Chapter 10

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One advantage of outsourcing is that it: a. gives the company a high degree of control over its operations. b. increases the company’s access to state-of-the-art products and processes. c. protects the company’s proprietary designs and processes. d. encourages the development of the company’s core competencies. increases the company’s access to state-of-the-art products and processes.
Which of these is a direct cost associated with outsourcing? a. Direct material b. Direct labor c. Variable overhead d. Price from invoice Price from invoice
Which of these is an indirect cost associated with insourcing? a. Maintenance b. Purchasing c. Receiving d. Quality control Maintenance
A company using portfolio analysis correctly decides to streamline the purchasing process for a few items by use of EDI and automated requisitions to the greatest extent possible. The quadrant that these items fall in is most probably the: a. Bottleneck quadrant. b. Critical quadrant. c. Leverage quadrant.d. Routine quadrant Routine quadrant
Competitive bidding, active sourcing, and using industry standards are all actions that are appropriate if the sourcing strategy is to: a. Form partnerships with suppliers. b. Maximize commercial advantage. c. Simplify the acquisition process.d. Ensure supply continuity Maximize commercial advantage.
An item that is expensive, complex, and has few qualified suppliers can be described as having: a. high value potential and high complexity. b. high value potential and low complexity. c. low value potential and high complexity.d. low value potential and low complexity high value potential and high complexity.
When compared with single sourcing, multiple sourcing has the advantage of: a. spreading risk. b. volume leveraging. c. lower transportation costs. d. reduced quality variability. spreading risk.
Single sourcing is a better choice than multiple sourcing from the perspective of: a. increased competition. b. ensuring that a supplier will not become complacent. c. spreading risk. d. access to the supplier’s design and engineering capabilities. access to the supplier’s design and engineering capabilities.
A sourcing strategy in which two suppliers are used for the same purchased product or service is: a. cross sourcing. b. dual sourcing. c. contingency sourcing. d. Multi sourcing. dual sourcing.
This table contains a list of three companies that have been rated on four weighted performance dimensions. Which of the following statements regarding this information is best? Performance Dimension Strickland Thatherton Mega-Low Amerigas Quality (W=0.5) 4 4 2 4 Cost (W=0.4) 4 3 5 3 Speed (W=0.1) 2 2 4 5 a. Strickland is superior to Mega-Low. b. Thatherton is superior to Amerigas. c. Amerigas is superior to Strickland. d. Mega-Low is superior to Thatherton. Strickland is superior to Mega-Low.
Which of these statements about supply base trends is best? a. The decrease in supply base is realized primarily at the lowest level as the number of third and fourth tier suppliers has been dramatically slashed during the last few years. b. Although the supply base has fallen considerably, the number of first-tier suppliers in most supply chains has actually increased. c. A recent trend is to rely on a large supplier to design and build entire subsystems. d. The supply base has actually increased when inflation is taken into account. A recent trend is to rely on a large supplier to design and build entire subsystems.
A recent survey of executives at Global 1000 companies uncovered what fear? a. The fear of a supply chain disruption. b. The fear of the unknown. c. The fear of improperly weighting performance dimensions. d. The fear of misclassifying direct and indirect costs. The fear of a supply chain disruption.
Which of these factors is most likely to increase the risk of a missed shipment, communication problem, or human error? a. Supply base reduction. b. Global outsourcing. c. Multi criteria decision models. d. Electronic data interchange. Global outsourcing.
The use of supply chain partners to provide products or services is called: a. In sourcing. b. offloading. c. partnering. d. outsourcing. outsourcing.
__________ are high level, often strategic decisions regarding which products or services will be provided internally and which will be provided by external supply chain members sourcing decisions
__________ is the name for a technique requiring a company to identify and determine all of the major costs associated with different sourcing possibilities total cost analysis
The bulk of insourcing costs are usually __________ costs indirect cost
A company using portfolio analysis decides to form partnerships with suppliers; the products in question probably fall in the __________ quadrant critical
A company using portfolio analysis identifies a number of products that fall in the routine quadrant. The company has a highly competent information technology department, so a logical way they might choose to automate the purchasing process is through __________ . EDI Electronic Data Interchange
Use of a single supplier for a part or service in part of the business and another supplier with the same capability for a different part or service in another area of the business is known as __________. Cross Sourcing
Among the disadvantages of __________ are that different product attributes with varying qualities may be produced and that it can actually result in increased prices over time. multiple sourcing
Top executives name __________as a significant threat to their companies’ revenue streams. supply chain disruptions
List three OUTSOURCING advantages and disadvantages
Adv: High strategic flexibility, low interest risk, improved cash flow
DisAdv: possibility of choosing bad supplier, communication/coordination challenges/ loss of control over the process and core technologies
What are the four sourcing strategies?
cross sourcing
dual sourcing
single sourcing
multiple sourcing
Identify three major trends in supply management
supply base reduction
global sourcing
environmentalism
Operations managers for a company using outsourcing must determine whether they have the capacity and resources they need, the most appropriate manufacturing or service processes to use, and the information systems they will rely on to coordinate operations. False
Outsourcing can be risky because it decreases the firm’s strategic flexibility. False
Total cost analysis divides costs into direct (costs that are tied to the level of operations or supply chain activities) and indirect (costs that are not tied to the level of operations or supply chain activity). True
A company that uses portfolio analysis would probably classify things like office supplies in the Bottleneck quadrant. False
Portfolio analysis begins with assignment to a quadrant before a sourcing strategy is formulated. True
A manufacturer seeking to reduce the variability of quality should use multiple sourcing. False
A manufacturer that wants to make sure that suppliers do not become complacent should use multiple sourcing. True
Cross sourcing is a strategy in which two suppliers are used for the same purchased product or service. False
The weighted-point evaluation system allows for a completely objective decision to be made. False
A recent trend in supply management is a reduction in the total supply base, although the authors note that the number of first-tier suppliers has actually increased slightly. False