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Student name:__________
TRUE/FALSE – Write ‘T’ if the statement is true and ‘F’ if the statement is false.
1) Outsourcing is hiring others to do noncore activities.
⊚ true
⊚ false
2) The process of coordinating and integrating the flow of materials, information, finances,
and services within and among companies in the value chain is called operations management.
⊚ true
⊚ false
3) It has been argued that the ultimate goal of effective supply chain management systems is
to reduce inventory.
⊚ true
⊚ false
4) Shorter and less predictable product life cycles have placed reduced emphasis on supply
chains and their performance.
⊚ true
⊚ false
5) The “over-the-wall” approach to product design involves an initial step in which the
designers prepare the product’s design, followed by sending the newly created design to the
company’s manufacturing engineers.
⊚ true
⊚ false
6) The primary reason for sourcing globally is to obtain lower prices.
⊚ true
⊚ false
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7) Companies engage in outsourcing when they make the decision to source internationally.
⊚ true
⊚ false
8) It is better for companies to initially outsource complex activities to achieve better cost
benefits.
⊚ true
⊚ false
9) The purchasing of goods and services that are part of finished goods—termed indirect
procurement—is critical.
⊚ true
⊚ false
10) For purchases of capital goods such as manufacturing equipment, many U.S. buying
organizations now use “business cycle costing” to analyze purchasing decisions.
⊚ true
⊚ false
11) International freight, insurance, and packing can add as much as 25 to 30 percent to the
quoted price.
⊚ true
⊚ false
12) For just-in-time (JIT) to be successful, manufacturers have to have the cooperation of
their suppliers.
⊚ true
⊚ false
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13) Total quality management is a companywide management approach to ensure quality
products throughout the organization.
⊚ true
⊚ false
14) Synchronous production, also called the theory of constraints, is superior to the just-in–
time production system because it is a balanced system in which the capacities of all operations
are equal.
⊚ true
⊚ false
15) Mass customization is usually appropriate in situations where there is the potential for
delaying the task of differentiating the product for a particular customer until the last possible
point in the supply network.
⊚ true
⊚ false
16) Logistics refers to managerial functions associated with the movement of raw materials
and work in progress, but not finished goods.
⊚ true
⊚ false
17) Standards are documented agreements containing flexible general guidelines, rules, or
definitions of the characteristics of a product, process, or service.
⊚ true
⊚ false
18) When production equipment is similar, home office control of quality in foreign affiliates
is more difficult because management must ensure that all plants adhere to the same standard.
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⊚ true
⊚ false
19) Generally, it is easier for international firms to standardize the concepts of total quality
management and synchronous manufacturing in their foreign plants than it is to standardize the
actual production facilities.
⊚ true
⊚ false
20) Backward vertical integration establishes facilities to manufacture inputs used in the
production of a firm’s final product.
⊚ true
⊚ false
MULTIPLE CHOICE – Choose the one alternative that best completes the statement or
answers the question.
21) Prada’s employees were overwhelmed with work, so she sent some accounting functions
to India and kept the rest in-house. Prada was engaging in
A) offshoring.
B) outsourcing.
C) supply chain management.
D) subcontracting.
22) Belmont’s job was to coordinate the flow of materials and services within and among
companies in the value chain from the company’s suppliers to the consumer. Belmont worked in
the area of
A) offshoring.
B) international strategy.
C) outsourcing.
D) supply chain management.
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23) Activities involved in producing a company’s products and services and the way in which
these activities are linked together are called
A) value chains.
B) supply chains.
C) operations management.
D) logistics.
24) It has been argued that the ultimate goal of effective supply chain management systems
is to
A) reduce costs.
B) improve quality.
C) reduce inventory.
D) increase sales.
25) Which of these measures would typically be used in measuring supply chain
performance?
A) salesperson turnover
B) orders delivered on time
C) website click-through rate
D) advertising results
26) How does Starbucks adapt the design of its stores to local conditions in China?
A) large tables and movable furniture
B) a bar design to encourage people to drink their coffee and leave to make room for the
next person
C) decorations reminiscent of prior periods in Chinese history
D) covered outdoor areas for escaping the heat
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27) Using cross-functional and customer participation in the design stage is a type of
________ engineering.
A) concurrent
B) parallel
C) nontraditional
D) sourced
28) A traditional approach to product design that involves a sequential approach to design is
A) product-based design.
