Chapter 14

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Chapter 14
Global Production, Outsourcing, and Logistics

True / False Questions

1. (p. 463) Outsourcing the "production" of certain service activities to developing nations, where labor costs are lower, has become a trend in recent years. TRUE

AACSB: Analytic
BT: Knowledge
Difficulty: Easy
Learning Objective: 14-1
Topic: Strategy, Production, and Logistics

2. (p. 463) Logistics is the activity that controls the transmission of physical materials through the value chain, from procurement through production and into distribution. TRUE

AACSB: Analytic
BT: Knowledge
Difficulty: Easy
Learning Objective: 14-1
Topic: Strategy, Production, and Logistics

3. (p. 463) The term production is used to denote manufacturing activities, but not service activities. FALSE

AACSB: Analytic
BT: Knowledge
Difficulty: Easy
Learning Objective: 14-1
Topic: Strategy, Production, and Logistics

4. (p. 463) Production and logistics are closely linked since a firm's ability to perform its production activities efficiently depends on a timely supply of high-quality material inputs, for which logistics is responsible. TRUE

AACSB: Analytic
BT: Knowledge
Difficulty: Easy
Learning Objective: 14-1
Topic: Strategy, Production, and Logistics

5. (p. 463-464) Two important objectives shared by the production and logistics functions are to lower costs and to simultaneously increase product quality. TRUE

AACSB: Analytic
BT: Knowledge
Difficulty: Easy
Learning Objective: 14-1
Topic: Strategy, Production, and Logistics

6. (p. 464) One way the improved quality control reduces costs is that it lowers the warranty costs and time associated with fixing defective products. TRUE

AACSB: Analytic
BT: Knowledge
Difficulty: Easy
Learning Objective: 14-1
Topic: Strategy, Production, and Logistics

7. (p. 464) The Six Sigma methodology is an indirect descendant of the total quality management philosophy. FALSE

AACSB: Analytic
BT: Knowledge
Difficulty: Easy
Learning Objective: 14-1
Topic: Strategy, Production, and Logistics

8. (p. 465) Reengineering is the main management technique that companies are using to boost their product quality. FALSE

AACSB: Reflective thinking
BT: Comprehension
Difficulty: Medium
Learning Objective: 14-1
Topic: Strategy, Production, and Logistics

9. (p. 465) At Six Sigma, a production process would be 96.66 percent accurate. FALSE

AACSB: Reflective thinking
BT: Comprehension
Difficulty: Medium
Learning Objective: 14-1
Topic: Strategy, Production, and Logistics

10. (p. 465) Certification process that requires certain quality standards to be met is ISO 9000. TRUE

AACSB: Analytic
BT: Knowledge
Difficulty: Easy
Learning Objective: 14-1
Topic: Strategy, Production, and Logistics

11. (p. 466) Political economy, culture, and relative factor costs are similar across countries. FALSE

AACSB: Analytic
BT: Knowledge
Difficulty: Easy
Learning Objective: 14-2
Topic: Where to Produce

12. (p. 466-467) For global organizations, formal and informal trade barriers have no influence on location decisions. FALSE

AACSB: Analytic
BT: Knowledge
Difficulty: Easy
Learning Objective: 14-2
Topic: Where to Produce

13. (p. 468) The concept of economies of scale tells us that as plant output expands, unit costs increase. FALSE

AACSB: Analytic
BT: Knowledge
Difficulty: Easy
Learning Objective: 14-2
Topic: Where to Produce

14. (p. 468) The type of technology a firm uses to perform specific manufacturing activities can be pivotal in location decisions. TRUE

AACSB: Analytic
BT: Knowledge
Difficulty: Easy
Learning Objective: 14-2
Topic: Where to Produce

15. (p. 468) It now costs more than $5 billion to set up a state-of-the-art plant to manufacture semiconductor chips. FALSE

AACSB: Analytic
BT: Knowledge
Difficulty: Easy
Learning Objective: 14-2
Topic:...
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