SCM Chapter 5

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.

True

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.

False

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.

False

Capacity allocation decisions have a significant impact on supply chain performance because they tend to stay in place for several years.

True

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.

True

The allocation of supply sources and markets to facilities does not need to be reconsidered on a regular basis so that the allocation can be changed as market conditions or plant capacities change.

True

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.

True

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.

False

If production technology displays significant economies of scale, many local locations are the most effective.

False

If facilities have lower fixed costs, many local facilities are preferred because this helps

lower transportation costs.

True

If the production technology is very inflexible and product requirements vary from one country to another, a firm has to set up local facilities to serve the market in each country.

True

If the technology is flexible, it becomes more difficult to consolidate manufacturing in a few large facilities.

False

Tariffs have a minor influence on location decisions within a supply chain.

False

High tariffs lead to more production locations within a supply chain network, with each location having a lower allocated capacity.

True

When designing supply chain networks, companies must build appropriate flexibility to help counter fluctuations in exchange rates and demand across different countries.

True

Inventory and facility costs increase as the number of facilities in a supply chain increase.

True

Transportation costs increase as the number of facilities is increased.

False

A firm may increase the number of facilities beyond the point that minimizes total logistics cost to improve the response time to its customers.

True

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.

False

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.

True

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.

True

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.

True

If facilities have higher fixed costs, many local facilities are preferred because this helps lower transportation costs.

False

Supply chain network design decisions include

both the location of manufacturing, storage, or transportation-related facilities and the allocation of capacity and roles to each facility.