Supply Chain Management, 5e (Chopra/Meindl)
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: Analytic Skills
Learning Outcome: Compare common approaches to supply chain design
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: Analytic Skills
Learning Outcome: Compare common approaches to supply chain design
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: Analytic Skills
Learning Outcome: Compare common approaches to supply chain design
4) Capacity allocation decisions have a significant impact on supply chain performance because
they tend to stay in place for several years.
Answer: TRUE
Diff: 2
Topic: 5.1 The Role of Network Design in the Supply Chain
AACSB: Analytic Skills
Learning Outcome: Compare common approaches to supply chain design
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
Learning Outcome: Compare common approaches to supply chain design
5-1
, 6) 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.
Answer: TRUE
Diff: 2
Topic: 5.1 The Role of Network Design in the Supply Chain
Learning Outcome: Compare common approaches to supply chain design
7) 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
Learning Outcome: Compare common approaches to supply chain design
8) 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
Learning Outcome: Compare common approaches to supply chain design
9) 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
Learning Outcome: Compare common approaches to supply chain design
10) 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
Learning Outcome: Compare common approaches to supply chain design
11) 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.
Answer: TRUE
Diff: 3
Topic: 5.2 Factors Influencing Network Design Decisions
Learning Outcome: Compare common approaches to supply chain design
5-2
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: Analytic Skills
Learning Outcome: Compare common approaches to supply chain design
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: Analytic Skills
Learning Outcome: Compare common approaches to supply chain design
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: Analytic Skills
Learning Outcome: Compare common approaches to supply chain design
4) Capacity allocation decisions have a significant impact on supply chain performance because
they tend to stay in place for several years.
Answer: TRUE
Diff: 2
Topic: 5.1 The Role of Network Design in the Supply Chain
AACSB: Analytic Skills
Learning Outcome: Compare common approaches to supply chain design
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
Learning Outcome: Compare common approaches to supply chain design
5-1
, 6) 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.
Answer: TRUE
Diff: 2
Topic: 5.1 The Role of Network Design in the Supply Chain
Learning Outcome: Compare common approaches to supply chain design
7) 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
Learning Outcome: Compare common approaches to supply chain design
8) 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
Learning Outcome: Compare common approaches to supply chain design
9) 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
Learning Outcome: Compare common approaches to supply chain design
10) 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
Learning Outcome: Compare common approaches to supply chain design
11) 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.
Answer: TRUE
Diff: 3
Topic: 5.2 Factors Influencing Network Design Decisions
Learning Outcome: Compare common approaches to supply chain design
5-2
