Question

Which of the following statements are true. Mark any that are.

a.Studies have shown that, in some cases, long lead times due to global sourcing lead to increased retailer markdowns of products.
b.For retailers like Zara, it is cheaper to produce their products in Spain from a total cost perspective even though the labor costs are high, because of gains in agility.
c.As a firm ""reshores""—moving production from offshore to domestic—generally it would require less safety stock held in its supply chain.
d.Generally, as the degree of a firm's global sourcing increases, time to deliver product goes up, meaning that less safety stock is required.

Answer 1

a. Long lead times due to global sourcing can lead to increased retailer markdowns. b. For retailers like Zara, it is cheaper to produce in Spain due to gains in agility. d. As the degree of global sourcing increases, time to deliver the product goes up.

Step-by-step explanation:

a. Studies have shown that, in some cases, long lead times due to global sourcing can lead to increased retailer markdowns of products. This is because when products take longer to reach the retailer, they may become outdated or less desirable, leading to the need for markdowns.

b. For retailers like Zara, it is cheaper to produce their products in Spain from a total cost perspective even though the labor costs are high because of gains in agility. Zara's fast fashion business model relies on quick turnaround times and the ability to respond to changing fashion trends, which is facilitated by producing in close proximity to their market.

d. Generally, as the degree of a firm's global sourcing increases, time to deliver the product goes up, meaning that less safety stock is required. This is because global sourcing involves longer lead times due to transportation and customs processes, which can increase the time it takes for products to reach their destination.