Operation Management Workbook For Students

Operations Management
2nd Edition
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WORKBOOK
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Icfai Center for Management Research

Road # 3, Banjara Hills, Hyderabad 500 034
 Icfai, March 2007. All rights reserved.
No part of this publication may be reproduced, stored in a retrieval system, used
in a spreadsheet, or transmitted in any form or by any means – electronic,
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mechanical, photocopying or otherwise – without prior permission in writing from
Icfai.
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Operations Management (2nd Edition) – Workbook
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ISBN 81-314-1126-5
Ref. No. OM WB – 03 2K7 35

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For any clarification regarding this book, students may please write to Icfai giving the above
reference, and page number.
While every possible care has been taken in preparing this book, Icfai welcomes suggestions
from students for improvement in future editions.
Contents
Part A
Multiple Choice Questions 3-67
Multiple Choice – Answers and Explanations 71-136
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Part B
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Paper I
Paper I – Model Test 1 139-148
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Paper I – Model Test 2 149-159
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Paper I – Model Test 1 – Answers and Explanations 163-172
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Paper I – Model Test 2 – Answers and Explanations 173-184
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Paper II
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Paper II – Model Test 1 187-196
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Paper II – Model Test 2 197-207

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Paper II – Model Test 1 – Answers and Explanations 211-221

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Paper II – Model Test 2 – Answers and Explanations 222-231

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Detailed Contents
Part One: Introduction to Operations Management
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1. OPERATIONS MANAGEMENT – AN OVERVIEW
Operations Management Decisions
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The Historical Evolution of Operations Management
Computers and Advanced Operations Technology
2. OPERATIONS STRATEGY
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Operations Strategy as a Competitive Weapon
Elements of Operations Strategy
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Developing an Operations Strategy
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Financial and Economic Analysis in Operations
3. FORECASTING DEMAND
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Forecasting in Operations
Forecast Components
Demand Forecasting Process
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Forecasting Methods
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Selecting a Forecasting Method

Measures of Forecasting Accuracy
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Monitoring and Controlling Forecasts
Part Two: Design of Facilities and Jobs

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4. ALLOCATING RESOURCES TO STRATEGIC ALTERNATIVES

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Allocation Decisions in Operations Strategy

Linear Programming in Operations Management
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Formulation of Linear Programming Problems

Solution of Linear Programming Problems
The Transportation Problem in Linear Programming
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5. DESIGN OF PRODUCTION PROCESSES

Process Planning and Design
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Major Factors Affecting Process Design Decisions

Types of Process Designs
Process Planning Aids
Selecting the Type of Process Design
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6. FACILITY LOCATION AND LAYOUT
Importance of Location
Factors Affecting the Location Decisions
General Steps in Location Selection and Location Decision Process
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Location Evaluation Methods
Locating Service Facilities
Facility Layout
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Basic Layout Formats
Developing a Process Layout
Developing a Product Layout
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Developing a Cellular Manufacturing Layout
Japanese Approaches and Trends in Manufacturing Layouts
Service Facility Layouts
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7. JOB DESIGN
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Job Design Fundamentals
Considerations in Job Design
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Work Environment
Uses of Job Design
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8. WORK MEASUREMENT
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Uses of Setting Work Standards

Work Measurement Techniques
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Part Three: Operations Planning and Control

9. AGGREGATE PLANNING AND CAPACITY PLANNING
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Overview of Planning Activities

The Aggregate Planning Process
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Strategies for Developing Aggregate Plans

Aggregate Planning Techniques
Master Production Schedule
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Implementing Aggregate Plans and Master Schedules

Capacity Planning
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10. FUNDAMENTALS OF INVENTORY CONTROL

Purpose of Inventories
Inventory Costs
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Inventory Systems
Economic Order Quantity Model
Inventory Classifications Models
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11. PURCHASE MANAGEMENT
Importance of Purchasing
Organizing Purchasing
Responsibilities of a Purchasing Manager
Purchasing Process
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Duties of Buyers
Make-or-Buy Decisions
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Ethics in Buying
12. MATERIALS MANAGEMENT

Necessity of Materials Management
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Functions of Materials Management
Materials Management Technology
Materials Management Techniques
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13. MATERIALS REQUIREMENT PLANNING
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Fundamentals of Materials Requirement Planning
Components of an MRP System
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Advantages and Disadvantages of an MRP System
Problems in Implementing MRP Systems
Manufacturing Resource Planning (MRP II)
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14. OPERATIONS SCHEDULING
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Purpose of Scheduling
Scheduling Methods
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Scheduling Activities
Scheduling by Type of Operations
Scheduling Personnel in Service Operations
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Scheduling Techniques
15. ENTERPRISE RESOURCE PLANNING

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Evolution of ERP
Business Process Reengineering
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Business Modeling for ERP

ERP Implementation
ERP and Competitive Advantage
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16. SUPPLY CHAIN MANAGEMENT

Business Drivers in Supply Chain Performance
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Principles of Supply Chain Management

Forces Shaping Supply Chain Management
Supply Chain Management Framework
Customer Focus in Supply Chain Management
Electronic Supply Chain Management
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17. JUST-IN-TIME (JIT) MANUFACTURING SYSTEM
The Concept of the JIT System
Advantages of JIT Systems
Characteristics of JIT Systems
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18. PRODUCTIVITY AND QUALITY MANAGEMENT
Productivity
The Strategic Role of Quality
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Role of Inspection in Quality Control
The Cost of Quality
Statistical Concepts in Quality Control
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Computers in Quality Control
Concept of TQM
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19. FACILITIES AND MAINTENANCE MANAGEMENT
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Facilities Management
Necessity of Maintenance Management
Types of Maintenance
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Economics of Maintenance
Evaluation of Preventive Maintenance Policies
Maintenance Planning
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Modern Approaches to Preventive Maintenance
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Recent Trends in Maintenance

20. PROJECT MANAGEMENT
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Necessity of Project Management

Network Modeling
Project Planning Methods
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Project Crashing
Part Four: Technology and Globalization in Operations Management

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21. TRENDS IN OPERATIONS TECHNOLOGY

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Automation
Overview of Manufacturing Activities
Artificial Intelligence (AI)
Electronic Data Interchange (EDI)
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22. GLOBALIZATION AND OPERATIONS MANAGEMENT

Significance of Globalization
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Sources of Global Competitive Advantage

Difficulties in Managing Globalization
Changes in Operations Strategy Necessary due to Globalization
Managing Globalization
Operations in Global Business Strategy
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Part A – Multiple Choice Questions: Relevant Chapters
Chapters Title Multiple Choice Questions
Chapter 1 Operations Management – An Overview 1-16

Chapter 2 Operations Strategy 17-40
Chapter 3 Forecasting Demand 41-86
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Chapter 4 Allocating Resources to Strategic Alternatives 87-113
Chapter 5 Design of Production Processes 114-140
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Chapter 6 Facility Location and Layout 141-186
Chapter 7 Job Design 187-200
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Chapter 8 Work Measurement 201-216
Chapter 9 Aggregate Planning and Capacity Planning 217-243
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Chapter 10 Fundamentals of Inventory Control 244-278
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Chapter 11 Purchase Management 279-300
Chapter 12 Materials Management 301-333
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Chapter 13 Materials Requirement Planning 334-360
Chapter 14 Operations Scheduling 361-408
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Chapter 15 Enterprise Resource Planning 409-425
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Chapter 16 Supply Chain Management 426-443

Chapter 17 Just-In-Time (JIT) Manufacturing System 444-460
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Chapter 18 Productivity and Quality Management 461-493

Chapter 19 Facilities and Maintenance Management 494-529
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Chapter 20 Project Management 530-557

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Chapter 21 Trends in Operations Technology 558-582

Chapter 22 Globalization and Operations Management 583-600
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Part A: Multiple Choice Questions
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This section consists of multiple-choice questions that test the student’s
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understanding of the basic concepts discussed in the textbook. Answering these

questions will help students quickly recollect the theories they’ve learnt and apply
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them to real-life business situations.

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Part A: Multiple Choice Questions
1. On the basis of Hawthorne studies, Elton 6. Which of the following decision do not
Mayo and his team concluded that fall within the basic scope of operations
________had a major impact on employee management?
productivity. a. Analyzing the firm’s financial position
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a. Physical work conditions b. Designing a new assembly line
b. Importance and recognition given to c. Determining the location of a new
employees distribution center
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c. Job content d. Improving product quality
d. Fear of losing job
7. Division of labor or specialization is an
2. Which company first adopted the concept outcome of ____________.
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of scientific management in the assembly a. Industrial revolution
line production system? b. World War II
a. General electric c. Scientific management
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b. Ford motors d. Computerization of production systems
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c. General motors
8. The decision of an operations manager
d. Westinghouse about what products to make and when is
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part of which function?
3. The computerization of operations began
when the first computer was installed in a. Organizing
General Electric Appliance Park in 1954. b. Directing
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What was the basic objective of computer c. Planning
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applications then? d. Coordinating

a. Reducing manpower
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b. Reducing clerical costs take can be broadly classified into various

c. Enhancing worker safety categories. What is the usual time-frame
d. Increasing production for tactical decisions?
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a. Seven years or more

