SCM 300 | SCM300 Exam 4: Global Supply
Operations Updated and Latest Questions and
Correct Answers with Rationale - Arizona State
University
1. A company decides to shift its manufacturing from a low-cost country back to its home
country to reduce lead times and improve quality control. This strategy is best described as:
A. Offshoring
B. Nearshoring
C. Reshoring
D. Outsourcing
Correct Answer: C
Expert Explanation: Reshoring involves moving production activities back to the domestic
market from an overseas location. This strategy is often driven by a need for better quality
control and faster response to local demand. While offshoring focuses on low labor costs,
reshoring prioritizes total cost of ownership and agility. It helps companies mitigate risks
associated with long international lead times and intellectual property theft. Therefore, it
serves as a strategic realignment of the global supply network.
2. Which of the following components is NOT typically part of the Triple Bottom Line in
sustainable supply chain management?
A. Technological Singularity
B. Social Responsibility
C. Economic Prosperity
D. Environmental Stewardship
Correct Answer: A
Expert Explanation: The Triple Bottom Line framework focuses on people, planet, and
profit to measure sustainability. Technological singularity is a theoretical future point in AI
development and is not a core pillar of this framework. Environmental stewardship
ensures that supply chain operations do not deplete natural resources unnecessarily. Social
responsibility focuses on fair labor practices and the impact on local communities.
Economic prosperity ensures the long-term financial viability of the organization through
efficient operations.
3. A global electronics manufacturer faces a sudden shortage of semiconductors due to a
natural disaster in Taiwan. Which action represents a ‘resilient’ supply chain response?
A. Halting all production until the supplier recovers
,B. Activating a pre-qualified secondary source in a different region
C. Suing the supplier for breach of contract
D. Increasing prices to discourage consumer demand
Correct Answer: B
Expert Explanation: Resilience refers to the ability of a supply chain to bounce back or
adapt to disruptions. By having pre-qualified secondary sources, the company maintains
continuity despite localized disasters. This approach requires proactive risk planning and
investment in supplier diversification before a crisis occurs. Simply halting production is a
reactive failure that leads to significant revenue loss. Effective resilience planning
minimizes the impact of external shocks on the final customer.
4. In the context of global operations, what does ‘Total Cost of Ownership’ (TCO) primarily
attempt to calculate?
A. The purchase price of the raw materials only
B. The marketing budget required to sell an imported item
C. The shipping costs from a foreign port to a domestic warehouse
D. All costs associated with the acquisition, use, and disposal of a product
Correct Answer: D
Expert Explanation: TCO provides a comprehensive financial estimate that goes beyond
the initial invoice price of an item. It includes hidden costs such as logistics, tariffs,
inventory holding, and even environmental disposal fees. In global sourcing, a lower unit
price often masks higher transportation and quality management costs. Understanding
TCO allows managers to make more informed decisions about where to source products. It
is a critical tool for strategic operations planning and long-term profitability analysis.
5. A company is accused of using child labor in its tier-two supplier factories. Which concept
best describes the company’s responsibility to manage this risk?
A. Ethical sourcing
B. Transactional sourcing
C. Vertical integration
D. Lean manufacturing
Correct Answer: A
Expert Explanation: Ethical sourcing involves ensuring that products are acquired
through responsible and sustainable methods, including fair labor practices. Companies are
increasingly held accountable for the actions of their sub-tier suppliers in a globalized
economy. Failure to monitor the supply chain can lead to severe brand damage and legal
, repercussions. Robust auditing and transparency are essential components of an ethical
sourcing strategy. This approach aligns corporate values with the expectations of modern
consumers and regulators.
6. When a firm chooses to produce high-volume, standardized products in a country with low
labor costs, they are likely following which strategy?
A. Cost-leadership strategy
B. Agile supply chain strategy
C. Niche market strategy
D. Customer-centric strategy
Correct Answer: A
Expert Explanation: Cost-leadership focuses on becoming the lowest-cost producer in an
industry through economies of scale and low input costs. Offshoring to low-cost regions is a
classic tactic used to achieve this competitive advantage. This strategy works best for
functional products with stable demand and low customization requirements. However, it
may introduce risks such as longer lead times and reduced supply chain visibility. Strategic
planning must weigh these cost savings against the potential for disruption.
7. Which of the following is a significant ‘hidden cost’ of global sourcing that can impact the
bottom line?
A. Direct labor wages
B. Inventory carrying costs due to longer transit times
C. Standard raw material prices
D. Domestic utility rates
Correct Answer: B
Expert Explanation: Longer lead times in global sourcing necessitate higher levels of
safety stock to prevent stockouts. These inventory carrying costs include warehousing,
insurance, and the risk of product obsolescence. Many companies overlook these expenses
when they only focus on the low unit price of foreign goods. Efficient supply chain
management requires balancing the trade-off between transportation costs and inventory
levels. Recognizing these hidden costs is essential for an accurate Total Cost of Ownership
analysis.
