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CTP · Question #740

(Topic 8) LLZ Company manufacturers metal detectors in California at a cost of $9 per unit. The most expensive component to make is the sensor which goes in the finished product. The cost is $5 per…

The correct answer is B. Offshoring. See the full explanation below for the reasoning.

Question

  • (Topic 8)

LLZ Company manufacturers metal detectors in California at a cost of $9 per unit. The most expensive component to make is the sensor which goes in the finished product. The cost is $5 per sensor. Last month LLZ acquired a company in Mexico that makes the sensors for $1 per sensor. LLZ plans to move all sensor manufacturing operations to the factory in Mexico. What is the movement of this cost saving process called?

Options

  • AReengineering
  • BOffshoring
  • CRationalizing
  • DOutsourcing

How the community answered

(22 responses)
  • A
    9% (2)
  • B
    82% (18)
  • C
    5% (1)
  • D
    5% (1)

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