Chapter 5 Network Design in the Supply Chain True False

Supply Chain Management Chapter 5 Network Design in the Supply Chain 5.1 True/False Questions 1) Supply chain network design decisions include the location of manufacturing, storage, or transportation-related facilities and the allocation of capacity and roles to each facility. Answer: TRUE Diff: 2 Topic: 5.1 The Role of Network Design in the Supply Chain AACSB: Application of knowledge Objective: LO 5.1: Understand the role of network design in a supply chain. 2) Decisions concerning the role of each facility are significant because they determine the amount of rigidity the supply chain has in changing the way it meets demand. Answer: FALSE Diff: 2 Topic: 5.1 The Role of Network Design in the Supply Chain AACSB: Application of knowledge Objective: LO 5.1: Understand the role of network design in a supply chain. 3) Facility location decisions have a long-term impact on a supply chain's performance because it is cost effective to shut down a facility or move it to a different location. Answer: FALSE Diff: 1 Topic: 5.1 The Role of Network Design in the Supply Chain AACSB: Application of knowledge Objective: LO 5.1: Understand the role of network design in a supply chain. 4) Answer: TRUE Diff: 2 Topic: 5.1 The Role of Network Design in the Supply Chain AACSB: Application of knowledge Objective: LO 5.1: Understand the role of network design in a supply chain. 5) The allocation of supply sources and markets to facilities has a significant impact on performance because it affects total production, inventory, and transportation costs incurred by the supply chain to satisfy customer demand. Answer: TRUE Diff: 1 Topic: 5.1 The Role of Network Design in the Supply Chain AACSB: Application of knowledge Objective: LO 5.1: Understand the role of network design in a supply chain. 1 6) Network design decisions have a significant impact on performance because they 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. Answer: TRUE Diff: 2 Topic: 5.1 The Role of Network Design in the Supply Chain AACSB: Application of knowledge Objective: LO 5.1: Understand the role of network design in a supply chain. 7) Decisions concerning the role of each facility are significant because they determine the amount of flexibility the supply chain has in changing the way it meets demand. Answer: TRUE Diff: 1 Topic: 5.1 The Role of Network Design in the Supply Chain AACSB: Application of knowledge Objective: LO 5.1: Understand the role of network design in a supply chain. 8) Network design decisions have a significant impact on performance because they determine the supply chain configuration and set constraints within which the other supply chain drivers can be used either to decrease supply chain cost or to increase responsiveness. Answer: TRUE Diff: 1 Topic: 5.1 The Role of Network Design in the Supply Chain AACSB: Application of knowledge Objective: LO 5.1: Understand the role of network design in a supply chain. 9) If facilities have higher fixed costs, many local facilities are preferred because this helps lower transportation costs. Answer: FALSE Diff: 1 Topic: 5.2 Factors Influencing Network Design Decisions AACSB: Analytical thinking Objective: LO 5.2: Identify factors influencing supply chain network design decisions. 10) Firms focusing on cost leadership tend to find the lowest cost location for their manufacturing facilities, but only if that means locating very far from the markets they serve. Answer: FALSE Diff: 1 Topic: 5.2 Factors Influencing Network Design Decisions AACSB: Application of knowledge Objective: LO 5.2: Identify factors influencing supply chain network design decisions. 2 11) If production technology displays significant economies of scale, many local locations are the most effective. Answer: FALSE Diff: 2 Topic: 5.2 Factors Influencing Network Design Decisions AACSB: Application of knowledge Objective: LO 5.2: Identify factors influencing supply chain network design decisions. 12) If facilities have lower fixed costs, many local facilities are preferred because this helps lower transportation costs. Answer: TRUE Diff: 2 Topic: 5.2 Factors Influencing Network Design Decisions AACSB: Application of knowledge Objective: LO 5.2: Identify factors influencing supply chain network design decisions. 13) If the technology is flexible, it becomes more difficult to consolidate manufacturing in a few large facilities. Answer: FALSE Diff: 3 Topic: 5.2 Factors Influencing Network Design Decisions AACSB: Application of knowledge Objective: LO 5.2: Identify factors influencing supply chain network design decisions. 14) High tariffs lead to more production locations within a supply chain network, with each location having a lower allocated capacity. Answer: TRUE Diff: 3 Topic: 5.2 Factors Influencing Network Design Decisions AACSB: Application of knowledge Objective: LO 5.2: Identify factors influencing supply chain network design decisions. 15) When designing supply chain networks, companies must build appropriate flexibility to help counter fluctuations in exchange rates and demand across different countries. Answer: TRUE Diff: 2 Topic: 5.2 Factors Influencing Network Design Decisions AACSB: Application of knowledge Objective: LO 5.2: Identify factors influencing supply chain network design decisions. 16) Inventory and facility costs increase as the number of facilities in a supply chain increase. Answer: TRUE Diff: 2 Topic: 5.2 Factors Influencing Network Design Decisions AACSB: Application of knowledge Objective: LO 5.2: Identify factors influencing supply chain network design decisions. 3 17) Transportation costs increase as the number of facilities is increased. Answer: FALSE Diff: 2 Topic: 5.2 Factors Influencing Network Design Decisions AACSB: Application of knowledge Objective: LO 5.2: Identify factors influencing supply chain network design decisions. 18) A firm may increase the number of facilities beyond the point that minimizes total logistics cost to improve the response time to its customers. Answer: TRUE Diff: 1 Topic: 5.2 Factors Influencing Network Design Decisions AACSB: Application of knowledge Objective: LO 5.2: Identify factors influencing supply chain network design decisions. 19) When faced with a network design decision, the goal of a manager is to design a network that minimizes the firm's costs while satisfying customer needs in terms of demand and responsiveness. Answer: FALSE Diff: 3 Topic: 5.3 Framework for Network Design Decisions AACSB: Application of knowledge Objective: LO 5.3: Develop a framework for making network design decisions. 20) The supply chain network is designed to maximize total profits, taking into account the expected margin and demand in each market, various logistics and facility costs, and the taxes and tariffs at each location. Answer: TRUE Diff: 1 Topic: 5.3 Framework for Network Design Decisions AACSB: Application of knowledge Objective: LO 5.3: Develop a framework for making network design decisions. 4