Overview

CHAPTER 11:
SUPPLY CHAIN MANAGEMENT

True / False Questions

1. Operations managers are finding online auctions a fertile area for disposing of discontinued
inventory.
True (E-procurement, moderate) {AACSB: Use of IT}

2. The key to effective supply chain management is to get many suppliers to compete with each other,
in order to drive down prices.
False (The supply chain’s strategic importance, easy)

3. Even though a firm may have a low cost strategy, supply chain strategy can select suppliers
primarily on response or differentiation.
False (The supply chain’s strategic importance, moderate)

4. The supply chain for a brewery would include raw ingredients such as hops and barley but not the
manufactured goods such as bottles and cans.
False (The supply chain’s strategic importance, moderate)

5. Supply chain management faces additional challenges, such as those related to quality production
and distribution systems, when companies enter growing global markets.
True (Supply chain economics, moderate) {AACSB: Multiculture and Diversity}

6. McDonald’s was able to utilize existing plants and transportation systems in preparing the supply
chain for opening its stores in Moscow.
False (The supply chain’s strategic importance, moderate)

7. When using the low-cost strategy for supply chain management, the firm should invest
aggressively to reduce production lead time.
False (The supply chain’s strategic importance, moderate)

8. Savings in the supply chain exert more leverage as the firm has a lower net profit margin.
True (Supply chain economics, moderate)

9. A reduction in inventory costs is one reason for making rather than buying.
False (Supply chain economics, moderate)

10. Outsourcing refers to transferring a firm’s activities that have traditionally been internal to external
suppliers.
True (Supply chain economics, moderate)

11. Outsourcing is a form of specialization that allows the outsourcing firm to focus on its critical
success factors.
True (Supply chain economics, moderate)

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