4. Operations management involves the
functions of planning, organizing, b. One or two years
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controlling etc, in production systems. The c. Two to four months

activity of encouraging employees through d. A couple of weeks
praise, recognition and other intangibles is
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10. Operations Management deals with which

part of which function?
of the following?
a. Controlling
a. Design of products
b. Motivating
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b. Design of services
c. Coordinating c. Acquisition of resources
d. Organizing d. All of the above
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5. Decisions on production and process 11. Operations Management involves the

design, facility location and layout etc, are activities of planning, organizing,
part of which decision category? controlling, directing, and coordinating in
a. Strategic decisions production systems. These systems convert
b. Tactical decisions resource inputs into products or services.
Centralization and/or decentralization of
c. Operational decisions operations fall under which of the
d. All of the above following activities?
a. Planning a. Rise in quality of products

b. Organizing b. Reduction in labor costs
c. Directing c. Higher maintenance costs
d. Controlling d. Greater efficiency of the production
process
12. The term ‘Production Management’ was
replaced by a more general term 17. Which of the following are among the key
‘Operations Management’ in the 1970s. objectives of an operations manager?
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What led to the enlargement of the field i. Maximizing customer satisfaction
and use of the new term?
ii. Minimizing inventory
i. Inclusion of purchasing function
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iii. Maximizing resource utilization
ii. Inclusion of dispatch and other related
activities a. i & ii
iii. Inclusion of services related concepts and b. ii & iii
of
procedures c. i & iii
iv. Inclusion of manufacturing technologies d. i, ii & iii
a. i, ii, iii 18. Product design is one of the factors that an
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b. iii, iii, iv operations manager must consider while
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c. i, iii, iv designing a production system. Product
d. i, ii, iii, iv design can be based on a customized or a
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13. Operations Research uses mathematical does a customized product design system
techniques to solve complex problems. primarily focus on?
When was the concept of operations a. Quality and on-time delivery
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research first introduced?
b. Reducing costs
a. In the early 1940s during World War II
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c. Costs and quality

b. In the late 1920s during Hawthorne studies
d. Mass production
c. In 1911 for the moving assembly line
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production by Ford 19. Which of the following is not categorized

d. In the 1880s at Midvale Steel Works among indirect costs?
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14. Who was involved in the Hawthorne a. Administrative costs

experiments at the Western Electric plant? b. Maintenance costs
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c. Labor costs
a. Frederick Taylor
d. Rentals
b. Henry Ford
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c. Elton Mayo 20. Who generally develops corporate

d. Adam Smith objectives that are unique to each
organization?
15. Which of the following technologies helps a. Frontline managers
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perform tasks that are repetitive or

b. Top-level managers
hazardous for a human being to perform?
c. Middle level managers
a. CAD
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d. Production supervisors
b. FMS
c. Expert systems 21. What factors must managers consider
d. Moving assembly line while formulating corporate objectives?
a. Market conditions
16. Computerization has significantly
b. Political environment
improved the production process. Which
of the following is not an advantage of c. Economic environment
computerization in the production process? d. All of the above
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Part A
22. Rainbow Electronics manufactures a a. Designing the production system

limited number of models of television b. Product/service design and development
sets. What kind of product design system
c. Technology selection and process
does the company have? development
a. Customized production design d. Allocation of resources to strategic
b. Standardized product design alternatives
c. Stock-to-order 27. Which among the following products are
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d. Assemble-to-order generally customized as per user
requirements?
23. Feasibility studies are part of the new i. Industrial boilers
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product development process. The ii. Turbines
feasibility test generally focuses on which iii. Televisions
of the following aspects?
iv. Ceiling fans
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i. Technical feasibility
a. i and ii
ii. Marketing feasibility
b. ii and iii
iii. Economic feasibility
c. iii and iv
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iv. Production feasibility d. iv and i
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a. i & ii 28. Which stage of the product life cycle is
b. ii & iii characterized by exponential growth of
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c. i & iii sales volume?
d. iii & iv a. Introduction stage
b. Growth stage
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24. Large organizations are often divided into c. Maturity stage
separate operating divisions that operate as d. Decline stage
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autonomous business units with

independent control. What are such units 29. Pick the statement that pertains to the
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called? relationship between the role of operations

department and the product life cycle.
a. Subsidiary units
a. The role of operations department
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b. Strategic business units increases as the product moves up the

c. Franchise centers lifecycle
d. Sister concerns b. The role of operations department
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decreases as the product moves up the

25. Nucor, a steel producer, competes lifecycle
successfully with larger integrated steel c. There is no change in the role of
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producers by processing steel scrap rather operations department across the lifecycle
than producing steel from iron ore. What d. The role of operations department
advantage does the company gain through increases or decreases as the product
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this kind of production process? moves up the lifecycle

a. Production flexibility 30. What is the basic use of a prototype during
b. Better quality the new product development process?
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c. Lower costs a. A prototype is used to test the technical

d. Batch process facility and economical feasibility
b. A prototype helps test the product
26. Selecting product design, production performance under standard conditions
system, and inventory policy for finished c. A prototype is developed as part of test
goods fall under which component of marketing
operations strategy? d. None of the above
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31. Availability of raw materials and nearness itself as a financial supermarket. Which
to markets are some of the factors that are type of competitive advantage strategy
considered while making decisions does the bank seek to focus on?
regarding plant location. Which a. Quality
component of operations strategy deals b. Product variety
with decisions such as plant location? c. Convenience
a. Allocation of resources to strategic d. Low cost
alternatives
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(Questions 36 to 39) The given data below
b. Technology selection and process
shows the initial investment of three projects
development
and their payback periods. Use this data to
c. Product design and development
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answer the following four questions.
d. Facility planning
Project Initial Expected annual
32. Developing an operations strategy is an investment income from the
important function of an operations
of
project
manager. The operations strategy should A Rs.10,00,000 Rs.2,00,000
basically be in accordance with which of B Rs.12,00,000 Rs.2,50,000
the following? C Rs.8,00,000 Rs.1,50,000
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a. Organization strategy
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36. Calculate the payback period for Project A
b. Marketing strategy
c. Competitor strategy a. 5 years
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b. 4 years
d. Both a and c
c. 3 years
33. How is strategic planning different from d. 6 years
operations planning?
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a. Strategic planning is concerned with long- 37. What is the payback period for Project B?
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term planning while operational planning a. 5.0 years

involves short-term day-to-day planning b. 4.8 years
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b. Strategic planning is concerned with short- c. 3.8 years

term day-to-day planning while d. 4.5 years
operational planning involves long-term
planning
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38. Calculate the payback period for Project C.

c. Operational planning involves selection of a. 5.0 years
target markets and distribution channels b. 4.8 years
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d. Both strategic planning and operational c. 5.3 years

planning are long-term in nature d. 4.5 years
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34. Which of the following is not a 39. Based on the results for product A, B and
characteristic of operations strategy? C, which is the best investment in terms of
a. It should be fixed so as to support a faster returns?
product through its entire lifecycle a. Project A
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b. It should accommodate future changes in b. Project B

market demand c. Project C
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c. It should focus on having short-term d. Either project A or C

operational superiority over competitors
40. Allocation of resources to strategic
d. It should be consistent with strategies in alternatives is a component of operations
other functional areas such as marketing, strategy. What is the main objective of this
finance and human resources component?
35. HDFC Bank offers deposits, loans, a. To minimize efficiency
insurance products, mutual funds, trading b. Optimize the use of resources for best
in stocks, etc, under one roof and positions strategic use
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Part A
c. Ensure capacity expansion c. Medium

d. Maintain proximity to resources d. Can take any value
41. Demand for a commodity is most likely to 46. Organizations generally use demand
depend upon which of the following? forecasts to develop which of the
following plans?
i. The price of the commodity
a. Financial plans
ii. The prices of the available complimentary
goods b. Facilities plans
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iii. The customer tastes and preferences c. Marketing plans
d. All of the above
iv. Price of substitutes
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47. Which of the following methods is
a. i and ii
judgmental and subjective in nature and
b. ii and iii based on the estimates and opinions of
c. i, ii, and iii individuals?
of
d. i, ii, iii, and iv a. Time series methods
b. Delphi method
42. _________is the ability of an organization
c. Exponential smoothing
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to adjust quickly to true changes in the
base level of demand. d. Regression analysis
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a. Stability 48. Which of the following statements is not
b. Responsiveness true about demand?
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c. Repetitiveness a. Dependent demand is forecasted
d. Controlling b. If a manufacturer produces tires, the
demand for the tires is a dependent
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43. The numerical difference between forecast demand
demand and actual demand is called
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c. MRP systems help determine demand for

___________. items with dependent demand
a. Standard deviation
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d. Exponential smoothing is used to

b. Forecast error determine independent demand
c. Forecast variance
49. Which of the following statements about
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d. Forecast noise demand forecasting is not true?

44. A forecast made by using exponential a. Forecasts are more accurate for shorter
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smoothing was found to be over-optimistic time horizons

to the most recent trends in demand. b. Regression analysis produces more
Which of the following is the most suitable
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accurate forecasts than moving average

corrective action possible to make the c. A 6-month moving average forecast is
forecast more realistic? more accurate than a 3-month moving
a. Increase the value of α average forecast
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b. Decrease the value of α d. Forecasts are created using only

c. Shift to some other forecasting method quantitative data
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d. Ensure that α remains constant 50. Identify the statistical techniques that use
45. If the demand for a product is stable and is historical data collected over a period of
representative of the future, what should time to predict future demand.
be the value of α used to forecast the a. Time-series methods
demand for the product? b. Qualitative methods
a. Low c. Nonparametric methods
b. High d. Causal methods
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51. Which of the following is not considered 57. Raw materials demand forecast is derived
by operations managers before selecting a from which of the following type of
method for forecasting the future demand? forecast?
a. Cost and accuracy a. Short-term demand forecast
b. Data availability b. Aggregate product demand forecast
c. Projected time span c. Labor demand forecast
d. All of the above
d. Plant capacity
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58. Forecasting demand has a direct impact on
52. Which of the following measures provide
which of the following two functions of
information on the extent of forecast error management.
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in relative terms?
a. Planning and organizing
a. Mean absolute deviation b. Directing and control
b. Mean square error c. Organizing and staffing
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c. Mean forecast error d. Planning and controlling
d. Mean absolute percentage error
59. In Delphi method, independent opinions
and predictions are made by a panel of
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53. Which of the following decisions
undertaken by operations managers does experts and summarized by a competent
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not generally require long-range forecast? mediator. The success of this method is
not dependent on which of the following?
a. Capacity planning
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a. The presence of a socially dominant
b. New product development individual
c. Spare parts inventory b. The geographical distance between the
d. Capital funds experts
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c. Tendency towards groupthink

54. Demand for a product is influenced by
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many factors. Which of the following is d. Competency of coordinator

not a factor that influences product 60. The demand for generator sets for twelve
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demand? consecutive months from January to

a. Price of the product December is given as 78, 80, 85, 82, 84,
b. Price of the substitutes 85, 87, 88, 86, 89, 86, 87. Calculate the
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c. Income levels of the consumers approximate demand for January of the

d. Extent of accuracy of demand forecasts next year using the simple moving
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averages method. Assume the time period

