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c15 Key
1. In recent years, the trend among U.S. firms is to outsource the "production" of certain service activities to
developing nations where labor costs are lower.
2. The production and supply chain management of an international firm are independent of each other.
3. The objectives of reducing costs and increasing quality in a firm are independent of each other.
4. A firm that improves its quality control cannot reduce its costs of value creation simultaneously.
5. W. Edward Deming believed that achieving better quality requires the commitment of everyone in a
company.
6. In terms of Six Sigma, the higher the number of "sigmas," the greater the number of errors.
7. In international business, production and supply chain functions accommodating demands for local
responsiveness work independent of host-government demands.
8. In recent years, time-based competition has become less important in international business.
9. 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.
10. Currency appreciation can transform a low-cost location into a high-cost location.
11. In international business, a relatively high level of fixed costs can make it economical to perform a
particular activity in several locations at once.
12. The concept of economies of scale tells us that as plant output expands, unit costs decrease.
13. The level of output at which most plant-level scale economies are exhausted is referred to as the maximum
efficient scale of output.
14. 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.
15. A wide product variety makes it easier for a firm to increase its production efficiency and thus reduce its
unit costs.
16. 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.
17. Flexible machine cells cannot be used for mass customization.
18. With the advent of flexible manufacturing technologies and mass customization, establishing manufacturing
facilities in each major market in which the firm is active is becoming less attractive.
19. With flexible manufacturing technologies, a firm can manufacture products customized to various national
markets at a single factory sited at the optimal location but will nevertheless incur a significant cost penalty.
20. Industrial products have few national differences in consumer taste and preference, hence the need for local
responsiveness is reduced for such products.
21. Other things being equal, when fixed costs are substantial and minimum efficient scale of production is
high, the arguments for concentrating production at a few choice locations are strong.
22. 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.
23. Under a just-in-time inventory system, a company can reduce the amount of working capital it needs to
finance inventory, freeing capital for other uses and/or lowering the total capital requirements of the enterprise.
24. The drawback of a just-in-time inventory system is that it leaves a firm with excess unsold inventory that it
has to write off against earnings or price low to sell.
25. Firms now typically use electronic data interchange (EDI) via the Internet to coordinate the flow of
materials into manufacturing, through manufacturing, and out to customers.
26. Proprietary software solutions to implement electronic data interchange systems now dominate the market
for global supply chain management software.
27. Which of the following refers to the activity that controls the transmission of physical materials through the
value chain, from procurement through production and into distribution?
28. Champion Works Inc. is an animation company, headquartered in the United States. The CEO of the
company has decided to outsource some of the production to companies in developing countries, as the firm
seems to be losing out on its competitive advantage. This decision to shift functions or processes to less
developed countries is most likely due to their:
29. An important objective shared by both production and logistics functions of an international firm is to:
30. A second strategic objective shared by production and supply chain management is to increase product
quality. In this context, quality means:
31. Which of the following is a consequence of improved quality control?
32. The effect of improved quality control is to lower the costs of value creation by reducing production costs
and:
33. Manufacturing firms should typically aim at lowering the costs of value creation by:
34. Which of the following is a statistically based methodology for improving product quality and a direct
descendant of the total quality management philosophy, and is the principal tool that most managers now use to
increase the reliability of their product offering?
35. Which of the following is a philosophy that 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?
36. The total quality management philosophy was developed by a number of American consultants. Which of
the following individuals is one of them?
37. Which of the following is true of W. Edward Deming's beliefs about the total quality management
philosophy?
38. Which of the following companies adheres to the total quality management steps identified by W. Edward
Deming?
39. Which of the following best describes the relationship between the number of "sigmas" and the number of
errors?
40. Which of the following is a statistically based philosophy that aims to reduce defects, boost productivity,
eliminate waste, and cut costs throughout a company?
41. Six Sigma refers to a statistically based philosophy that aims to:
42. Which of the following statements is true of Six Sigma?
43. Pink Polka Fashion Inc., a multinational clothing brand, has plans to expand in the European Union (EU)
marketplace. To do so, the EU requires the company to:
44. Which of the following is a drawback of ISO 9000 certification?
45. To be able to accommodate demands for local responsiveness, a firm should:
