.
19. ERP systems aim to
a.
store all information in multiple databases.
b.
represent each business function by a module.
c.
design the system as a collection of functions.
d.
eliminate the need for internetworking networks.
e.
reduce a business’s reliance on software.
20. Most of the activities in operations management can be grouped into the following business functions
EXCEPT:
a.
procurement
b.
logistics
c.
production
d.
research and development
e.
selling
21. Tipton Manufacturing is based in Lexington, Kentucky. The company does not make the gears it uses in its
products, it purchases them from a supplier in Hong Kong. Tipton Manufacturing is practicing
a.
global outsourcing.
b.
domestic outsourcing.
c.
insourcing.
d.
right-sizing.
e.
downsizing.
22. A Japanese user of Sony’s ERP system can view the company’s financial information in Japanese yen, while
a British user of the system is able to see the same information in British pounds. This ERP system is _____.
a.
multi-language
b.
multi-national
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c.
multi-currency
d.
multi-enterprise
e.
multi-culture
23. Most of the activities in operations management can be grouped into ____ business functions.
a.
two
b.
three
c.
four
d.
five
e.
six
24. Ford’s ERP system follows the American accounting standards in its U.S. subsidiaries, and follows the
Mexican accounting standards in its Mexico subsidiaries. This ERP system is _____.
a.
multi-language
b.
multi-national
c.
multi-currency
d.
multi-enterprise
e.
multi-culture
25. When the firm doing the outsourcing and the supplier that will provide the outsourced goods and services
are located in the same country, it is called _____.
a.
domestic outsourcing
b.
domestic manufacturing
c.
insourcing
d.
offshoring
e.
global outsourcing
26. _____ refers to the property of ERP systems to simultaneously operate in multiple languages.
a.
Multi-language
b.
Multi-national
c.
Multi-currency
d.
Multi-enterprise
e.
Multi-culture
27. In the production system model, all of the following would be considered inputs EXCEPT _____.
a.
labor
b.
machines and equipment
c.
the finished product
d.
raw materials
e.
factors of production
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28. Collections of computer hardware and software arranged to transmit information from one place to another
are known as _____.
a.
telecommunication networks
b.
global networks
c.
enterprise networks
d.
internetworking networks
e.
multi-national networks
29. ______ is responsible for the acquisition of goods and services in the production process.
a.
Procurement
b.
Logistics
c.
Production
d.
Research and development
e.
Selling
30. The production process may consist of one or more transformations which could be all of the following
EXCEPT:
a.
physical
b.
locational
c.
psychological
d.
esteem
e.
physiological
31. Of the following, which is NOT an advantage of global procurement?
a.
The firm does not need to invest the money that is associated with making.
b.
The firm can focus upon the production stages and components with the most value added.
c.
The firm can maximize its flexibility by allocating its orders among the suppliers in a dynamic way.
d.
If global suppliers are selling to many companies in the same industry but in different countries, these
suppliers can achieve economies of scale and lower costs.
e.
The firm does not rely upon suppliers on important dimensions such as quality, delivery, and cost.
32. Which of the following has the highest value-to-weight ratio?
a.
pickup trucks
b.
HD televisions
c.
personal computers
d.
microchips
e.
petroleum
33. Which of these is responsible for the movement of materials in the production process?
a.
Procurement
b.
Logistics
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c.
Production
d.
Research and development
e.
Selling
34. When the firm has been buying goods and services from suppliers, and then decides to make these goods
and services in-house, it is called _____.
a.
dual outsourcing
b.
domestic outsourcing
c.
global outsourcing
d.
offshoring
e.
insourcing
35. Which of these is responsible for the transformations required by the production process?
a.
Procurement
b.
Logistics
c.
Production
d.
Research and development
e.
Selling
36. Goods and services that integrate a product are called _____.
a.
production process
b.
production facilities
c.
raw materials
d.
components
e.
factors of production
37. Determining which components and raw materials should be produced in-house and which components and
raw materials should be acquired from suppliers is known as the _____ decision.
a.
sale-or-keep
b.
manufacture-or-sale
c.
sink-or-swim
d.
make-or-buy
e.
build-or-break
38. ______ is responsible for the design of new products in the production process.
a.