55. Which of the following is not a to be a six month moving average.
consequence of underestimation of
a. 82
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demand?
b. 83
a. Increase in supply lead time
c. 86
b. Increase in loss of orders
d. 87
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c. Increase in customer switching

d. Increased locking up of working capital as 61. The sum of weights used in weighted
inventory moving average method should be equal to
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_________.
56. Which of the following demand estimates
are very detailed and used to plan and a. 1
schedule production operations? b. 10
a. Short-term demand c. 100
b. Medium-term demand d. Zero
c. Long-term demand 62. How are weights in the weighted moving
d. All of the above average method calculated?
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Part A
a. Simple moving average method a. Only i

b. Future forecast b. Only ii
c. Trial & error c. i and ii
d. Exponential smoothing d. i, ii, and iii
63. Which of the following forecasting
68. In the equation Y = a + bX, what is ‘a’
methods are used when the demand for a
product is influenced by seasonal termed as?
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tendencies? a. Value of the dependent variable
a. Delphi method b. Value of the independent variable
b. Simple moving average method c. Slope of the line
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c. Exponential smoothing d. Y intercept or constant value
d. All of the above
69. What is the relation between the slope of
64. Which of the following is not a benefit the line and the trend line in regression
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that an operations manager gains when analysis?
using the exponential smoothing method?
a. If the slope is positive, then the trend line
a. Easy availability of standard software
increases positively
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packages
b. Less computational requirements b. If the slope is positive, then the trend line
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c. Larger data storage space decreases negatively
d. Greater accuracy in forecasts c. There is no relationship between the slope
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and the trend line
65. Maximum weightage is given in the
d. If the slope is negative, then the trend line
exponential smoothing method for demand
values in which of the following time increases positively
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periods? 70. If the sales of a refrigerator model rose
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a. Latest time period from 15000 units to 20000 units between

b. Earliest time period two consecutive time periods due to 5%
c. Average of latest and oldest time periods increase in advertising expenditure. What
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d. Sum of latest and oldest time periods is the value of the slope?
66. What is the formula for calculating the a. 33.33
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weighted moving average? b. 6.67

n c. 3.33
∑C A
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a. WMAt = t t d. 250
t =1
71. Short-range decisions vary from
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b. WMAt+1 = ∑C A
t =1
t t
purchasing, job scheduling, and project
assignment to machine scheduling. Which
of the following forecasting methods can
n +1
∑C A be used for such decisions?

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c. WMAt+1 = t t
t =1 a. Exponential smoothing
n -1 b. Linear regression analysis
∑C A
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d. WMAt-1 = t t c. Multiple regression analysis

t =1
d. Delphi method
67. Why is the constant α used in exponential
smoothing method? 72. Identify the forecasting method that can be
used when data collection proves very
i. To show effects of past demand expensive.
ii. To smooth out the effects of any noise a. Moving averages method
iii. To predict future trends in demand b. Delphi method
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c. Regression analysis c. 7
d. Exponential smoothing d. 5
73. Which of the following forecasting 78. Mean Absolute Percentage Error (MAPE)
methods give 100% accurate forecasts? for the given data is __________.
a. Qualitative methods a. 5.72
b. Time series methods b. 3.14
c. 1.14
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c. Causal methods
d. None of the above d. 2.56
74. Identify the relationship between cost of 79. Calculate the Tracking Signal (TS).
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forecasting and accuracy of forecasting. a. 1.67
a. Cost is directly proportional to extent of b. 2.67
accuracy c. 3.67
of
b. Cost is indirectly proportional to extent of d. 4.67
accuracy
80. For forecasting purposes, firms need to
c. Accuracy is independent of costs take into consideration various factors or
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d. Cost is inversely proportional to extent of components. Which of the following is
as
accuracy associated with average sales over a given
period of time?
(Questions 75 to 79) Use the data given in the
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a. Trend component
table below to answer the following five
questions related to forecast errors. b. Seasonal component
c. Cyclical component
Demand Forecast Actual Demand
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d. Base demand
500 510
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81. The demand for luxury products may be

510 510 linked with the business cycle, as sales
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usually increase during the boom phase

520 515 and slow-down during recession. What
540 550 component of forecasting is described
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here?
550 545
a. Trend component
75. Calculate the Mean Absolute Deviation
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b. Seasonal component
(MAD).
c. Cyclical component
a. 5 d. Base demand
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b. 6
c. 30 82. When LG increased the advertising budget
d. 20 by 40%, the sales of its televisions
doubled. On this basis, LG prepared an
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76. The Mean Square Error (MSE) for the aggressive demand forecast for the next
given data is ______________. year. What component of demand did LG
consider as part of its forecast?
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a. 250
b. 100 a. Cyclical component
c. 50 b. Promotional component
d. 75 c. Trend component
d. Irregular component
77. Calculate the mean forecast error.
a. 2 83. Which of the following is an example of
b. 10 the trend component of forecast?
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Part A
a. The demand for gold has reduced as the a. Feasible solutions are reduced to
price of gold has increased manageable numbers
b. The promotional expenditure of Airtel’s b. Provides optimal solution for the whole
GSM service was hiked based on demand organization
forecast c. Enables decision-makers to perform what-
c. The demand for camera mobile phones in if analysis
India has increased steeply since 2001 d. Provides optimal solutions that are always
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d. The demand for wrist watches has been practical
fluctuating for quite some time
88. Constrained optimization models consist
84. Identify the correct sequence of steps taken of three major components. Which of the
20
as part of the demand forecasting process. following is not a component of these
a. Identify influencing factors – understand models?
objectives – identify customer segments – a. Decision variables
of
select forecasting technique
b. Nature of demand
b. Identify influencing factors – identify
c. Objective functions
customer segments – understand objectives
d. Constraints
s
– select forecasting technique
as
c. Identify customer segments – understand 89. Linear programming is a mathematical
objectives – identify influencing factors – constrained optimization model used to
select forecasting technique maximize or minimize the linear functions
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d. Understand objectives – identify of a large number of variables, subject to
influencing factors – identify customer certain constraints. Linear programming
segments – select forecasting technique cannot help obtain solutions for which of
y
85. Which of the following demand the following?
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forecasting techniques is divided into static a. Profitability

and adaptive methods? b. Cost effectiveness
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a. Qualitative methods c. Motivation

b. Time series methods d. Productivity
c. Causal methods
se
90. Identify the term that describes the

d. All of the above
solution satisfying all the restrictions of a
86. Trend and seasonal components play an linear programming problem.
U
important role in demand forecasting. In a. Initial solution

which of the following forecasting b. Basic solution
methods are estimates of trend and
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seasonal components assumed to not vary c. Feasible solution

from year to year? d. Final solution
a. Exponential smoothing 91. In linear programming, a statement such as
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b. Static forecasting method the ‘number of labor hours available is

c. Regression analysis 600’ is identified as a ___________.
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d. Simple moving average a. Constraint

87. Constrained optimization models are b. Slack variable
useful techniques enabling operations c. Objective function
managers to compute the amount of d. Decision variable
resources to be allocated to each strategic
alternative. Which of the following is not a 92. Identify the mathematical technique used
benefit of using a constrained optimization to determine the optimal utilization of
model? resources in an organization.
11
a. Exponential smoothing a. 2x + y ≤ 600

b. Regression analysis b. x + 2y ≤ 600
c. Linear programming c. x + y ≤ 650
d. Decision tree analysis d. x + y ≤ 600
93. When arriving at production plan decisions 97. If the number of superior quality
by using linear programming, which of the telephones produced in a month is 200 and
following is not considered a constraint? inferior quality telephones is 200, then
09
a. Market what is the maximum profit (in rupees)
b. Capacity that the company gets?
c. Destination requirements a. Rs. 75000
20
d. Inventory space b. Rs. 70000
c. Rs. 76500
(Questions 94 to 98) Atul Tele-Products
manufactures two telephone models using two d. Rs. 78500
of
different raw material grades. One (x) is of
98. What is the appropriate production
superior quality and the other (y) inferior
combination for the two models to gain
(second grade). The profit per unit for the
s
maximum profits?
model using superior quality raw material is
as
Rs.200 and that of the other is Rs150. The a. x = 300, y = 300
maximum demand for both telephones is 600 b. x = 600, y = 0
units. Production should not exceed demand c. x = 250, y = 100
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and total machine time available for both types d. x = 200, y = 200
of telephones together is 650 hours. Besides,
one superior quality telephone can be produced 99. While constructing a linear programming
in two hours while one unit of inferior quality problem, certain assumptions are made.
y
telephone can be produced every hour. Answer Which of these is not such an assumption?
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the following five questions using the a. Proportionality

information given above.
b. Optimality
O
94. If Atul Tele-Products wants to maximize c. Divisibility

profits, what should be the objective d. Additivity
function?
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a. Maximize Z = 2x + 4y 100. If the objective function is a maximizing

function, which of the following can be
b. Maximize Z = 200x + 150y
considered for it?
U
c. Maximize Z = 600x + 650y

a. Profits
d. Maximize Z = 2x + y
b. Inventory
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95. What is the constraint on machine hours? c. Advertising expenditure

a. 2x + y ≤ 650 d. Production costs
b. x + 2y ≤ 650 (Questions 101 to 104) The diagram represents
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c. 2x + y ≤ 600 the solution for a linear programming problem

d. x + 2y ≤ 600 where ABCS is the feasible region. Use the
diagram to answer the following four
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96. What is the constraint on demand? questions.
12
Part A
D
120
100
09
80
A
20
S
60
40
of
20
B C
s
O (0,0)
as
20 40 60 80 100 120 X
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101. Identify the constraint represented by the 105. Which of the following statements is not
line passing through the coordinates characteristic of linear programming?
(40, 0) and (0,60). a. The linear programming problem should
y
a. x + y = 40 have a well-defined single objective to
achieve
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b. 2x +3y = 120
c. 3x + 2y = 120 b. The objective function and constraints of
the linear programming problem must be
O
d. x + y = 60
linear functions
102. Identify the corner points of the feasible c. Decision variables of the linear
region from the above diagram. programming problem should be
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a. (0,0), (80,0), (60,0), (40,0) continuous in nature

b. (40,0), (80,0), (60,80), (60,0) d. The resources considered in the linear
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c. (40,0), (80,0), (80,60), (60,0) programming problem should have

unlimited supply
d. (0,60), (40,0), (80,0), (80,60)
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106. Identify the correct sequence of steps to

