Supply Chain Management, 5e (Chopra/Meindl)
Chapter 6 Designing Global Supply Chain Networks
6.1 True/False Questions
1) Decisions made during the supply chain design phase regarding significant investments in the
supply chain, such as the number and size of plants to build, the number of trucks to purchase or
lease, and whether to build or lease warehouse space, cannot be altered in the short term.
Answer: TRUE
Diff: 2
Topic: 6.1 The Impact of Globalization on Supply Chain Networks
Learning Outcome: Compare common approaches to supply chain design
2) Decisions made during the supply chain design phase regarding significant investments in the
supply chain, such as the number and size of plants to build, the number of trucks to purchase or
lease, and whether to build or lease warehouse space, rarely remain in place for several years.
Answer: FALSE
Diff: 2
Topic: 6.1 The Impact of Globalization on Supply Chain Networks
Learning Outcome: Compare common approaches to supply chain design
3) Long-term contracts for both warehousing and transportation requirements will be more
effective if the demand and price of warehousing do not change in the future or if the price of
warehousing goes up.
Answer: TRUE
Diff: 1
Topic: 6.5 Evaluating Network Design Decisions Using Decision Trees
Learning Outcome: Compare common approaches to supply chain design
4) The degree of demand and price uncertainty has a significant influence on the appropriate
portfolio of long- and short-term warehousing space that a firm should carry.
Answer: TRUE
Diff: 1
Topic: 6.1 The Impact of Globalization on Supply Chain Networks
Learning Outcome: Compare common approaches to supply chain design
5) If price and demand vary over time in a global network, flexible production capacity can be
reconfigured to maximize profits in the new environment.
Answer: TRUE
Diff: 2
Topic: 6.1 The Impact of Globalization on Supply Chain Networks
Learning Outcome: Compare common approaches to supply chain design
6-1
, 6) A firm may choose to build a flexible global supply chain even in the presence of little
demand or supply uncertainty if certainty exists in exchange rates or prices.
Answer: FALSE
Diff: 2
Topic: 6.1 The Impact of Globalization on Supply Chain Networks
7) The present value of a stream of cash flows is what that stream is worth in today's dollars.
Answer: TRUE
Diff: 1
Topic: 6.4 Discounted Cash Flows
8) The present value of future cash flows is found by using a discount factor.
Answer: TRUE
Diff: 2
Topic: 6.4 Discounted Cash Flows
9) The rate of return k is also referred to as the present value of capital.
Answer: FALSE
Diff: 1
Topic: 6.4 Discounted Cash Flows
10) A negative NPV for an option indicates that the option will lose money for the supply chain.
Answer: TRUE
Diff: 2
Topic: 6.4 Discounted Cash Flows
11) The decision with the lowest NPV will provide a supply chain with the highest financial
return.
Answer: FALSE
Diff: 2
Topic: 6.4 Discounted Cash Flows
12) In reality, demand and prices are highly uncertain and are likely to fluctuate during the life of
any supply chain decision.
Answer: TRUE
Diff: 2
Topic: 6.5 Evaluating Network Design Decisions Using Decision Trees
Learning Outcome: Compare common approaches to supply chain design
13) For a global supply chain, exchange rates and inflation are unlikely to vary over time in
different locations.
Answer: FALSE
Diff: 1
Topic: 6.5 Evaluating Network Design Decisions Using Decision Trees
Learning Outcome: Compare common approaches to supply chain design
6-2
Chapter 6 Designing Global Supply Chain Networks
6.1 True/False Questions
1) Decisions made during the supply chain design phase regarding significant investments in the
supply chain, such as the number and size of plants to build, the number of trucks to purchase or
lease, and whether to build or lease warehouse space, cannot be altered in the short term.
Answer: TRUE
Diff: 2
Topic: 6.1 The Impact of Globalization on Supply Chain Networks
Learning Outcome: Compare common approaches to supply chain design
2) Decisions made during the supply chain design phase regarding significant investments in the
supply chain, such as the number and size of plants to build, the number of trucks to purchase or
lease, and whether to build or lease warehouse space, rarely remain in place for several years.
Answer: FALSE
Diff: 2
Topic: 6.1 The Impact of Globalization on Supply Chain Networks
Learning Outcome: Compare common approaches to supply chain design
3) Long-term contracts for both warehousing and transportation requirements will be more
effective if the demand and price of warehousing do not change in the future or if the price of
warehousing goes up.
Answer: TRUE
Diff: 1
Topic: 6.5 Evaluating Network Design Decisions Using Decision Trees
Learning Outcome: Compare common approaches to supply chain design
4) The degree of demand and price uncertainty has a significant influence on the appropriate
portfolio of long- and short-term warehousing space that a firm should carry.
Answer: TRUE
Diff: 1
Topic: 6.1 The Impact of Globalization on Supply Chain Networks
Learning Outcome: Compare common approaches to supply chain design
5) If price and demand vary over time in a global network, flexible production capacity can be
reconfigured to maximize profits in the new environment.
Answer: TRUE
Diff: 2
Topic: 6.1 The Impact of Globalization on Supply Chain Networks
Learning Outcome: Compare common approaches to supply chain design
6-1
, 6) A firm may choose to build a flexible global supply chain even in the presence of little
demand or supply uncertainty if certainty exists in exchange rates or prices.
Answer: FALSE
Diff: 2
Topic: 6.1 The Impact of Globalization on Supply Chain Networks
7) The present value of a stream of cash flows is what that stream is worth in today's dollars.
Answer: TRUE
Diff: 1
Topic: 6.4 Discounted Cash Flows
8) The present value of future cash flows is found by using a discount factor.
Answer: TRUE
Diff: 2
Topic: 6.4 Discounted Cash Flows
9) The rate of return k is also referred to as the present value of capital.
Answer: FALSE
Diff: 1
Topic: 6.4 Discounted Cash Flows
10) A negative NPV for an option indicates that the option will lose money for the supply chain.
Answer: TRUE
Diff: 2
Topic: 6.4 Discounted Cash Flows
11) The decision with the lowest NPV will provide a supply chain with the highest financial
return.
Answer: FALSE
Diff: 2
Topic: 6.4 Discounted Cash Flows
12) In reality, demand and prices are highly uncertain and are likely to fluctuate during the life of
any supply chain decision.
Answer: TRUE
Diff: 2
Topic: 6.5 Evaluating Network Design Decisions Using Decision Trees
Learning Outcome: Compare common approaches to supply chain design
13) For a global supply chain, exchange rates and inflation are unlikely to vary over time in
different locations.
Answer: FALSE
Diff: 1
Topic: 6.5 Evaluating Network Design Decisions Using Decision Trees
Learning Outcome: Compare common approaches to supply chain design
6-2