B) concurrent engineering.
C) over the wall.
D) participatory design.
29) A recent design process innovation, such as Dell’s IdeaStorm site or Starbucks’s
MyStarbucksIdea.com site, involves
A) participating of designers with representatives of suppliers.
B) conducting many iterative cycles of design and testing.
C) selling products that have been produced in lot sizes of one.
D) encouraging very broad input, including from general customers.
30) Apple makes use of factories in other countries to supply parts for its phones. This refers
to
A) offshoring.
B) a joint venture.
C) product diversity.
D) subcontracting.
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31) Joe’s Jumpers has always made its clothing in the United States, but as prices have gotten
more competitive it has had to move some of its production to China. This demonstrates
A) production transfer.
B) offshoring.
C) price control.
D) broadening the supply chain.
32) Outsourcing has become an increasingly common option for companies because it
A) helps companies to focus scarce resources away from their core competencies.
B) avoids problems of different languages or cultures.
C) enhances flexibility and improves speed of response.
D) increases capital investments.
33) Which activity represents an extension of the make-or-buy decisions of earlier eras?
A) total quality management
B) JIT
C) offshoring
D) outsourcing
34) Standardized operations that require low-skilled labor sometimes move their production
away from industrialized countries to locations where
A) raw materials are readily available.
B) labor is less expensive.
C) equipment is easily replicated.
D) final product can be more easily transported.
35) Which arrangement can provide a firm with foreign products?
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A) domestic subsidiary
B) wholly owned subsidiary
C) foreign sales office
D) home country production facilities
36) Which is a description of the sourcing arrangement overseas joint venture?
A) A firm has no production facilities and contracts with foreign manufacturers to make
clothing to their specifications.
B) A company contracts with an independent manufacturer in another country to
provide it with products, often designed by the overseas manufacturer.
C) Production plant in the home country or another nation sends components to be
machined and assembled, or just to be assembled, by an independent contractor in an in-bond
plant.
D) Established where labor costs are lower, or quality higher, than in the home country
to supply components or other inputs to the home country.
37) Which sourcing arrangement may be established in a country with low-cost labor to
supply components to the home-country plant, or the subsidiary may produce a product that
either is not made in the home country or is of higher quality?
A) wholly owned subsidiary
B) overseas joint venture
C) overseas plant contractor
D) independent overseas manufacturer
38) Which sourcing arrangement is common in the clothing industry?
A) wholly owned subsidiary
B) overseas joint venture
C) overseas independent contractor
D) independent overseas manufacturer
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39) Which sourcing arrangement occurs when a company contracts with an independent
manufacturer in another country to provide it with products, often designed by the overseas
manufacturer?
A) wholly owned subsidiary
B) overseas joint venture
C) overseas independent contractor
D) independent overseas manufacturer
40) Trade that occurs between a parent company and its foreign affiliates is called
A) foreign trade.
B) intrafirm trade.
C) industry trade.
D) interfirm trade.
41) What is a reason the proportion of externally produced materials relative to the cost of
goods sold is increasing?
A) greater complexity of products
B) lack of qualified employees domestically
C) lack of new products
D) slowing market changes
42) As Corrine’s business grew, it struggled to keep up with the maintenance and repair of
her products, so she started buying these services from another company. This is called
A) direct purchasing.
B) domestic sourcing
C) indirect procurement.
D) insourcing.
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43) The purchasing of goods and services that are not part of finished goods is called
A) overhead.
B) indirect procurement.
C) peripheral purchasing.
D) e-procurement.
44) Which item or service is least likely to be included within indirect procurement?
A) maintenance
B) office equipment
C) repair
D) components
45) Electronic procurement exchanges can
A) facilitate efforts to obtain equity investments.
B) permit bid/quote systems for buyers and suppliers.
C) protect companies from potential loss of proprietary data.
D) prevent exposure to exchange rate fluctuations.
46) Industry-based B2B exchanges can create value with
A) increased backward integration.
B) exposure to exchange rate fluctuations.
C) optimized supply chains across an entire network of organizations.