103. What is the equation of the line passing
formulate a linear programming problem.
through (80,0)?
i. Identify the objective function
a. x = 80
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ii. Identify decision variables

b. y = 80
iii. Identify constraints
c. x + y = 80
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d. x - y = 80 a. ii, i, and iii

b. i, ii, and iii
104. Find the minimum value of the objective
function where minimize Z = 20x + 35y. c. iii, ii, and i
d. ii, iii, and i
a. 2100
b. 1600 107. Where does the optimum solution lie on
c. 800 the graph in the graphical method of
d. 3700 solving a linear programming problem?
13
a. On the X axis 113. The concept of linear programming does

b. On the Y axis not consider any synergetic effects among
c. In the feasible region decision variables while calculating their
total value for the objective function or the
d. Outside the feasible region
constraints they are associated with. This
108. In the simplex method of solving a linear is part of which assumption of linear
programming problem, the ‘lesser than or programming?
equal to’ inequality is converted into a. Proportionality
09
equality by ___________ to the left hand
b. Additivity
side of the inequality.
c. Divisibility
a. Adding a slack variable
20
d. Certainty
b. Subtracting a slack variable
c. Adding a function 114. Onio Designs provides industrial designing
d. Subtracting a function services to various automobile companies
of
in India. This is an example of
109. The sequence of steps in moving from one ___________.
basic solution to another in a simplex
method is known as ____________. a. Job shop production
s
b. Batch manufacturing
a. Integration
as
c. Standardized service
b. Iteration
c. Allocation d. Customized service
d. Summation
Cl
115. In the emerging business scenario, it has
become essential for operations managers
to manage the structure of their
organizations, not merely their operations.
y
110. Identify the typical objective function of a
transportation problem. What does the term ‘structure’ include?
nl
a. To minimize the sum of all quantities a. Number of plants and their individual
transported capacities
O
b. To minimize the sum of all production b. Choices in equipment and process

costs technology
c. To minimize the sum of all transportation c. Production control and workforce
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costs management
d. All of the above d. All of the above
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111. Which among the following is not a 116. Keeping other things constant, when the
method used in developing an initial price of a commodity decreases, the
feasible solution for a transportation demand for the commodity __________.
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problem? a. Does not change

a. North-West corner method b. Increases continuously
b. Least cost method c. Increases to a certain level
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c. Vogel’s approximation method d. Decreases

d. Stepping stone method
117. To attain its objective of profit
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112. Of all the methods used to determine the maximization, L&T decided to acquire a
initial feasible solution in transportation mine in Australia thereby owning sources
problems, which is said to be most of raw material supplies. What is this
effective? process of expanding ownership called?
a. North-West corner method a. Horizontal integration
b. Lest cost method b. Forward integration
c. Vogel’s approximation method c. Backward integration
d. Both a & b d. Diagonal integration
14
Part A
118. The factor that is not considered by a. Lower unit costs

operations managers while making their b. Lower initial investments
decisions on backward integration. c. Ease of planning
a. Level of training for distributor employees d. Reduced worker training
b. Capabilities to consume and market the
products 124. ABC Corp. to match the diversity in
c. Anticipate changes in net return on assets customer orders wants to produce products
in small batches. Which type of process
09
d. Availability of funds
design would be economically feasible for
119. What are the basic objectives of process ABC?
planning and design?
20
a. Assembly line
i. To produce products with desired quality
b. Continuous processing
ii. To produce products at the right time
c. Discrete unit processing
iii. To produce products in required quantities
d. Job shop process
of
iv. To produce products below competitor
prices 125. Which of the following forms the basis for
a. i and ii designing factory buildings and facility
s
b. i and iii layouts?
as
c. ii, iii, and iv a. Operations strategy
d. i, ii, and iii b. Production planning
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c. Process planning
120. Organizations must be flexible to increase
or maintain their market share. The ability d. Product design
of the production system to shift quickly 126. When Hindustan Smelters Ltd. decided to
y
from producing one product to another is
manufacture lead ingots, the management
called _____________.
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decided to develop a process plan for the

a. Product flexibility same. Which of the following factors
b. Demand flexibility
O
should the operations manager at

c. Volume flexibility Hindustan Smelters Ltd. keep in mind
d. Customer flexibility when developing a process plan?
se
121. In an assembly chart, the process of a. Nature of demand

inspection is generally represented by a b. Degree of vertical integration
U
__________. c. Employee skill level requirements

a. Square d. Quality level and degree of customer
b. Circle contact
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c. Triangle
d. Pentagon 127. Demand for Pepsi cola is seasonal. It has a
very high demand during summer and
122. Which of the following is not an minimal demand during winter season.
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advantage of process-focused production? Which of the following assumptions is

a. Small work-in-process inventory false with respect to the seasonality of
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b. Less manufacturing cycle time demand of Pepsi cola?

c. Low initial investment a. As demand is seasonal Pepsi cola should
d. Better product mix available to meet not be produced in winter season
customer demand b. Pepsi cola should be produced throughout
the year but with varying outputs
123. Which of the following is not an
advantage of the product focused c. Finished goods inventory must be stocked
production system? to meet high demand during summer
d. All the above statements are false.
15
128. Which of the following is not a factor a. Product-focused systems

affecting backward integration? b. Process-focused systems
a. Cost of producing components versus cost c. Group technology
of buying them d. All of the above
b. Investments necessary to produce
components in-house 134. What are the characteristics of process
c. Anticipated changes in net return on focused systems?
09
assets, if production of components is i. Operations are grouped according to the
undertaken type of processes
d. Ability of the organization to market its ii. Production is performed on products on a
20
products start and stop basis
iii. Products move from department to
129. Identify which of the following is not an
department in batches
advantage of vertical integration.
iv. Products are produced irrespective of
of
a. It reduces the over-dependency on the
diversity in customer orders
purchasing function
b. It helps decentralize the overheads a. i and ii
s
c. It helps in pooling the R&D and design b. iii and iv
as
efforts c. i, ii, and iii
d. It helps in achieving economies of scale d. ii, iii, and iv
Cl
130. Assume that Eastside, a readymade 135. Coding of parts in a manufacturing plant is
garment retailer, acquired a textile mill to done to ensure the identification of each
produce different fabrics. What kind of part and its characteristics. What is the
y
integration strategy has the retailer difficulty in adopting this approach?
adopted?
nl
a. It provides a clear picture of the steps

a. Forward integration involved in producing the part
b. Backward integration b. It results in standardization of part design
O
c. Horizontal integration c. It leads to grouping of the parts into

d. Lateral integration families
se
131. There are various types of process designs d. It requires high employee skills
that are generally used by organizations. In 136. Which of the following is not an
U
which type of process design, products or advantage of cellular manufacturing?

services tend to flow along linear paths
without backtracking or sidetracking? a. Lesser machine changeover time
BS
b. Lower cost of training

a. Product-focused systems
c. Reduction in material handling costs
b. Process-focused systems
d. Increase in the in-process inventory
c. Group technology
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d. All the above 137. Which of the following types of charts

indicate operations by circles and
132. Steel and Chemical industries generally
inspections by squares?
Fo
implement which type of process design?

a. Assembly charts
a. Discreet unit manufacturing
b. Gantt charts
b. Process manufacturing
c. Flow charts
c. Job shop process
d. None of the above
d. Both a & c
138. Which type of production systems has high
133. Which of the following process design diversity in product design and small batch
systems entail high initial investment? size?
16
Part A
a. Job shop production systems c. Healthcare industry

b. Cellular manufacturing systems d. Call center
c. Batch production systems
144. What do you understand by the term
d. Product focused systems ‘facility layout’?
139. Which of the following is not true about a a. A list of facilities provided by the
product-focused system? organization to the consumers
a. Presence of initial fixed costs b. The physical distribution of various
09
b. Presence of low variable costs departments for ease in production
c. The total cost of production increases as c. The location of employees inside the
organization
20
the output volume increases
d. Low variations in products d. Layout of safety equipment in an
organization
140. In what way is a typical product-focused
145. Layouts are differentiated by the types of
of
system distinct when compared to a
process focused system? workflow they entail. Workflow in turn is
a. Lower fixed costs and higher variable dictated by the nature of the product.
costs Which of the following statements is true
s
b. Higher fixed costs and lower variable about product layout?
as
costs a. Equipment is dedicated to the manufacture
c. Higher fixed costs and higher variable of a narrow product line
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costs b. Equipment is flexible to produce a wide
d. Lower fixed costs and lower variable costs range of products
c. Material handling cost increases
141. Which of the following reasons persuade significantly
y
companies to set up facilities in export
d. It is used for manufacturing customized
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promotion zones, technology parks and

industrial estates? products
i. Tax holidays and exemption from import- 146. Which of the following involves the use of
O
export barriers layout planning tools like templates and

ii. Availability of infrastructure two-dimensional cut-outs of equipment
drawn to scale?
se
iii. Low loan interest rates

iv. Low cost of manpower a. Graphic and schematic analysis
b. Load distance model
U
a. i and iv
c. Computer models
b. ii, iii, iv
d. CRAFT model
c. i, ii, iii
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d. ii and iv 147. Cotton yarn manufacturing units are

generally concentrated in select areas of
142. Which of the following is a major factor in the country as yarn production requires
selection of a location for an aluminum
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certain ideal levels of humidity. What

factory?
factor influences selection of plant location
a. Proximity to final consumer in this case?
Fo
b. Proximity to input sources a. Site cost

c. Proximity to sea port b. Conducive politico-economic situation
d. All of the above c. Suitability of climate
143. For which of the following industries is d. Availability of amenities
proximity to markets a must?
148. Which of the following is not a primary
a. Telecom industry objective of facility location and layout
b. Textile industry decisions?
17
a. To set up a plant of the right size and right c. Fixed position layout
design d. Hybrid layout
b. To serve the customer better
155. In which of the following situations is
c. To optimize production cost there no need for selecting a facility
d. To use best available technology location?
149. Which of the following is not an a. When a business has just started
advantage of selecting an ‘optimum b. When expansion of the existing plant is
09
location’ for a plant? possible
a. Reduction of transportation costs of raw c. When a business wants to establish new
material and finished goods branches/plants
20
b. Competitive advantage due to proximity to d. When government regulations mandate
market that the business has to shift its location
c. Low labor-cost 156. Firms conduct facility location analysis
of
d. Cost of technology where they evaluate different locations and
finally choose an optimum location to start
150. Which of the following types of layout is operations. Arrange the following
used when the product manufactured is
s
activities related to facility location
bulky, heavy or fragile? planning in a logical sequence.
as
a. Product layout i. Design layout
b. Process layout ii. Select location
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c. Fixed position layout iii. Search for a location
d. Group technology layout iv. Revise layout
151. Which of the following techniques is not a. i, ii, iii, iv
y
associated with taking suitable location
decisions? b. ii, iii, i, iv
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c. iii, ii, i, iv
a. Cost-profit-volume analysis
b. Factor analysis d. iv, iii, ii, i
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c. Linear programming 157. Rahul wanted to set up a small scale

d. CRAFT analysis printing press to print books for
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individuals interested in publishing their

