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Exam 15: Global Production and Supply Chain Management

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Question 1

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Which of the following is a consequence of a low minimum efficient scale?

A) Preventing a firm from utilizing capital equipment fully
B) Necessitating centralized production in a single location or a limited number of locations
C) Preventing a firm from accommodating demands for local responsiveness
D) Increasing the unit cost of products
E) Allowing a firm to hedge against currency risk by manufacturing the same product in several locations

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Question 2

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Which of the following is the initial reason for the establishment of a foreign production facility?

A) Employee turnover is high.
B) Products are not labor-intensive.
C) Inventory turnover is low.
D) Exchange rate fluctuations are high.
E) Labor costs are low.

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Question 3

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Which of the following terms refers to the production of a variety of end products at a unit cost that could once be achieved only through bulk production of a standardized output?

Which of the following statements is true of industrial products such as steel?

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?

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.

The effect of improved quality control is to lower the costs of value creation by reducing production costs and:

Discuss the two basic strategies for locating production facilities. When is it most appropriate to centralize production?

What are the ways in which improved quality control reduces costs?

To be able to accommodate demands for local responsiveness, a firm should:

Describe the philosophy of total quality management. A. V. Feigenbaum. Deming identified a number of steps that should be part of any TQM program. He argued that management should embrace the philosophy that mistakes, defects, and poor-quality materials are not acceptable and should be eliminated. He suggested that the quality of supervision should be improved by allowing more time for supervisors to work with employees and by providing them with the tools they need to do the job. Deming recommended that management should create an environment in which employees will not fear reporting problems or recommending improvements. He believed that work standards should not only be defined as numbers or quotas, but should also include some notion of quality to promote the production of defect-free output. He argued that management has the responsibility to train employees in new skills to keep pace with changes in the workplace. In addition, he believed that achieving better quality requires the commitment of everyone in the company.

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?

What do firms now typically use via the Internet to coordinate the flow of materials into manufacturing, through manufacturing, and out to customers?

Which of the following is a hidden cost to basing production in a foreign location?

A wide product variety makes it easier for a firm to increase its production efficiency and thus reduce its unit costs.

In international business, production and supply chain functions accommodating demands for local responsiveness work independent of host-government demands.

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.

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.

Flexible manufacturing technologies are specially targeted at enabling companies to:

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?