8. What is the primary purpose of a ‘Supplier Code of Conduct’ in global operations?
A. To dictate the exact selling price of products to consumers
B. To prevent the supplier from working with any other competitors
C. To establish mandatory standards for labor, ethics, and environmental impact
Operations Updated and Latest Questions and
Correct Answers with Rationale - Arizona State
University
1. A company decides to shift its manufacturing from a low-cost country back to its home
country to reduce lead times and improve quality control. This strategy is best described as:
A. Offshoring
B. Nearshoring
C. Reshoring
D. Outsourcing
Correct Answer: C
Expert Explanation: Reshoring involves moving production activities back to the domestic
market from an overseas location. This strategy is often driven by a need for better quality
control and faster response to local demand. While offshoring focuses on low labor costs,
reshoring prioritizes total cost of ownership and agility. It helps companies mitigate risks
associated with long international lead times and intellectual property theft. Therefore, it
serves as a strategic realignment of the global supply network.
2. Which of the following components is NOT typically part of the Triple Bottom Line in
sustainable supply chain management?
A. Technological Singularity
B. Social Responsibility
C. Economic Prosperity
D. Environmental Stewardship
Correct Answer: A
Expert Explanation: The Triple Bottom Line framework focuses on people, planet, and
profit to measure sustainability. Technological singularity is a theoretical future point in AI
development and is not a core pillar of this framework. Environmental stewardship
ensures that supply chain operations do not deplete natural resources unnecessarily. Social
responsibility focuses on fair labor practices and the impact on local communities.
Economic prosperity ensures the long-term financial viability of the organization through
efficient operations.
3. A global electronics manufacturer faces a sudden shortage of semiconductors due to a
natural disaster in Taiwan. Which action represents a ‘resilient’ supply chain response?
A. Halting all production until the supplier recovers
,B. Activating a pre-qualified secondary source in a different region
C. Suing the supplier for breach of contract
D. Increasing prices to discourage consumer demand
Correct Answer: B
Expert Explanation: Resilience refers to the ability of a supply chain to bounce back or
adapt to disruptions. By having pre-qualified secondary sources, the company maintains
continuity despite localized disasters. This approach requires proactive risk planning and
investment in supplier diversification before a crisis occurs. Simply halting production is a
reactive failure that leads to significant revenue loss. Effective resilience planning
minimizes the impact of external shocks on the final customer.
4. In the context of global operations, what does ‘Total Cost of Ownership’ (TCO) primarily
attempt to calculate?
A. The purchase price of the raw materials only
B. The marketing budget required to sell an imported item
C. The shipping costs from a foreign port to a domestic warehouse
D. All costs associated with the acquisition, use, and disposal of a product
Correct Answer: D
Expert Explanation: TCO provides a comprehensive financial estimate that goes beyond
the initial invoice price of an item. It includes hidden costs such as logistics, tariffs,
inventory holding, and even environmental disposal fees. In global sourcing, a lower unit
price often masks higher transportation and quality management costs. Understanding
TCO allows managers to make more informed decisions about where to source products. It
is a critical tool for strategic operations planning and long-term profitability analysis.
5. A company is accused of using child labor in its tier-two supplier factories. Which concept
best describes the company’s responsibility to manage this risk?
A. Ethical sourcing
B. Transactional sourcing
C. Vertical integration
D. Lean manufacturing
Correct Answer: A
Expert Explanation: Ethical sourcing involves ensuring that products are acquired
through responsible and sustainable methods, including fair labor practices. Companies are
increasingly held accountable for the actions of their sub-tier suppliers in a globalized
economy. Failure to monitor the supply chain can lead to severe brand damage and legal
, repercussions. Robust auditing and transparency are essential components of an ethical
sourcing strategy. This approach aligns corporate values with the expectations of modern
consumers and regulators.
6. When a firm chooses to produce high-volume, standardized products in a country with low
labor costs, they are likely following which strategy?
A. Cost-leadership strategy
B. Agile supply chain strategy
C. Niche market strategy
D. Customer-centric strategy
Correct Answer: A
Expert Explanation: Cost-leadership focuses on becoming the lowest-cost producer in an
industry through economies of scale and low input costs. Offshoring to low-cost regions is a
classic tactic used to achieve this competitive advantage. This strategy works best for
functional products with stable demand and low customization requirements. However, it
may introduce risks such as longer lead times and reduced supply chain visibility. Strategic
planning must weigh these cost savings against the potential for disruption.
7. Which of the following is a significant ‘hidden cost’ of global sourcing that can impact the
bottom line?
A. Direct labor wages
B. Inventory carrying costs due to longer transit times
C. Standard raw material prices
D. Domestic utility rates
Correct Answer: B
Expert Explanation: Longer lead times in global sourcing necessitate higher levels of
safety stock to prevent stockouts. These inventory carrying costs include warehousing,
insurance, and the risk of product obsolescence. Many companies overlook these expenses
when they only focus on the low unit price of foreign goods. Efficient supply chain
management requires balancing the trade-off between transportation costs and inventory
levels. Recognizing these hidden costs is essential for an accurate Total Cost of Ownership
analysis.
8. What is the primary purpose of a ‘Supplier Code of Conduct’ in global operations?
A. To dictate the exact selling price of products to consumers
B. To prevent the supplier from working with any other competitors
C. To establish mandatory standards for labor, ethics, and environmental impact
