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Exam 2: Value Chains

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Question 21

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Postproduction services might include customer financing, customer benefit package design, and promotion/advertising.

A) True
B) False

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Question 22

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Offshoring is the same as outsourcing in terms of transferring ownership and control.

A) True
B) False

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Question 23

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A U.S. motorcycle manufacturer has the option of either making the gas tank in their newly designed motorcycle, or subcontracting it to a manufacturer from Sinagpore. The manufacturer expects to produce 1,000 units per year. Costs for the two options are: $\begin{array}{|l|c|c|}\hline \text { Source } & \text { Fixed Cost } & \text { Variable Cost } \\\hline \text { Make in-house } & \$ 15,000 & \$ 21.50 \\\hline \text { Buy from Singapore } & \$ 0 & \$ 29.00 \\\hline\end{array}$ -The annual cost to make the gas tank in-house is _____.

Preproduction services might include warranty and claim services.

Differentiate a supply chain from a value chain.

An organization that outsources still retains ownership of an outsourced process or function.

A value chain views an organization from an integrative perspective of goods and services, while a supply chain focuses mainly on the physical movement of goods and materials.

Contrast outsourcing with vertical integration. Also, contrast backward integration with forward integration.

The first, second, and third waves of outsourcing experienced by the United States involve _____ respectively.

What are the major decisions organizations must address in designing and configuring their value chains?

Which of the following is NOT a value chain process?

The decision to offshore or outsource involves a variety of economic and noneconomic issues.

_____ refers to acquiring capabilities in the value (supply) chain toward distributions or even customers.

_____ is the process of having suppliers provide goods and services that were previously provided internally.

Global value chains face higher levels of risk and uncertainty, requiring more inventory and day-to-day monitoring to prevent product shortages.

The focus on value has forced many traditional goods-producing companies to reduce services to their customer benefits packages.

A U.S. motorcycle manufacturer has the option of either making the tires in their newly designed motorcycle, or subcontracting it out to a manufacturer from Singapore. Costs for the two options are: $\begin{array}{|l|c|c|}\hline \text { Source } & \text { Fixed Cost } & \text { Variable Cost } \\\hline \text { Make in-house } & \$ 15,000 & \$ 21.50 \\\hline \text { Buy from Singapore } & \$ 0 & \$ 29.00 \\\hline\end{array}$ a.Which option would be preferred at an annual volume of 3,000 tires? b.Which option would be preferred at an annual volume of 5,000 tires? c.For what range of production volume would it be better to make the tires in-house?

A value chain begins with the goods and services that are provided to customers.

A company has two alternatives for meeting a customer requirement for 6,000 units of a specialty molding. If done in-house, fixed cost would be $350,000, with variable cost at $30 per unit. If outsourced, the cost is $80 per unit. Determine the break-even point and determine if they should make the item in-house or outsource it.

Vertical integration is a modern method of outsourcing.