Version 1 17
A) the firm will have fewer subunits to control by making products in-house.
B) it will help the firm capture more orders from other countries.
C) it enables a firm to protect the proprietary technologies that it has.
D) firms can make better use of the location advantages of certain countries.
60) An advantage of buying component parts, or even an entire product, from independent
suppliers is that
A) it can make planning, coordination, and scheduling of adjacent processes easier for
the firm.
B) the firm can strategically manage inventory.
C) the firm will be able to maintain strict control over its proprietary technology.
D) the firm will have access to superior quality raw materials and will deliver high
quality products.
61) Cost and _____ are the two main drivers behind make-or-buy choices made by global
companies when they engage in global supply chains.
A) production capacity
B) assurance of continual supply
C) quality control
D) control
62) _____ can be viewed as the decision-making process regarding the raw materials, work-
in-process (component parts), and finished goods inventory for a multinational corporation.
Version 1 18
A) Global supply chain management
B) Global inventory management
C) Global corporate management
D) Global sourcing arrangements
63) This type of facility positions and allows customization of products for delivery to
worldwide wholesalers or retailers or directly to consumers anywhere in the world.
A) logistics center
B) lead factory
C) global distribution center
D) source factory
64) _____ is the outer packaging envelope that allows for easier handling or product transfer
among international suppliers, manufacturers, distribution centers, retailers, and any other
intermediaries in the global supply chain.
A) Primary packaging
B) Performance packaging
C) Secondary packaging
D) Unit-load packaging
65) Packaging, which comes in all shapes, sizes, forms, and uses, can be divided into three
different types
A) primary, secondary, and transit.
B) customer, retailer, and distributor.
C) primary, secondary, and tertiary.
D) first level, second level, and third level.
Version 1 19
66) _____ refers to the movement of raw material, component parts, and finished goods
throughout the global supply chain.
A) Distribution
B) Transportation
C) Sourcing
D) Logistics
67) The process of planning, implementing, and controlling the efficient, cost-effective flow
of raw materials, in-process inventory, finished goods, and related information from the point of
consumption to the point of origin for the purpose of recapturing value or proper disposalis
called
A) transportation.
B) distribution.
C) reverse logistics.
D) global sourcing.
68) Packaging is intended to achieve a set of multilayered functions, which can be grouped
into (1) perform, (2) protect, and (3) inform. Which of the following is one of the functions of
the “perform” group?
A) the package’s ability to preserve the products to maintain their freshness or newness
B) the package’s ability to provide the necessary security and safety to ensure that the
products reach their end destination in their intended shape
C) the package’s ability to contain the products properly
D) the ability of the product in the package to handle being transported between nodes
in the global supply chain
Version 1 20
69) There are five strategic levels for global purchasing that can be undertaken by a global
company. At which level do companies engage in international purchasing activities as part of
the firm’s overall supply chain management strategy?
A) Level I
B) Level II
C) Level III
D) Level IV
70) There are five strategic levels for global purchasing that can be undertaken by a global
company. At which level do companies engage in global purchasing activities that are integrated
across worldwide locations and functional groups?
A) Level II
B) Level III
C) Level IV
D) Level V
71) When a multinational corporation buys products or services from one of its suppliers that
produces them somewhere else, whether domestically or globally, it is referred to as
A) offshoring.
B) insourcing.
C) outsourcing.
D) co-sourcing.
72) A multinational corporation uses both its own employees from inside the firm and an
external supplier to perform certain tasks, often in concert with each other.
Version 1 21
A) insourcing
B) offshore outsourcing
C) nearshoring
D) co-sourcing
73) The major cost saving associated with JIT systems comes from
A) early delivery of raw materials to production.
B) decentralization of manufacturing.
C) speeding up inventory turnover.
D) reduced spending on CRM activities.
74) Just-in-time inventory systems
A) are used when procurement is not organized.
B) require large warehouses for storage.
C) economize on inventory holding costs.
D) maintain large buffer for inventory.
75) What is a drawback of a just-in-time system?
A) Transport costs are high when using a just-in-time system.
