Deck 10: Outsourcing

Question 1

Which of the following is a major element typically included in a "to buy" cost analysis?

A) Delivered purchased material costs
B) Transportation costs
C) Direct labor costs
D) Any follow-on costs stemming from quality and related problems
E) Incremental inventory carrying costs

Answer 1

B

Question 2

Which of the following is a consideration that favors making a product?

A) Limited production facilities
B) Cost considerations dictate that it is less expensive to buy
C) Desire to maintain a stable work force in a period of reduction of sales
D) Small-volume requirements
E) Suppliers' specialized know-how

Answer 2

C

Question 3

Which of the following is not a strategic issue in making the outsourcing decision?

A) The Issue of Short-term Vulnerabilities
B) Core Competencies
C) Supplier Dominance
D) The Creation of Strategic Vulnerabilities
E) The Dangers of Vertical Integration

Answer 3

A

Question 4

"Netsourcers" are internal supply management specialists that keep a company competitive in e-business.

Question 5

From a strategic level,which of the following items is the most logical to outsource?

A) An item that can be bought and sold in a commodity exchange
B) An item that is critical to the success of the product
C) An item that requires specialized design, manufacturing skills or equipment
D) An item that fits well within the firm's core competencies

Question 6

As technology has advanced most manufacturing firms have become much more specialized.

Question 7

Which of the following is a consideration that favors making a product?

A) Unreliable suppliers
B) Stable work force is desired in a period of rising sales
C) Multiple-source policy
D) Indirect managerial control considerations
E) Procurement and inventory considerations

Question 8

Which of the following is a consideration that favors buying a product?

A) Cost considerations make in-house production less costly
B) Desire to integrate plant operations
C) Stable work force is desired in a period of rising sales
D) Use of excess plant capacity
E) Control over production

Question 9

Outsourcing all non-critical activities is a trend where the idea is to achieve significant cost leverage.

Question 10

Many companies are not readily staffed to keep a company competitive in e-business.As a result,companies are outsourcing infrastructure development and maintenance to "Netsourcers."

Question 11

Outsourcing all critical activities is a trend where the idea is to achieve significant cost leverage.

Question 12

To identify non-critical activities,the firm's core competencies must be defined.

Question 13

Which of the following is not true about outsourcing?

A) Outsourcing is increasing rapidly in not just materials, many business functions are being outsourced
B) Outsourcing should be used for all materials when suppliers are available
C) Outsourcing can enable leveraging of the supplier's expertise and increases in innovation
D) Outsourcing can result in lower staffing levels
E) Outsourcing can result in reduced costs and more flexibility

Question 14

Which of the following is a consideration that favors buying a product?

A) Control over quality
B) Multiple-source policy
C) Design secrecy required
D) Unreliable suppliers
E) Desire to maintain a stable work force in a period of reduction of sales

Question 15

Outsourcing decreases an organization's flexibility to meet rapidly changing market conditions,but it can usually reduce total costs in the long-term.

Question 16

Outsourcing has become a way to increase an organization's flexibility to meet rapidly changing market conditions,focus on core competencies and develop competitive advantage.As a result,the need for SM has intensified and positioned supply managers as agents of strategic change critical to supply chain success.

Question 17

As technology has advanced,most manufacturing firms have become much more generalized.

Question 18

Firms are becoming more aware of the strategic dimension of the make-or-buy decision.

Question 19

Cost of materials has continued to increase in many industries,which means that the make or buy outsourcing decision must be reinvestigated from time to time for even stable demand products.

Question 20

Which of the following is not a reason to investigate the make or buy decision at the tactical level?

A) If you currently outsource and the supplier suddenly has poor performance
B) Changing sales demand in the short term
C) Restricted manufacturing capability due to a breakdown
D) Increased manufacturing capability exists due to reduced sales of other items
E) If the part under consideration is still in the design stage

Question 21

Which of the following points is not considered a danger of outsourcing?

A) Loss of control
B) Loss of client focus
C) Loss of centralization
D) Loss of clarity
E) Loss of cost control

Question 22

Which one of the following points is not a reason that Netsourcing has become popular?

A) Netsourcing enables a quick e-business presence
B) Netsourcing provides supply managers that flexibility to make changes
C) Netsourcing can help create a sustained performance
D) Netsourcing can provide support without the need to train or hire specialized personnel
E) Netsourcing can completely replace supply management using intelligent agents

Question 23

Which one of the following points is not a reason that the Make-or-Buy Decision is often a volatile decision?

A) Rigid formulas and rules of thumb are often used, which are often a poor choice to apply
B) The make-or-buy question is influenced by a multitude of diverse factors that are constantly changing
C) Companies do not support promotions based on cost savings
D) The relevant factors for the decision often vary immensely from one firm to another
E) Companies often do not periodically evaluate the effectiveness of their past decisions to generate information helpful in guiding future decisions

Question 24

Which of the following is a major element typically included in a "to make" cost analysis?

A) Direct labor costs at your facility
B) Purchase price of the part from the supplier
C) Transportation costs
D) Receiving and inspection costs of incoming goods
E) Any follow-on costs related to quality or service provided by the supplier

Question 25

Which of the following activities or steps was not included in the typical framework for outsourcing provided in the textbook?

A) Development of a strategic roadmap
B) Development of a decision flowchart
C) Development of a tactical roadmap
D) Development of a transition back plan
E) Development of a review system

Question 26

Which of the following points is not considered a danger of outsourcing?

A) Loss of cost control
B) Ineffective management
C) Loss of confidentiality
D) Double outsourcing
E) Lack of responsibility

Question 27

Which of the following is a major element typically included in a "to buy" cost analysis?

A) Incremental factory overhead costs
B) Incremental managerial costs
C) Incremental purchasing costs
D) Incremental costs of capital
E) Receiving and inspection costs