IB_Production, Outsourcing

Mass customization facilitates product customization at low costs

• True

• False

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

Which of the following is a factor that transforms a low-cost location to a high-cost location?

• 
  implementation of free trade regime

• appreciation of local currency

• use of fixed exchange rates

• use of pegged exchange rates

Which of the following is a desired outcome of flexible manufacturing technology?

• minimizing the utilization of individual machines

• implementing specialized equipment in production

• reducing setup times for complex equipment

• standardizing the output of a system

Products such as refined sugar, certain bulk chemicals, paint, and petroleum products

• cannot travel through a global supply chain

• come from offshore factories

• have low value-to-weight ratios

• have high value-to-weight ratios

________ makes the most sense when differences among countries in factor costs have a substantial impact on the costs of manufacturing in various countries.

• Total quality management (TQM)

• Concentration of production

• Decentralized production

• Just in time (JIT)

Which of the following situations would lead a firm to choose to decentralize production?

• The product serves universal needs

• The production technology has low fixed costs and low minimum efficient scale, and flexible manufacturing technology is not available

• Trade barriers are low

• The production technology has high fixed costs and high minimum efficient scale relative to global demand or flexible manufacturing technology exists

An advantage of engaging make in-house production of products and components is that

• firms can make better use of the location advantages of certain countries

• the firm will have fewer subunits to control by making products in-house

• 
  it will help the firm capture more orders from other countries

• 
  it enables a firm to protect the proprietary technologies that it has

The major cost saving associated with JIT systems comes from

• speeding up inventory turnover

• early delivery of raw materials to production

• decentralization of manufacturing

• reduced spending on CRM activities

Just-in-time inventory systems

• maintain large buffer for inventory

• are used when procurement is not organized

• economize on inventory holding costs

• require large warehouses for storage