Supply Chain Management, 6e, Global Edition (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: Application of knowledge
Objective: LO 5.1: Understand the role of network design in a supply chain.
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: Application of knowledge
Objective: LO 5.1: Understand the role of network design in a supply chain.
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: Application of knowledge
Objective: LO 5.1: Understand the role of network design in a supply chain.
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: Application of knowledge
Objective: LO 5.1: Understand the role of network design in a supply chain.
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
AACSB: Application of knowledge
Objective: LO 5.1: Understand the role of network design in a supply chain.
1
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,6) 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
AACSB: Application of knowledge
Objective: LO 5.1: Understand the role of network design in a supply chain.
7) 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.
Answer: TRUE
Diff: 1
Topic: 5.1 The Role of Network Design in the Supply Chain
AACSB: Application of knowledge
Objective: LO 5.1: Understand the role of network design in a supply chain.
8) 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.
Answer: TRUE
Diff: 1
Topic: 5.1 The Role of Network Design in the Supply Chain
AACSB: Application of knowledge
Objective: LO 5.1: Understand the role of network design in a supply chain.
9) If facilities have higher fixed costs, many local facilities are preferred because this helps lower
transportation costs.
Answer: FALSE
Diff: 1
Topic: 5.2 Factors Influencing Network Design Decisions
AACSB: Analytical thinking
Objective: LO 5.2: Identify factors influencing supply chain network design decisions.
10) 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
AACSB: Application of knowledge
Objective: LO 5.2: Identify factors influencing supply chain network design decisions.
2
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, 11) 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
AACSB: Application of knowledge
Objective: LO 5.2: Identify factors influencing supply chain network design decisions.
12) 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
AACSB: Application of knowledge
Objective: LO 5.2: Identify factors influencing supply chain network design decisions.
13) If the technology is flexible, it becomes more difficult to consolidate manufacturing in a few
large facilities.
Answer: FALSE
Diff: 3
Topic: 5.2 Factors Influencing Network Design Decisions
AACSB: Application of knowledge
Objective: LO 5.2: Identify factors influencing supply chain network design decisions.
14) High tariffs lead to more production locations within a supply chain network, with each
location having a lower allocated capacity.
Answer: TRUE
Diff: 3
Topic: 5.2 Factors Influencing Network Design Decisions
AACSB: Application of knowledge
Objective: LO 5.2: Identify factors influencing supply chain network design decisions.
15) When designing supply chain networks, companies must build appropriate flexibility to help
counter fluctuations in exchange rates and demand across different countries.
Answer: TRUE
Diff: 2
Topic: 5.2 Factors Influencing Network Design Decisions
AACSB: Application of knowledge
Objective: LO 5.2: Identify factors influencing supply chain network design decisions.
16) Inventory and facility costs increase as the number of facilities in a supply chain increase.
Answer: TRUE
Diff: 2
Topic: 5.2 Factors Influencing Network Design Decisions
AACSB: Application of knowledge
Objective: LO 5.2: Identify factors influencing supply chain network design decisions.
3
Copyright © 2016 Pearson Education, Ltd.
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: Application of knowledge
Objective: LO 5.1: Understand the role of network design in a supply chain.
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: Application of knowledge
Objective: LO 5.1: Understand the role of network design in a supply chain.
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: Application of knowledge
Objective: LO 5.1: Understand the role of network design in a supply chain.
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: Application of knowledge
Objective: LO 5.1: Understand the role of network design in a supply chain.
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
AACSB: Application of knowledge
Objective: LO 5.1: Understand the role of network design in a supply chain.
1
Copyright © 2016 Pearson Education, Ltd.
,6) 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
AACSB: Application of knowledge
Objective: LO 5.1: Understand the role of network design in a supply chain.
7) 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.
Answer: TRUE
Diff: 1
Topic: 5.1 The Role of Network Design in the Supply Chain
AACSB: Application of knowledge
Objective: LO 5.1: Understand the role of network design in a supply chain.
8) 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.
Answer: TRUE
Diff: 1
Topic: 5.1 The Role of Network Design in the Supply Chain
AACSB: Application of knowledge
Objective: LO 5.1: Understand the role of network design in a supply chain.
9) If facilities have higher fixed costs, many local facilities are preferred because this helps lower
transportation costs.
Answer: FALSE
Diff: 1
Topic: 5.2 Factors Influencing Network Design Decisions
AACSB: Analytical thinking
Objective: LO 5.2: Identify factors influencing supply chain network design decisions.
10) 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
AACSB: Application of knowledge
Objective: LO 5.2: Identify factors influencing supply chain network design decisions.
2
Copyright © 2016 Pearson Education, Ltd.
, 11) 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
AACSB: Application of knowledge
Objective: LO 5.2: Identify factors influencing supply chain network design decisions.
12) 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
AACSB: Application of knowledge
Objective: LO 5.2: Identify factors influencing supply chain network design decisions.
13) If the technology is flexible, it becomes more difficult to consolidate manufacturing in a few
large facilities.
Answer: FALSE
Diff: 3
Topic: 5.2 Factors Influencing Network Design Decisions
AACSB: Application of knowledge
Objective: LO 5.2: Identify factors influencing supply chain network design decisions.
14) High tariffs lead to more production locations within a supply chain network, with each
location having a lower allocated capacity.
Answer: TRUE
Diff: 3
Topic: 5.2 Factors Influencing Network Design Decisions
AACSB: Application of knowledge
Objective: LO 5.2: Identify factors influencing supply chain network design decisions.
15) When designing supply chain networks, companies must build appropriate flexibility to help
counter fluctuations in exchange rates and demand across different countries.
Answer: TRUE
Diff: 2
Topic: 5.2 Factors Influencing Network Design Decisions
AACSB: Application of knowledge
Objective: LO 5.2: Identify factors influencing supply chain network design decisions.
16) Inventory and facility costs increase as the number of facilities in a supply chain increase.
Answer: TRUE
Diff: 2
Topic: 5.2 Factors Influencing Network Design Decisions
AACSB: Application of knowledge
Objective: LO 5.2: Identify factors influencing supply chain network design decisions.
3
Copyright © 2016 Pearson Education, Ltd.