152. Which of the following organizations work for a small audience. Which is the
selects a particular location from a market- right location for Rahul to establish a
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oriented approach? printing press to cater to this kind of

a. A retailer market?
b. A manufacturer a. Near paper mills
BS
c. A software development center b. In a town/city

d. A content development center c. In a village where cost of labor is cheap
153. Which of the following is not a type of d. Near the manufacturer of printing
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facility layout? machines

a. Process layout 158. There are many factors affecting the
Fo
b. Product layout selection of a facility location. Which of

c. Employee layout the following factors would deter a firm
d. Hybrid layout from setting up operations in a particular
location?
154. ‘It is also called the cellular manufacturing
a. Low labor costs
layout.’ Identify the layout from the
following. b. High transportation costs
a. Process layout c. Availability of public utility services
b. Grouping technology layout d. Benefit of tax holidays
18
Part A
159. The basic raw material for a cement c. Low interest loans
manufacturing unit is limestone and the d. Availability of prime real estate
major consumers are the government, real
estate and individual consumers. Which is 163. Companies can follow certain guidelines
the best possible location to build a cement when trying to analyze possible locations
plant? and identify an optimal one since it is
expensive and time-consuming. What is
a. Close to sea port the correct sequence of guidelines a
b. Close to cities where consumption is high company can follow when evaluating
09
c. Close to the raw material source locations?
d. Within special economic zones or export a. Define location objectives – relate
processing zones objectives to criteria – Identify relevant
20
decision criteria – evaluate alternative
160. Process layouts are also known as ______.
locations – select the best location
a. Functional layouts b. Identify relevant decision criteria – define
b. Fixed position layout
of
location objectives – relate objectives to
c. Flow-shop layouts criteria – evaluate alternative locations –
d. Straight-line layouts select the best location
c. Define location objectives – identify
s
161. Many auto-ancillary units have set up
relevant decision criteria – relate
as
facilities close to facilities of auto majors
like Hyundai and Ford near Chennai. objectives to the criteria – evaluate
Which of the following factors would have alternative locations – select the best
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primarily led to this decision? location
a. Site cost d. Define location objectives – identify
b. Proximity to markets relevant decision criteria – evaluate
y
c. Need for safety requirements alternative locations – relate objectives to
criteria – select the best location
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d. Availability of services like electricity,

drainage, and waste disposal 164. Though there is no standard procedure,
certain guidelines can be used for making
O
162. Which of the following is not considered a

benefit derived by companies setting up a location decision. The first guideline is to
operations in special export zones (SEZ)? define location objectives. Whose views
and requirements are not considered when
se
a. Good infrastructure support

b. Tax holidays defining them?
U
Cost Volume Relationships of Two Locations
Revenue
BS
TC2
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TC1
Fo
FC1
Cost
FC2
V0
Volume of sales
19
a. Owners and promoters a. Chandigarh

b. Employees b. Gurgaon
c. Customers c. Delhi
d. Competitors d. Both Chandigarh and Gurgaon
(Questions 165 & 166) The above figure 169. Which plant location would you select if
presents cost-volume-profit analysis. Based on you were the authority to make the final
decision?
09
the figure, answer the following two questions.
a. Chandigarh
165. Which of the following is similar for the
b. Gurgaon
two locations?
20
c. Delhi
a. Revenue
d. Any of the above
b. Fixed cost
c. Variable cost 170. Which of the following is not an
of
d. Total cost advantage of a good layout?
a. It reduces material handling costs
166. If fixed cost at a location is Rs.500,000,
b. It reduces congestion in the plant
s
variable cost per unit Rs.30, and price per
c. It reduces space utilization
as
unit Rs.50. Calculate the number of units a
firm should produce to break even? d. It increases machine utilization
a. 20,000
Cl
171. Under which type of layout are similar
b. 10,000 machines and equipment grouped to carry
c. 25,000 out the production process.
d. 15,000 a. Process layout
y
b. Product layout
(Questions 167 to 169) The table below gives
nl
c. Fixed position layout

details about fixed costs and variable costs for
three different locations. Answer the following d. Hybrid layout
O
three questions using information given in the 172. What type of machine is used in a process
table. layout?
se
a. Specially designed machines

Location
Fixed cost /Yr Variable cost /
Unit b. General purpose machines
U
Chandigarh Rs. 4,00,000 300 c. Machines that help manufacture

Gurgaon Rs. 4,50,000 285 standardized products
Delhi Rs. 5,00,000 275 d. All of the above
BS
167. Which of the following locations would 173. Which of the following is an advantage of
have the highest total cost per year if process layouts?
annual output of a firm located there is a. Increased production time
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1000 units? b. Increased work-in-progress

a. Chandigarh c. Increased accumulation of work
Fo
b. Gurgaon d. Increased utilization of men and material

c. Delhi 174. Which type of layout is designed to
d. Both Delhi and Gurgaon produce standardized products?
a. Process layout
168. Which of the following locations would
have the highest annual profit if the annual b. Product layout
production is 1000 units and selling price c. Fixed position layout
per unit is Rs.1000? d. Hybrid layout
20
Part A
175. Which of the following manufacturing i. CRAFT model

processes requires using a fixed position ii. Load distance model
layout?
iii. Line balancing
a. Petroleum distillation
iv. Graphic & schematic analysis
b. Beer manufacturing
c. Ship-building p. Used for studying workflow in an
d. Cement manufacturing assembly line
09
q. Evaluates thousands of alternative layouts
176. In a fabrication and assembly plant,
fabrication is done on __________ layout in a short period
while assembly is done on r. Analyses and minimizes material
20
______________ layout. movements costs in a plant
a. Product, process s. Two dimensional drawings are used to
b. Process, product determine the best layout
of
c. Product, fixed position a. i/p, ii/q, iii/r, iv/s
d. Fixed position, product
b. i/q, ii/p, iii/r, iv/s
177. Managers can use various models like c. i/r, ii/q, iii/p, iv/s
s
mathematical models, computer models, d. i/q, ii/r, iii/p, iv/s
as
and physical models to develop a process
layout. Which among the following helps 181. Different types of layout of service
find the best process layout by evaluating facilities exist based on degrees of
Cl
thousands of alternative layouts very
customer contact. In which of the
quickly?
following layouts is internal work of
a. Graphic and schematic analysis employees given secondary importance?
y
b. CRAFT model
a. Layouts focusing on customer receiving
c. Load distance model
nl
and servicing
d. Line balancing
b. Layouts focusing on technology
O
178. Different types of products are c. Layouts focusing on physical materials

manufactured using a process layout. As processing
workflow differs from product to product,
managers focus on minimizing the d. Layouts focusing on production efficiency
se
movement of materials as it can hike

182. Which of the following service providers
material movement costs. Which of the
uses both customer focus layouts and
U
following models aims at minimizing these

costs? process focus layouts as part of its service
facility layout?
a. Graphic and schematic analysis
BS
b. CRAFT model a. Banks

c. Load distance model b. Hospitals
d. Line balancing c. Restaurants
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d. Call center
179. In which of the following countries were
compact production layouts developed due 183. The following table gives the volume of
to space constraints?
Fo
quantities to be shipped to four markets.

a. USA The X and Y coordinate values of the
b. Japan location that would help minimize
c. India transportation costs are also given. Use the
d. China center of gravity method to identify
coordinates for the optimal location to set
180. Match the following models used to
develop layouts with their respective up a warehouse to service the four markets
features. with minimal transportation costs.
21
Distribution X Y VOLUME c. They consider non linear cost relationships

Center (‘000) d. They can be generalized to all
A 4 4 60 organizations
B 12 6 90
187. ________ is the basis for job analysis, job
C 10 14 110
description and job specification.
D 5 13 100
a. Job rotation
a. 10.75, 9.06 b. Job design
09
b. 10.05, 8.11 c. Job enrichment
c. 9.06. 10.75 d. Job enlargement
d. 8.11, 10.06
20
188. ________ describes the tasks, duties and
184. Which of the following is not a location responsibilities of a job.
evaluation method?
a. Job analysis
a. Point rate method
of
b. Job enrichment
b. Center of gravity method
c. Job description
c. Analytic Delphi method
d. Empowerment
d. Historical analogy method
s
189. ___________ investigates job content, the
as
185. Analytic Delphi Method helps managers physical conditions in which the job is
take complex multi-location decisions. carried out, and qualifications necessary to
Give the correct sequence of steps to be
Cl carry out job responsibilities.
taken as part of such location decisions.
a. Job description
a. Form panels - Identify trends and
b. Job analysis
opportunities - Determine directions and
y
strategic goals of the organization - c. Job profile
Develop alternatives - Prioritize d. Job specification
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alternatives
190. What does an effective job design ensure?
b. Identify trends and opportunities -
O
a. Employees are paid above expectations

Determine directions and strategic goals of
the organization - Form panels - Develop b. Jobs are consistent with organizational
alternatives - Prioritize alternatives goals
se
c. Identify trends and opportunities - Form c. Proper measurement of work done by each
panels - Determine directions and strategic employee
U
goals of organization - Prioritize d. All the above

alternatives - Develop alternatives
191. The Job Characteristics Model developed
d. Form panels - Determine directions and by Richard Hackman and Greg Oldham
BS
strategic goals of the organization - includes five characteristics. They are skill
Prioritize alternatives - Develop variety, task identity, task significance,
alternatives - Identify trends and autonomy and feedback. Match the
opportunities
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following terms with their respective