B) It leaves a firm without a buffer stock of inventory.
C) It increases the warranty costs associated with products.
D) It leaves a firm with high scrap costs associated with defective products.
Version 1 22
76) With _____ system, suppliers, shippers, and the purchasing firm can communicate with
each other with no time delay.
A) a CAD
B) a JIT
C) a CAM
D) an EDI
77) Just-in-time systems
A) leave a firm without a buffer stock of inventory.
B) ensure that product is always available.
C) help a firm respond quickly to increases in demand.
D) allow for stockpiling of key components of production.
78) _____ refers to shared decision-making opportunities and operational collaboration of
key global supply chain activities.
A) Global supply chain coordination
B) Make-or-buy decision
C) Reverse logistics
D) Global sourcing
79) Production is also sometimes referred to as operations as part of a global supply chain.
⊚ true
⊚ false
80) Logistics includes the buying of raw materials and component parts.
Version 1 23
⊚ true
⊚ false
81) The upstream portion of the global supply chain includes all of the organizations and
resources in the supply chain.
⊚ true
⊚ false
82) Six Sigma is a qualitative alternative to total quality management that focuses primarily
on managing human resources to improve profitability.
⊚ true
⊚ false
83) Other things being equal, a firm should locate its various manufacturing activities where
the relative factor costs are conducive to the performance of those activities.
⊚ true
⊚ false
84) The argument for centralizing production will be greater if the minimum efficient scale of
a plant relative to total global demand is low.
⊚ true
⊚ false
85) Mass customization facilitates product customization at low costs.
⊚ true
⊚ false
Version 1 24
86) Flexible manufacturing technologies enable companies to customize products to the
demands of small consumer groups.
⊚ true
⊚ false
87) Products such as electronic components and pharmaceuticals have low value-to-weight
ratios.
⊚ true
⊚ false
88) Organizations are under pressure to produce products in the optimal location and to serve
the world market from there if their products have low value-to-weight ratios.
⊚ true
⊚ false
89) Modern consumer products such as personal computers serve universal needs.
⊚ true
⊚ false
90) Poor product quality and low productivity are hidden costs associated with basing
production in a foreign location.
⊚ true
⊚ false
Version 1 25
91) Concentration of production should be avoided when important exchange rates are
expected to remain relatively stable.
⊚ true
⊚ false
92) Decentralization of production is appropriate when the product does not serve universal
needs.
⊚ true
⊚ false
93) Managers in a source factory operate in essentially the same way that managers in an
offshore factory operate. They have very little say in purchasing or logistics decisions.
⊚ true
⊚ false
94) Global learning refers to the idea that valuable knowledge does not reside just in a firm’s
domestic operations.
⊚ true
⊚ false
95) Make-or-buy decisions are decisions that concern the components to be used in a
production process.
⊚ true
⊚ false
96) Firms would prefer buying component parts, or an entire product, from independent
suppliers to protect proprietary product technologies.
Version 1 26
⊚ true
⊚ false
97) The firm that sources from independent suppliers has less inventory to manage.
⊚ true
⊚ false
98) Buying a product from external vendors is highly appropriate when a firm intends to
protect proprietary technology.
⊚ true
⊚ false
99) The term distribution center is rarely used today in a global context.
⊚ true
⊚ false
100) In the context of a tube of toothpaste, the box in which the toothpaste is shipped to the
store from the warehouse is the primary packaging.
⊚ true
⊚ false
101) In global purchasing, Level I involves domestic purchasing activities only.
⊚ true
⊚ false
Version 1 27
102) Just-in-time systems are used to economize on inventory holding costs by having
materials arrive at a manufacturing plant just in time to enter the production process and not
before.
⊚ true
⊚ false
103) Just-in-time systems reduce product quality although it brings about huge cost savings.
⊚ true
⊚ false
104) One way to reduce risks associated with a JIT global supply chain is to source inputs
from several suppliers located in different countries.
⊚ true
⊚ false
Version 1 28
Answer Key
Test name: chapter 17
Version 1 31