Procurement
b.
Logistics
c.
Production
d.
Research and development
e.
Selling
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39. The production systems of Honda Motor Company, the Boeing Company, and Toshiba Corporation, would
be called _____ systems.
a.
production
b.
manufacturing
c.
service
d.
component
e.
raw
40. Of the following, which is NOT an advantage of making?
a.
Knowledge of the product may provide efficiency advantages over potential suppliers.
b.
The firm has more control over quality.
c.
People producing the component or raw material have the incentive to improve their product.
d.
The firm has more control over deliveries.
e.
It secures the supply source.
41. Of the following, which is NOT a consideration for the one-versus-many production facilities decision?
a.
Fixed costs
b.
The notion of the minimum efficient scale and its comparison to demand
c.
The local culture
d.
The value-to-weight ratio
e.
The infrastructure that the company offers
42. Of the following, which is NOT a disadvantage of global procurement?
a.
The firm has to invest the money that is associated with making products.
b.
The firm may need to compete for the attention of suppliers.
c.
The profits that the company could earn by producing the goods and services in-house now go to the
suppliers.
d.
Buying from suppliers could unintentionally lead suppliers becoming competitors.
e.
The firm relies upon suppliers on important dimensions such as quality, delivery, and cost.
43. Of the following, which is NOT a disadvantage of making?
a.
The firm has less control over quality.
b.
It requires the company to have expertise in the production of the component or raw materials what
will be made.
c.
The people producing the component or raw material do not have the incentive to improve their
product.
d.
The firm may not be able to gain the economies of scale that can be gained by a supplier that is able
to pool the activity of a large number of firms.
e.
The firm would incur both fixed and variable costs.
44. Steps in the production process are called _____.
a.
production stages
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b.
production facilities
c.
raw materials
d.
components
e.
factors of production
45. A production system in which services dominate the value of the product is known as a(n) _____ system.
a.
production
b.
manufacturing
c.
service
d.
component
e.
raw
Enter the appropriate word(s) to complete the statement.
46. Determining if products made in–house will be produced in one or more facilities, and if these facilities
should be located in one or more countries is called __________.
47. __________ refers to all activities associated with the flow and transformation of goods and services from
the raw material stage to the end user, together with the corresponding flows of monetary funds and
information.
48. Goods and services that integrate a product are called __________.
49. __________ (also called global outsourcing) occurs when a firm is outsourcing to a supplier located in a
different country.
50. __________ refers to collections of computer hardware and software arranged to transmit information from
one place to another.
51. When the goods dominate the value of the product, the production system is typically called a(n) ________
system.
52. A company that only completes product design and outsources all other production process functions is
called a(n) __________.
53. __________ refers to a property of ERP systems to handle the accounting standards of multiple countries.
54. __________ occurs when components and raw materials are produced in-house and purchased from
suppliers.
55. __________ occurs when a firm buys components and raw materials globally.
Scenario – Jenkins and Jones Corporation
Michael Jenkins and Emma Jones started the Jenkins and Jones Corporation in 1976 in Kansas, USA. The
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initial goal of this company was to serve customers throughout the United States. Since the company’s
inception it has grown at an outstanding rate. It now serves online customers as well as customers in ten foreign
nations. Jenkins and Jones is now looked at as the industry’s benchmark company due to its superior supply
chain management skills. Its practices and techniques are used by many other organizations in the industry to
improve their own supply chain management skills.
56. If Jenkins and Jones would decide to maintain its product production on a domestic basis, there would be
certain advantages the company could expect from making this decision. Which one of the following would not
be considered an advantage of domestic production?
a. Better control over costs
b. Better control over quality
c. Do not have to face competition
d. Better control over deliveries
e. Knowledge of the product provides efficiency advantages
57. As the Jenkins and Jones Corporation continues to grow, it will face the need to make more and more
strategic decisions. Which one of the following best describes the corporation if it decides to make purchase
globally versus domestically?
a. Global proliferation
b. Global procurement
c. Domestic outsourcing
d. Global production
e. Enterprise resource planning
Scenario – Ardella Enterprises
Twenty years ago two people from New Jersey, USA had a dream of building a superior company that would
have global operations with an unparalleled supply chain. The idea took root and Ardella Enterprises was
born. This company conducts operations across four continents. It has earned a reputation for prompt
deliveries, accurate shipments, and exemplary customer service. This partnership is quickly taking the lead in
the industry and is contemplating further expansion. Ardella Enterprises grossed over $11 billion last year. Its
plan for additional expansion and growing Internet influence is projected to increase sales by two billion dollars
within the first year.
58. Ardella Enterprises acknowledges the importance of its supply chain. It knows that the company’s
operations would not be as successful if the supply chain was less effective. Which one of the following is not
related to a company’s supply chain and its functions?
a. The activities of the supply chain are associated with the transformation of goods from raw material to end
user.
b. Effective supply chain management will minimize total costs.
c. Supply chain management involves maximizing the value of the product to the final user.
d. Management of the supply chain requires adherence to stiff environmental standards.
e. A company’s supply chain encompasses all activities associated with the flows of monies and information.
59. Which one of the following would describe Ardella Enterprises if it would decide to stop purchasing goods
and services from suppliers and instead make the goods and services in-house?
a. A hollow corporation
b. An insourcing firm
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c. An international development association
d. An outsourcing corporation
e. A production system
Scenario – Jenkins and Jones Corporation
Michael Jenkins and Emma Jones started the Jenkins and Jones Corporation in 1976 in Kansas, USA. The
initial goal of this company was to serve customers throughout the United States. Since the company’s
inception it has grown at an outstanding rate. It now serves online customers as well as customers in ten foreign
nations. Jenkins and Jones is now looked at as the industry’s benchmark company due to its superior supply
chain management skills. Its practices and techniques are used by many other organizations in the industry to
improve their own supply chain management skills.
60. As the Jenkins and Jones Corporation continues to grow and expand, one of the strategic decisions it must
face is that of location of its facilities. Which one of the following does not relate to the problem of location?
a. Minimum efficient scale in comparison to demand
b. Value-to-weight ratio
c. Fixed costs
d. Factor endowments of countries
e. Number of Internet users
Scenario – Ardella Enterprises
Twenty years ago two people from New Jersey, USA had a dream of building a superior company that would
have global operations with an unparalleled supply chain. The idea took root and Ardella Enterprises was
born. This company conducts operations across four continents. It has earned a reputation for prompt
deliveries, accurate shipments, and exemplary customer service. This partnership is quickly taking the lead in
the industry and is contemplating further expansion. Ardella Enterprises grossed over $11 billion last year. Its
plan for additional expansion and growing Internet influence is projected to increase sales by two billion dollars
within the first year.
61. Ardella Enterprises is renowned for its operations management otherwise described as the management of
the direct resources involved in the production system of the company. Which one of the following would not
be considered a business function associated with the activities of operations management?
a. Production
b. Logistics
c. Procurement
d. Dual sourcing
e. Research and development
62. “Fortunately, ERP does not affect global supply chain management.” Do you agree with this statement.
Defend your position.
63. Differentiate between manufacturing and service system. Describe a typical production system using a
company.
64. Identify the advantages and disadvantages of making components and raw materials in-house.
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65. Describe the advantages and disadvantages of global procurement.
66. Discuss the circumstances that would MOST likely convince a company to use one production facility rather
than multiple facilities.
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1. True
2. False
3. True
4. True
5. True
6. True
7. True
8. False
9. False
10. False
11. False
12. True
13. True
14. False
15. False
16. b
17. b
18. a
19. b
20. e
21. a
22. c
23. c
24. b
25. a
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26. a
27. c
28. a
29. a
30. d
31. e
32. d
33. b
34. e
35. c
36. d
37. d
38. d
39. b
40. c
41. c
42. a
43. a
44. a
45. c
46. location decision
47. Supply chain
48. components
49. Offshoring
50. telecommunication networks
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51. manufacturing
52. hollow corporation
53. Multi-national
54. Dual sourcing
55. Global procurement
56. c
57. b
58. d
59. b
60. e
61. d
62. Student answers will vary.
63. Student answers will vary.
64. Student answers will vary.
65. Student answers will vary.
66. Student answers will vary.