186. Linear Decision Rules (LDRs) are a set of description.
equations for calculating the optimal i. Skill variety
Fo
workforce, aggregate output rate and ii. Task significance

inventory level for each time period in a iii. Autonomy
planning horizon. Which of the following
iv. Feedback
is not true about LDRs?
a. They provide optimum solutions for the p. Influence of job on individuals inside &
problems outside the organization
b. They eliminate trial and error q. Flexibility, independence, and discretion in
computations the job
22
Part A
r. Skill sets and abilities needed for the job a. i and ii

s. Extent of information given to employees b. iii and iv
on their performance c. i, ii, and iii
a. i/q, ii/p, iii/s, iv/r d. i, ii, iii, iv
b. i/p, ii/q, iii/r, iv/s 196. Job specialization at work has many
c. i/r, ii/q, iii/p, iv/s advantages for the organization. Which of
the following is not an advantage resulting
09
d. i/r, ii/p, iii/q, iv/s
from this?
192. Which of the following is not a a. Ease in recruiting new workers because
consequence of a good job design? fewer skills are required
20
a. Improved efficiency b. Lower production time and higher
b. Improved productivity productivity levels
c. Increase in worker inputs c. Lower flexibility in job rotation
of
d. Increase in motivation d. Larger scope for mechanization or
automation of processes
193. The job design developed should be
s
feasible for employees as well as the 197. Which of the following is an advantage of
organization. Feasibility is required in work specialization for a manager?
as
which of the following areas? a. Lower work satisfaction
i. Technical feasibility b. Ease of supervision and training workers
Cl
ii. Economic feasibility c. Reduced scope for improvement because
iii. Political feasibility of limited perspective of workers
iv. Behavioral feasibility d. Hidden costs of worker dissatisfaction
y
resulting from absenteeism and high
a. i, ii, iv employee turnover
nl
b. i, iii, iv
198. Which of the following types of
c. i, ii, iii
O
compensation is a basic need and is not a

d. ii, iii, iv tool used for employee motivation?
i. Fixed salary
194. What do you understand by the term job
se
content? ii. Promotion

iii. Health insurance
a. It gives the detailed set of activities to be
U
performed on the job iv. Bonus

b. It describes the physical conditions in a. Only i
BS
which the job is done and qualifications b. ii, iii and iv

for the job. c. i, iii and iv
c. It describes the duties and responsibilities d. i, ii, iii, iv
of a job.
rI
d. All of the above 199. Which of the following is a form of

monetary benefit given to employees in an
195. Job content is the key to job design as it organization?
Fo
influences other aspects of human resource a. Rewards

management. Job content helps clarify b. Titles
which of the following aspects? c. Promotions
i. Qualifications d. Low interest loans
ii. Skill sets
200. Identify the correct sequence of activities
iii. Nature of training programs
to be performed by the human resource
iv Level of motivation manager.
23
i. Job analysis 205. Which of the following statements gives

ii. Job description an incorrect description of a feature of
iii. Job design time study?
a. The average of observations made always
a. i, ii, iii
represents time required to perform each
b. ii, iii, i
elemental task
c. i, iii, ii
b. Workers behave differently than usual
d. iii, i, ii
09
while conducting a time study
201. The different techniques used in work c. Observations are recorded repeatedly
measurement are time study, historical across several workers to arrive at the
20
analysis, standard data, work sampling, standard time
and predetermined motion time data
systems. Each has a different way of d. Normal time is the product of average
measuring time. How is it done in time cycle time and worker rating
of
study?
a. Using standard table allowance considered under the time study
b. Using past record technique of work measurement?
s
c. Using stop watch
a. Contingency allowance
as
d. Using formula
b. Interference allowance
202. Which of the following are benefits of c. Dearness allowance
Cl
setting work standards?
d. Relaxation allowance
i. It helps improve machine utilization by
reducing idle time (Questions 207 & 208) A time study of a
y
ii. It helps compare efficiency of different production worker in a component
work methods manufacturing plant produced the following
nl
iii. It helps a manager delegate work to all results: Cycle time = 3.75 minutes; worker
employees performance rating = 90 percent. Answer the
O
iv. It provides benchmarks for evaluating following two questions using this information.
workers’ performance
207. Calculate the normal time for the job.
a. i and ii
se
a. 3.75 minutes
b. i and iii b. 3.375 minutes
c. i, ii and iv
U
c. 3.455 minutes
d. i, ii, and iii
d. 3.565 minutes
203. Which of the following work measurement
BS
methods does not use historical or stored 208. If allowances are 12 per cent of the job
data but uses several random observations time, calculate the standard time required
in the work environment? for the job.
a. Standard data technique a. 3.375 minutes
rI
b. Predetermined motion time study b. 3.775 minutes

c. Work sampling c. 3.835 minutes
Fo
d. Historical analysis d. 3.965 minutes

204. Which of the following is not a technique 209. Identify the technique of setting work
used for setting work standards?
standards that uses recorded standard time
a. Time study data for each of the basic motions
b. Work sampling associated with performing a task and
c. Delphi method summing them up to determine the time
d. Predetermined motion time systems required to perform the whole task.
24
Part A
a. Time study 214. Which of the following are drawbacks of

b. Pre-determined Motion Time Study using employee self-timing, a technique of
c. Standard data work measurement?
d. Historical analysis i. Low costs
ii. Low accuracy
210. Which of the following statements
iii. Does not take allowance into consideration
correctly describes the difference between
Standard Data Technique and Pre- iv. Less time consuming
09
determined Motion Time Study in work
a. i and ii
measurement?
b. ii and iii
a. PMTS has to be measured by taking
20
observations while Standard Data provides c. iii and iv
standard times for common movements d. iv and i
b. Standard data provides time for basic 215. Work standards techniques generally find
of
movements while PMTS provides time for use in which of the following operations?
job-specific motions
a. Operations planning
c. PMTS provides time for basic motions
while Standard Data provides time for job- b. Operations scheduling
s
specific motions c. Operations control
as
d. PMTS has to be measured by looking at d. All of the above
the standard table while Standard Data
technique uses observations
Cl
216. Three of the most widely used
predetermined motion-time data systems
211. ___________ is a technique of analyzing are MTM, MOST and work factors.
work by making several observations, Expand MOST.
y
usually at random, to see the relative a. Maynard Operations Sequence Technique
frequency with which various elemental
nl
activities take place. b. Myer’s Operations Sequence Technique

a. Time study c. Motion Operations Sequence Technique
O
b. Standard data d. Maynard Operations Scheduling

Technique
c. Historical analysis
se
d. Work sampling 217. Which of the following is not a pure

212. One of the primary applications of work planning strategy used for developing
aggregate plans?
U
sampling is to find the percentage of time

an employee or equipment was occupied, a. Varying utilization of the workforce
or left idle. What is the name given to this b. Varying workforce size in response to
BS
application of work sampling? output requirements

a. Ratio delay c. Varying size of inventory
b. Performance measurement d. Varying the compensation method
c. Time standards
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d. Employee self-timing 218. __________ translates the aggregate plan

into a detailed plan that specifies the exact
213. Which of the following primary
Fo
timing for production of each unit.

applications of work sampling are used to
identify the standard time for completion a. Master production schedule
of a task? b. Total production schedule
a. Ratio delay c. Primary production schedule
b. Performance measurement d. Alternative production schedule
c. Time standards 219. Which of the following is not an aggregate
d. None of the above planning technique?
25
a. Time series analysis Jun Jul Aug Sept

b. Graphical method Demand 2600 2700 2800 2750
c. Linear programming
Working 26 25 25 26
d. Heuristic methods
Days
220. Which model is based on historical
aggregate planning data available with an In addition, the following information is given:
organization? Opening stock of inventory = 500 units,
09
a. Heuristic approach Inventory holding cost = Rs.20/unit/month,
b. Computer search Worker productivity = 4 units/day, Worker
20
strength = 25, Shortage cost (due to lost sales)
c. Linear decision rules
= Rs.10/unit
d. Linear programming
Answer the following four questions based on
221. Which of the following is not a pure the above given information
of
planning strategy used as part of aggregate
225. What is the change in inventory on hand
planning?
after meeting demand for Product X for
a. Back-order strategy the month of June?
s
b. Maintaining fixed plant capacity
as
a. 300 units
c. Sub-contracting
b. 200 units
d. Varying workforce utilization
c. 100 units
Cl
222. Which of the following is not a function d. 0 units
under capacity requirement planning?
226. Assume that opening stock for the month
a. Identifying material requirement
y
of July is 500 units. What is the inventory
b. Defining how resources can be best carrying cost for that month?
nl
employed to meet market demand

a. Rs.6000
c. Allocating production among plants
O
b. Rs.3000
d. Determining monthly production
schedules c. Rs.4000
d. Rs.2000
se
223. Operations planning activities can be long-

range, medium-range or short-range. 227. Calculate the closing inventory for
Aggregate planning typically fall under August?
U
which category? a. 300 units

a. Long range b. 200 units
BS
b. Medium range c. 0 units

c. Short range d. 100 units
d. Both a & b
228. What is the shortage cost (due to lost sales)
rI
224. A production plan does not contain in the month of September if the opening
information about which of the following? inventory for the month is zero units?
Fo
a. Production process a. Rs.3000

b. Inventory requirements b. Rs.2500
c. Suppliers c. Rs.2000
d. Customers d. Rs.1500
(Questions 225 to 228) The aggregate demand 229. What is the basic use of the computer
for product X for the next four months is given simulation method, a type of optimal
in the following table: model used in aggregate planning?
26
Part A
a. To develop a master production schedule a. 90 units

b. To identify variables for developing the b. 55 units
plan c. 75 units
c. To evaluate the performance of a specific d. 80 units
plan
234. What is meant by ‘rolling through time,’
d. All of the above associated with implementing aggregate
230. A Master Production Schedule (MPS) is plans and master schedules?
09
based on which of the following? a. Development of initial aggregate plans
a. Amount of inventory needed for the end b. Revising and updating aggregate plans
c. Development of the initial master
20
product
production schedule
b. Estimation of overall demand for the end
d. Revising and updating master production
product
schedule
c. Confirmed customer orders for the end
of
product 235. It is important to determine adequate
d. All of the above production capacity to meet forecast
demand levels and to determine whether or
s
231. Identify the false statement from the not sub-contracting and/or overtime has to
be used. This activity is associated with
as
following about Master Production
Schedule and Master Schedule Formation. which of the following?
a. MPS of make-to-order organizations deals
Cl
only with final products b. Aggregate planning
c. Scheduling
b. MPS for assemble-to-order organizations
concentrates on scheduling major d. Demand forecasting
y
components assembled to make a product 236. Which of the following is not associated
nl
after orders are received with capacity planning?

c. Back orders are common in make-to-stock a. Identifying available and required capacity
organizations
O
b. Evaluation and summing up of capacities

d. There is no finished goods inventory in c. Identifying the right layout design for the
make-to-order production desired capacity
se
d. Identifying gaps in capacity and plugging

(Questions 232 & 233) The demand forecast them with sub-contracting, overtime, etc.
for metal rollers used in manufacturing printing
U
machines for the next three months is 60, 55, 237. Identify the correct sequence of steps
65. The number of orders booked at the start of associated with capacity planning.
the MPS planning period is 55, 60, 65 i. Identify current capacity
BS
respectively. Given, Inventory on hand = 75, ii. Forecast future capacity