D) increased barriers to entry for international market opportunities.
47) Which item is least likely to be a cost of importing for a company?
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A) reworking of products that do not meet specifications
B) an international sales force
C) transit inventory
D) cost of letter of credit
48) If a firm has a large volume of imports and the dollar is unstable, management may want
a quotation in a foreign currency. In that case, the chief financial officer of the importing
company probably will protect the company from exchange rate risk by using various financial
________ techniques.
A) manipulation
B) devaluation
C) hedging
D) escalation
49) Why did many early efforts at developing e-procurement systems fail?
A) They were made by people without the necessary technological background.
B) They were made by people without the necessary procurement background.
C) Too many people were involved, resulting in a jumble of features.
D) They were made in isolation from the company’s overall business system.
50) Automobiles, Inc. implemented B2B electronic commerce, but it ran into a problem when
one of its suppliers accidentally leaked the details of its pricing and inventory to a competitor.
What did Automobiles, Inc. fail to consider?
A) cost
B) country standards
C) security
D) governmental regulations
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51) A just-in-time supply chain requires
A) advance scheduling of orders.
B) materials and parts to arrive at each point in the production process when they are
needed.
C) parts and materials to arrive at a manufacturing plant at least one month in advance
to avoid “stockouts.”
D) an inventory of finished goods to fill orders as they come in.
52) What is a downside of flexible manufacturing?
A) Changes are made slowly.
B) Changes in the production line cost money.
C) The company receives more, smaller orders.
D) Suppliers are not involved.
53) “Little JIT” refers to
A) reducing the size of the production facility to make it more manageable.
B) narrowing the focus to the management of goods inventories.
C) working with designers, production managers, and marketers to simplify product
design.
D) lean production.
54) To improve quality, everyone in the organization has to be committed to quality. This has
led to the creation of ________, a companywide management approach.
A) total quality management
B) ISO 9000
C) Six Sigma
D) synchronous management
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55) Quality circles meet to discuss ways to improve
A) production speed.
B) their functional areas.
C) product quantity.
D) pricing.
56) Quality circles are commonly led by
A) an outside consultant specializing in management.
B) a middle manager in the sales department.
C) a department head in production.
D) an employee trained in quality control techniques.
57) Eiko and her customer service group felt they needed better communication because their
team seemed to be going in many directions. They decided to meet weekly to discuss how to
improve the department’s functional capabilities so they could better service their customers.
This is an example of
A) a quality circle.
B) total quality service.
C) lean communication.
D) total system performance.
58) An entire manufacturing system with unbalanced operations that emphasizes total system
performance is
A) JIT.
B) quality circles.
C) synchronous manufacturing.
D) concurrent engineering.
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59) ________ is a scheduling and manufacturing control system that seeks to locate and then
eliminate or minimize any constraints to greater production output.
A) Synchronous manufacturing
B) JIT
C) TQM
D) E-procurement
60) Total quality management is
A) the control of quality in all dimensions of product and services.
B) a process in which quality control is focused on the production of the firm’s products.
C) the control of quality in all functional areas of the firm.
D) adoption of concurrent engineering principles in product design.
61) Many American manufacturers made the mistake of rushing to copy parts of Japan’s just-
in-time production system without realizing that
A) cultural differences between Japanese and Westerners would prevent the system
from being transferred effectively.
B) the American legal system and approach to unionization would not permit its
successful adoption.
C) it is a total system that focuses on management of people, materials, and
relationships inside the company and with suppliers.
D) it was patented by Japan.
62) The output of a synchronized manufacturing system is set
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A) at the capacity of the operation with the highest output.
B) at the output of the slowest operation that is working at full capacity.
C) at the level that permits the system to be balanced.
D) so that all production operations can produce the same amount to eliminate
stockpiling.
63) A ________ is the name given to an operation in a synchronous manufacturing system
whose output sets the limit for the entire system’s output.
A) limiting point
B) strangle point
C) bottleneck
D) critical operation
64) In synchronous manufacturing, a production increase at the bottleneck means an increase
A) in that machine’s idle time.
B) for the entire production system.
C) in unwanted inventory.
D) in work stoppage.
65) Mass customization is
A) a company’s use of standardized production systems to produce and deliver products
and services.
