Chapter 5 COPY

Question 1

Hard Infrastructure Requirements

Answer 1

include the availability of suppliers, transportation services, communication, utilities, and warehousing facilities.

Question 2

Soft Infrastructure requirements

Answer 2

include the availability of a skilled workforce, workforce turnover, and the community receptivity to business and industry.

Question 3

A managers goal when locating facilities and allocating capacity should be to

Answer 3

maximize the overall profitability of the resulting supply chain network while providing customers with the appropriate responsiveness.
-A manager must consider many trade-offs during network design

Question 4

Managers use network design models in two situations.

Answer 4

1. decide on locations and capacities

2. assign current demand to facilities.

Question 5

Duties that must be paid when products and/or equipment are moved across international, state, or city boundaries are referred to as

Answer 5

tariffs

Question 6

If a country has very high tariffs,

Answer 6

companies either do not serve the local market or set up manufacturing plants within the country to save on duties.

Question 7

Developing countries often create free trade zones where

Answer 7

duties and tariffs are relaxed as long as production is used primarily for export.

Question 8

Building some over-capacity in the supply chain network and making the capacity flexible allows a firm to alter production flows within the supply chain to

Answer 8

produce more in facilities that have a lower cost based on current exchange rates.

Question 9

Total logistics costs are a sum of the

Answer 9

inventory, transportation, and facility costs.

Question 10

The facilities in a supply chain network must

Answer 10

at least equal the number that minimizes total logistics cost.

Question 11

When faced with a network design decision, the goal of a manager is to design a network that

Answer 11

maximizes the firm’s profits while satisfying customer needs in terms of demand and responsiveness.

Question 12

The objective of the first phase of network design is to

Answer 12

specify what capabilities the supply chain network must have to support a firm’s competitive strategy.

Question 13

The objective of the second phase of network design is to

Answer 13

identify regions where facilities will be located, their potential roles, and their approximate capacity.

Question 14

The objective of the third phase of network design is to

Answer 14

C) select a set of desirable sites within each region where facilities are to be located.

Question 15

It is very important that long-term consequences be thought through when making facility decisions, because

Answer 15

facilities last a long time and have an enduring impact on a firm’s performance.

Question 16

The implications of culture should not be glossed over because

Answer 16

tariffs and tax incentives should be carefully considered.

Question 17

The quality of life at selected facility locations has a significant impact on performance because

Answer 17

it influences the work force available and their morale.

Question 18

Capital, growth strategy, existing networks and global competition mostly affect which of the four Global Network Design Decisions?

Answer 18

Phase I - Supply Chain Strategy

Question 19

The availability of suppliers, transportation services, communication, utilities, and warehousing infrastructure mostly affect which of the four Global Network Design Decisions?

Answer 19

Phase III - Desirable Sites

Question 20

Tariffs, economies of scale and aggregate factor costs mostly affect which of the four Global Network Design Decisions?

Answer 20

Phase II - Regional Facility Configuration

Question 21

Supply chain network design decisions include

Answer 21

both the location of manufacturing, storage, or transportation-related facilities and the allocation of capacity and roles to each facility.

Question 22

Supply chain network design decisions classified as facility role are concerned with

Answer 22

what processes are performed at each facility.

Question 23

Supply chain network design decisions classified as facility location are concerned with

Answer 23

where facilities should be located.

Question 24

Supply chain network design decisions classified as capacity allocation are concerned with

Answer 24

how much capacity should be allocated to each facility.

Question 25

Supply chain network design decisions classified as market and supply allocation are concerned with

Answer 25

what markets each facility should serve and which supply sources should feed each facility.

Question 26

Decisions concerning the role of each facility are significant because

Answer 26

they determine the amount of flexibility the supply chain has in changing the way it meets demand.

Question 27

Facility location decisions have a long-term impact on a supply chain’s performance because

Answer 27

it is very expensive to shut down a facility or move it to a different location.

Question 28

Capacity allocation decisions have a significant impact on supply chain performance because

Answer 28

capacity decisions tend to stay in place for several years.

Question 29

Allocating too much capacity to a location results in

Answer 29

poor utilization, and as a result, higher costs.

Question 30

Allocating too little capacity results in

Answer 30

poor responsiveness if demand is not satisfied or high cost if demand is filled from a distant facility.

Question 31

The allocation of supply sources and markets to facilities has a significant impact on performance because

Answer 31

it affects total production, inventory, and transportation costs incurred by the supply chain to satisfy customer demand.

Question 32

The allocation of supply sources and markets to facilities should be reconsidered on a regular basis so that

Answer 32

the allocation can be changed as market conditions or plant capacities change

Question 33

Network design decisions have a significant impact on performance because they

Answer 33

determine the supply chain configuration.
and
set constraints within which inventory, transportation, and information can be used to either decrease supply chain cost or increase responsiveness.

Question 34

Firms focusing on cost leadership tend to

Answer 34

find the lowest cost location for their manufacturing facilities.

Question 35

Firms focusing on responsiveness tend to

Answer 35

locate facilities close to the market they serve.

Question 36

A facility that serves the role of being a low-cost supply source for markets located outside the country where the facility is located is

Answer 36

an offshore facility.

Question 37

A facility that also has low cost as its primary objective, but its strategic role is broader than that of an offshore facility is

Answer 37

a source facility.

Question 38

A facility built because of tax incentives, local content requirement, tariff barriers, or high logistics cost to supply the region from elsewhere with the objective to supply the market where it is located is

Answer 38

a server facility.

Question 39

A facility located primarily to obtain access to knowledge or skills that may exist within a certain region is

Answer 39

an outpost facility

Question 40

A facility that serves the market where it is located but also assumes responsibility for product customization, process improvements, product modifications, or product development is

Answer 40

a contributor facility.

Question 41

A facility that creates new products, processes, and technologies for the entire network is

Answer 41

a lead facility.

Question 42

Production technology displays significant economies of scale,

Answer 42

few high-capacity locations are the most effective.

Question 43

If facilities have lower fixed costs,

Answer 43

many local facilities are preferred because this helps lower transportation costs.

Question 44

If the production technology is very inflexible and product requirements vary from one country to another, a firm has to set up

Answer 44

local facilities to serve the market in each country.

Question 45

If the technology is flexible,

Answer 45

it becomes easier to consolidate manufacturing in a few large facilities.