Lead time = 1 month, Production lot size = 100 iii. Identify and evaluate sources to meet
units. Answer the following two questions. capacity requirements
rI
232. What is the projected inventory at the end iv. Select the most appropriate alternative
of the second month? a. i, ii, iii, iv
Fo
a. 55 units b. i, iii, ii, iv

b. 60 units c. iii, i, ii, iv
c. 65 units d. iii, ii, i, iv
d. 70 units
238. The capacity utilization rate measures
233. What would be the projected inventory at capacity level at which a production
the end of the third month if orders for the process is operating. Identify the correct
month increase to 80 from 65? formula for capacity utilization rate.
27
Capacity available iii. Make-to-stock environment : Takes inputs

a. Capacity utilizatio n rate = × 100
Capacity used from customer demand in deciding the
Capacity used
MPS
b. Capacity utilizatio n rate = × 100
iv. Make-to-order environment : Takes inputs
Capacity avaialable
from forecasts in deciding the MPS
Available time × Utilization
c. Capacity utilization rate = × 100
Capacity avaialable a. Only iii
b. Only i
09
Capacity available
d. Capacity utilizatio n rate = ×100 c. Both iii & iv
Available time × Utilizatio n
d. Both i & ii
239. Which of the following cannot be a reason
20
for decrease in per unit cost when volume range, medium range or short range in
of production increases? nature. Process planning typically falls
a. Decrease in fixed costs under which category?
of
b. Adoption of efficient processes a. Long-range planning
c. Adoption of automation b. Medium-range planning
c. Short-range planning
d. Increased complexity in operations
s
d. Both b & c
as
240. When the scale of production is increased
244. Carrying costs represent cost incurred
after a certain point, economies of scale
while inventories are stored in warehouses
can become diseconomies of scale. What
Cl or stores. Which of the following is not
can be the possible reasons for associated with carrying costs?
diseconomies of scale? a. Insurance costs
a. Complexities in operations b. Maintenance costs
y
b. High cost of modification & replacement c. Cost of obsolescence

nl
c. Distribution and storage costs d. Material receiving costs

d. All of the above 245. Organizations maintain buffer stocks to
O
overcome which of the following

241. Which of the following statements does conditions?
not correctly represent the characteristics
a. Demand is greater than expected
se
of services?
b. Supply is more than expected
a. Services cannot be produced in c. Demand is less than expected
U
anticipation of demand d. Supply matches demand

b. Services cannot be stored
c. A service firm with a single office can 246. On what basis do organizations fix reorder
BS
level for raw material under the EOQ

efficiently serve customers in another
model?
geographical area
a. Recommendations of finance managers
d. Production and consumption of a service
b. Estimated demand during lead-time
rI
go together
c. Recommendations of suppliers
242. The two major sources of inputs that d. Estimated sales for a financial year
Fo
influence master production schedule are

forecasts and customer orders. Identify the assumption that underlines the EOQ
correct combination from the following. model?
i. Make-to-stock environment : Takes inputs a. The lead-time for material delivery is
from forecasts in deciding the MPS known with certainty and remains constant
ii. Make-to-order environment : Takes inputs b. The total holding cost of inventory is
from customer demand in deciding the proportional to the number of inventory
MPS items stored
28
Part A
c. The cost of ordering varies and is a. 500 units

dependent on the quantity ordered b. 800 units
d. The price of the inventory item is c. 1000 units
independent of order quantity
d. 200 units
248. Opportunity cost is associated with which
basic category of inventory cost? 254. Which of the following are correct reasons
for organizations to hold raw material
a. Carrying costs
inventories?
09
b. Ordering costs
c. Purchase costs i. Obtaining raw materials from suppliers
exactly when needed for production
d. Stock-out costs
20
schedules is not always possible
249. Which of the following costs are ii. Products can be shown to customers
considered by a firm as part of calculating iii. Quantity discounts can result from larger
inventory costs?
purchase quantities
of
i. Holding costs iv. Larger shipments can result in reduced
ii. Acquisition costs incoming freight costs and material
iii. Ordering costs handling costs
s
iv. Stock out costs
as
a. i and ii
a. i, ii and iii b. ii and iii
b. ii, iii and iv
Cl
c. i, ii and iv
c. i, iii and iv
d. i, iii, and iv
d. i, ii, iii, iv
250. What does the EOQ inventory model
y
assumption of the EOQ model?
primarily attempt to minimize?
nl
a. Demand for a product or its usage rate is

a. The number of items ordered
constant over a period of time
b. The number of orders placed
b. Supply rate is always greater than or equal
O
c. Total inventory costs

to usage rate
d. The safety stock
c. The lead-time for material delivery is
se
251. Which of the following is not a primary known with certainty and it remains
cost involved in maintaining inventories? constant
a. Carrying cost d. The purchase price per unit varies
U
b. Ordering cost depending upon quantity ordered

c. Stock-out cost 256. Suppose a company consumes a particular
BS
d. Purchase cost product at an average of 50 units /week. It

costs Rs.200 to order and Rs.0.50 per unit
252. Which of the following terms refers to the per week to hold the item in inventory.
time lag between the point of order and Compute the EOQ.
rI
receiving the material? a. 100 units

a. Lead-time b. 200 units
b. Slack time c. 150 units
Fo
c. Reorder time d. 300 units

d. Order time 257. According to which inventory system
inventory is continuously checked and a
253. In a level production plant, if opening
new order placed when the level of
inventory was 500 units, sales forecast was
inventory reaches the reorder point?
for 1300 units and closing inventory at the
end of the period was 200 units, how many a. Q system
units were produced? b. P system
29
c. EOQ system 264. Match the following inventory costs with

d. Fixed order period system their related descriptions.
258. Why do organizations maintain an i. Purchasing costs
inventory of finished goods? ii. Carrying costs
a. To avoid bottlenecks in the production iii. Ordering costs
process iv Stock-out costs
b. To avoid backlogs in customer order
09
c. To smoothen production flow p. These costs arise when inventory is
damaged
d. To reduce material handling costs
q. Loss of customer goodwill is a
20
259. Semi-finished items stored temporarily and consequence of these costs
used to finish production are termed r. Discounts are given by suppliers on these
_________.
costs
a. Raw material inventory
s. These costs are fixed and come down with
of
b. Work-in-progress inventory increase in size of purchase
c. Finished products inventory
d. None of the above a. i/r, ii/q, iii/p, iv/s
s
b. i/p, ii/q, iii/r, iv/s
260. Manufacturers maintain buffer stocks of
as
_________to meet unprecedented increase c. i/r, ii/p, iii/q, iv/s
in demand. d. i/r, ii/p, iii/s, iv/q
a. Raw materials
Cl
265. Which inventory model is also referred to
b. Work-in-progress as the reorder point system?
c. Finished products
a. P system
y
b. Q system
261. A firm decides on quantity of material
nl
c. EOQ
ordered to maintain various inventory
costs. Which of the following costs does
O
not influence quantities ordered by the 266. What do you understand by the term ‘lead
firm? time’ associated with inventory
a. Purchase cost management?
se
b. Carrying cost a. Time required for depleting inventory once

c. Ordering cost replenished
U
d. Hiring cost b. Time required for replenishing inventory

after placing an order
262. Suppliers offer discounts to manufacturers
BS
c. Time required for inventory to reach the

based on which of the following type of reorder point
costs? d. Time required for inventory to reach the
a. Purchase costs safety stock limit
rI
b. Carrying costs
267. In the EOQ model, why is the reorder level
c. Ordering costs set equal to the number of units estimated
Fo
d. Stock-out costs to be used during lead time?

i. To ensure that inventory is just about zero
263. Which of the following does not come
when the time for replenishment comes
under carrying costs?
ii. To maintain the lowest possible inventory
a. Pilferage costs
b. Spoilage iii. To increase carrying costs
c. Maintenance costs iv. To ensure that sufficient inventory is
d. Material-receiving costs available before replenishment
30
Part A
a. i and ii 273. Calculate total cost of maintaining

b. ii and iii inventory.
c. iii and iv a. Rs.458000
d. i and iv b. Rs.3158000
c. Rs.233000
268. If the lead time for replenishing inventory
d. Rs.933000
in a production facility is 7 days and daily
demand is 25 units, calculate the reorder 274. The quantity at which an order is placed
09
point at which the firm should order for inventory replenishment is _________.
inventory replenishment. a. Safety stock
a. 150 units
20
b. Reorder level
b. 175 units c. Buffer stock
c. 180 units d. Cycle stock
d. 185 units
of
275. Lead time is assumed to remain constant.
269. Which of the following costs are not This is a condition associated with which
considered part of EOQ? of the following inventory systems?
a. Q-System
s
a. Purchasing costs
b. P-System
as
b. Carrying costs
c. EOQ
c. Ordering costs
d. Fixed Order Quantity system
d. Stock-out costs
Cl
276. Organizations come up with many reasons
(Questions 270 to 273) A production facility for holding inventory at various stages of
uses a certain type of raw material in its production. Which of the following is not
y
production process for which details are given a suitable reason for holding raw material
below. Annual Demand = 300000 units, inventory?
nl
Quantity per order = 75000 units, Fixed cost a. Obtaining raw materials from suppliers
per order = Rs.2000, Holding cost per unit = when needed to maintain production
O
Rs.5, Item cost per unit = Rs.10. Using the schedules is not always possible
EOQ model, answer the following four b. Quantity discounts can result from larger
questions. purchase quantities
se
270. Calculate total ordering costs incurred in a c. Larger shipments can reduce incoming
year. freight and material handling costs
U
a. Rs.6000 d. Producing and transporting in larger

batches reduces material-handling and
b. Rs.8000
production costs
c. Rs.10000
BS
d. Rs.12000 277. In which of the following types of

classification of inventory are items
271. Calculate holding costs per order. classified based on annual consumption
rI
a. Rs.37500 value?
b. Rs.75000 a. ABC
c. Rs.150000 b. VED
Fo
d. Rs.300000 c. FSND
d. Both b & c
272. Calculate total variable cost.
278. Which of the following is the basic
a. Rs.300000 objective of economic order quantity
b. Rs.3000000 purchasing?
c. Rs.75000 a. Minimizing total inventory cost
d. Rs.750000 b. Minimizing transport cost
31
c. Minimizing storage cost a. Procurement requests

d. Minimizing ordering costs b. Safety of procured material
279. Which of the following factors should a c. Contract execution
purchase department consider while d. Negotiation process
purchasing materials and supplies from a
supplier? 285. The purchase department is not
responsible for which of the following
i. Low price activities in a production-centric firm?
09
ii. High quality
a. Vendor relations
iii. Good after sales service
b. Procurement
20
a. i and ii c. Creating goodwill for the company among
b. i and iii vendors
c. ii and iii d. Public relations
of
d. i, ii, and iii 286. Identify the logical sequence that best
280. Value analysis is an organized effort to represents a simple purchase process.
control cost of _____________. a. Purchase indent - Purchase order -
s
a. Materials purchased Quotation
as
b. Materials exported b. Purchase indent - Quotation – Purchase
order
c. New product development
Cl
c. Quotation - Purchase indent – Purchase
d. Marketing efforts
order
281. Which of the following is not a primary d. Purchase order - Quotation – Purchase
responsibility of the purchase department?
y
indent
a. Vendor development
nl
287. The review of inputs to get the best kind of

b. Selection of suppliers output at the least cost while designing a
c. Contract negotiation product is called ______.
O
d. Quality control a. Cost reengineering