B) usually appropriate in situations where there is the limited potential for
differentiating a product for a particular customer.
C) a system that typically requires the company to reconceptualize the design of its
products as well as the design and integration of the processes used.
D) also known as lean production.
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66) Six Sigma is a management process that focuses on
A) reducing defects and eliminating variation.
B) reducing employee turnover.
C) improving communication between departments.
D) customizing product.
67) What commonly results from implementation of Six Sigma?
A) Defects temporarily go up.
B) Costs go down but cycle time goes up.
C) Customer satisfaction goes up.
D) Product quality goes down.
68) The Six Sigma approach includes five steps: define, measure, analyze, improve, and
A) document.
B) control.
C) report.
D) verify.
69) Projects selected for Six Sigma should be completed in
A) 4 to 6 weeks.
B) 3 to 6 months.
C) 6 to 12 months.
D) 1 to 2 years.
70) In Six Sigma, project leaders are called
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A) Black Belts.
B) Green Berets.
C) Master Black Belts.
D) White Knights.
71) The biggest advantage of Six Sigma among organizations using the methodology is
A) improved productivity.
B) quick results.
C) organizational buy-in.
D) cost savings.
72) Frank is responsible for getting raw materials to sites where they can be used to produce
the finished goods. Frank works in the area of
A) standards.
B) processes.
C) logistics.
D) value chains.
73) FedEx allows a company to arrange pickups and then monitor the status of each item
being transported. This demonstrates the concept of
A) facility management.
B) customer value chain.
C) subcontracting.
D) logistics.
74) Documented agreements containing technical specifications or other precise criteria that
will be used consistently as guidelines, rules, or definitions of the characteristics of a product,
process, or service are
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A) standards.
B) processes.
C) logistics.
D) value chains.
75) ISO 9000 is used
A) as the standard most used for quality in the United States.
B) as a set of five universal standards for a quality assurance system agreed to by the
International Organization for Standardization (ISO).
C) to ensure product quantity meets demand.
D) to guarantee the performance of suppliers.
76) The ISO has developed the ISO 1400 for managing ________ issues.
A) product cost
B) employee engagement
C) environmental
D) customer complaint
77) Intel, a supplier of semiconductor memory products and related computer components,
introduced an approach to standardization of its factories called
A) Global Consistency.
B) Intel Inside.
C) Copy Exactly.
D) Intel-ization.
78) Companies whose manufacturing processes are not unified have found that a current
separate set of specifications for each affiliate
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A) is costly and error-prone.
B) results in higher turnover among employees.
C) slows the delivery of raw materials.
D) results in more accurate processes.
79) Manufacturing rationalization is
A) the allocation of scarce resources among various production plants.
B) the division of production among several units so that each produces only a limited
number of components for all assembly plants.
C) the concentration of production at one site to get economies of scale.
D) the production by a subsidiary for its own national market.
80) What is a benefit of global standardization of operations?
A) It eliminates the task of maintenance and production control.
B) It allows home office personnel to quickly spot deviations from the norm.
C) It enables reasonably accurate forecasts of time required to obtain permits and erect
plants.
D) It enables subsidiaries to respond effectively to demands of host country
governments.
81) When a new plant can be built that is a duplicate of others already functioning,
A) labor trainers experienced in the operation of the machinery can be sent to the new
locations without undergoing any training.
B) costs will be the same as in existing locations.
C) vendors will be requested to furnish equipment that they have supplied previously.
D) manufacturing specifications from the technical department still require alterations.
82) Some companies in industrialized countries are using ________, which can reduce the
batch quantity to one and facilitate the potential for mass customization.
A) Six Sigma
B) computer-integrated manufacturing
C) manufacturing rationalization
D) standardized logistics
83) Backward vertical integration refers to
A) the purchase of competitive firms.
B) the installation of production facilities to produce inputs for the production of final
products.
C) the placing of minorities in charge of production processes.
D) the installation of production facilities to consume the outputs of the production
system.
84) The most important element of the economic forces that impede production
standardization is the
A) legal system in place and its protection of private property.
B) wide range of market sizes.
C) level of GDP per capita.
D) skill level of labor.
85) When designing production facilities, designers generally find that