282. What are the tasks of a purchase b. Industrial engineering
se
department in an organization? c. Value engineering

a. Processing requisition for materials and d. Cost accounting
U
supplies
288. Which of the following does not influence
b. Locating suppliers or vendors
vendor selection?
c. Negotiating purchasing contracts
BS
a. Cost
d. All of the above
b. Delivery and quality
283. Which of the following is not a c. Service and reliability
rI
characteristic of traditional purchasing? d. None of the above

a. Delivery schedule is left to the buyer
289. If the material requirement in the various
b. Purchases are in large quantities
Fo
production facilities of India Metallics

c. Multiple sources of supply Company differs significantly, which type
d. Standardized packaging for all types of of purchasing system is most suitable for
components the company?
284. For which of the following purchase a. Centralized purchasing
activities of a bio-pharmaceutical b. Decentralized purchasing
company, the purchase manager is more of c. A combination system
a facilitator than a decision-maker? d. Outsource the purchasing function
32
Part A
290. Which of the following is not an activity c. Vendor

performed by the purchase manager? d. Top management
a. Vendor analysis and development
296. Which of the following is not mentioned
b. Supplier selection in a quotation?
c. Value analysis
a. Price per unit
d. ABC analysis b. Delivery schedule
09
291. Identify various sources that help purchase c. Terms and conditions
managers obtain information about d. Name of the user department
potential vendors/suppliers.
20
297. Which of the following authorizes
i. Yellow pages suppliers to supply materials/goods?
ii. Newspapers a. Purchase indent
iii. Websites b. Quotation
of
iv. Business journals c. Purchase order
a. i and ii d. All of the above
s
b. i and iii 298. In a centralized purchase system, which
c. i and iv
as
department is responsible to the user
d. i, ii, iii, iv department for proper delivery of
components?
292. Which of the following is not part of value
Cl
analysis? a. Supplier
b. Purchase department
a. Study the value of material
c. Top management
y
b. Review product design
d. Quality control department
c. Eliminate high-cost parts
nl
d. Negotiate with suppliers 299. India Rubber Ltd. requires on a continuous

basis a certain rubber component for their
O
293. From the list of questions given below, product. When should the firm opt for
identify the one not considered under buying the component rather than
value analysis. producing it in-house?
se
a. Is it possible to run the system without the a. When the quantity of the part required is
item? huge
U
b. Can the item be substituted with a standard b. When the fixed cost to make the product is
less than buying costs
part?
c. When the total cost to make the product is
c. Can the vendor supply the material at the
BS
less than buying costs

right time?
d. When the quantity of the part required is
d. How much does the item cost? small
rI
294. Purchase indents are also called 300. Which of the following is not a reason for
__________. organizations to opt for in-house
a. Purchase requisitions production?
Fo
b. Purchase quotations a. To gain control over all value chain

activities
c. Purchase orders
b. To put excess plant capacity to productive
d. Purchase information use
295. Who generally issues a purchase indent? c. To ensure that the design of a product is
kept secret
a. User department
d. To take advantage of knowledge and
b. Purchase department expertise of suppliers
33
301. Materials managers should pay more Type of item Cost per unit Annual
attention to items whose usage value or (Rs) usage
consumption value is high and less 1 400 50
attention to items whose usage value is
low. Which inventory classification model 2 510 40
seeks to alter the expenses associated with 3 10 600
controlling materials according to their
usage value? 4 11 500
09
a. ABC 5 0.50 1,000
b. VED 6 0.25 1,500
20
c. FSND
a. 1&2
d. FIFO
b. 1&3
302. A Kanban system uses different types of c. 2&3
of
cards to initiate material transactions. d. 3&4
Which of the following type of Kanban
card authorizes a materials handling agent 306. The departments involved in production
s
to move the tray to a specified destination? control are purchasing, receiving, raw
as
a. Conveyance authorization card materials, and production department.
b. Production authorization card Which of the following tasks does the raw
Cl material inventory department carry out?
c. Vendor authorization card
i. Repackaging and labeling incoming stock
d. Dual-card Kanban system
ii. Storing and protecting raw materials
303. Which of the following is not a function of
y
iii. Auditing existing raw materials
materials management?
iv. Unpacking incoming materials
nl
a. Vendor analysis
b. Production control a. i and ii
O
b. ii and iv
c. Materials handling
c. i, ii, and iii
d. Inventory control
d. i, ii, and iv
se
304. Which of the following is not a

characteristic of the ABC inventory 307. The shipping department is associated with
the materials handling function. Which of
U
classification system?
the following tasks are carried out by this
a. It classifies inventory items based on the
department?
size of resources required to control usage
BS
value i. Staging or organizing orders to be shipped

b. The greater the usage value, the greater the ii. Weighing, labeling, and packing orders to
resources to be allocated to control usage be shipped
rI
of an item iii. Physically checking orders to make sure

c. The system considers availability of their content is consistent with the order
materials iv. Storing raw materials safely
Fo
d. Extent of allocation of resources is based a. i and iii

on value of the inventory b. ii and iii
305. The following table gives the unit cost and c. i and ii
annual usage rates for different items. d. i, ii, and iii
Classify items based on their rupee volume
using ABC classification and identify them 308. On what principle is ABC analysis based
under A-classification. upon?
34
Part A
a. An item is critical if its usage is high a. i and ii

b. There are usually a few critical items and b. i, ii, and iii
several items that are less critical c. i, ii, and iv
c. The safety stock (in terms of volume) d. i, ii, iii, iv
should be higher for A items than for C
items 314. Which of the following is not a proper
d. An item is critical if its unit price is high approach to be followed by materials
managers?
09
309. An inventory records file does not contain a. Stock large volumes of materials to avoid
__________. shortage
a. Characteristics of products
20
b. Maintain optimum levels of inventory to
b. Information on inventory levels avoid shortage
c. Additional information like inventory item c. Supply materials to the required
number and description workstation quickly to enable smooth
of
d. Supplementary information for planning production
purposes including vendor names, vendor d. Procure materials, receive and store safely
addresses, lead times and purchase for use in operations
s
quantities
315. Spykar Plastics recorded sales of Rs.60
as
310. Production control is one of the functions lakhs for the year 2004-05. The profit
of materials management. Which of the recorded is 20% of sales, while material
following is not a function of the
Cl costs amount to 50% of sales. If the firm
production department associated with
production control function? saves Rs. three lakh in material costs,
calculate change in profit?
a. Monitoring flow of raw materials
y
b. Determining and adjusting inventory a. 20% increase
storage capacity b. 25% increase
nl
c. Locating and receiving raw materials c. 20% decrease

d. Identifying material flow bottlenecks d. 25% decrease
O
311. Which of the following tasks are not 316. Which of the following is not an objective
performed by the receiving department
of materials management?
se
under the production control function of

materials management? a. To maintain low inventory turnover
a. Unpacking incoming orders b. To maintain cordial relations with
U
b. Processing requisitions for material suppliers and supplying firms

c. Inspecting the quality of incoming material c. To help increase effective utilization of
BS
d. Preparing receiving reports the firm’s capital

d. To keep searching for new products and
312. The detailed study of complete material
flow process in a firm is termed ________. materials that can help the firm run
efficiently
rI
a. Operations management
b. Inventory management 317. Materials management comprises
c. Materials management production control, inventory control and
Fo
d. Purchase management materials handling. Which of the following

departments is not associated with
313. How does shortage in materials affect a
production control function?
firm’s functioning?
i. It breaks the flow of operations a. Purchase department
ii. It delays delivery b. Raw material inventory department
iii. It increases operational efficiency c. Finished goods inventory department
iv. It increases operational expenses d. Production department
35
318. Purchasing can be done through c. To move materials to the required location
centralized as well as decentralized in a timely and cost-effective way without
systems. Which of the following is not a affecting the primary objective of
characteristic seen when large firms adopt production control and inventory control
centralized purchasing? d. All of the above
a. Huge/voluminous purchases
b. Consistency in buying policies 323. The materials management function is also
referred to as a combination of three sub-
09
c. Non-uniformity in maintaining records
functions: traffic, physical distribution and
d. Higher purchasing power
logistics. Movement of finished goods falls
319. What does a typical materials receiving under which of these sub-functions of
20
report contain? materials management?
a. Quantity of material a. Traffic
b. Price of material b. Physical distribution
of
c. Technical specifications c. Logistics
d. Information on inventory levels d. None of the above
s
320. A raw material inventory department helps 324. Which of the following category of robots,
as
production control by arranging for raw based on the nature of their operations, can
materials to be readily used in the change their sequence of tasks to suit the
production process. Which of the
operational process?
Cl
following is not a task of raw material
inventory department? a. Playback robot
a. Storing raw materials b. NC robot
y
b. Maintaining stocks of material at various c. Variable-sequence robot
stages of production d. Intelligent robot
nl
c. Labeling raw materials to make them

ready for use 325. What does the concept of just-in-time
O
d. Arranging for replenishment of stocks in purchasing highlight?

liaison with purchase department a. Maintain bulky inventory
b. Maintain safety stock in case of adversity
se
321. Materials management comprises

production control, inventory control and c. Maintain minimum inventory till the next
materials handling. Which department is replenishment
U
not associated with inventory control d. None of the above

function?
326. JIT purchasing has many advantages over
a. Purchase department
BS
traditional purchasing. Which among these

b. Raw materials inventory department is not an advantage?
c. Production department
a. Reduction in carrying costs
d. Finished goods inventory department
rI
b. Improved quality
322. What is the basic objective of materials c. Increased responsiveness
handling function under materials d. Reduced flexibility
Fo
management?
a. To maintain stock of materials in various 327. Which company developed the Kanban
stages of production and in desired System?
quantities a. General Motors
b. To direct and regulate movement of goods b. Toyota Motor Company
through the entire manufacturing cycle
from the process of purchasing materials to c. Ford Motor Company
making the finished product d. Suzuki Motor Corporation
36
Part A
328. Which of the following Kanban cards 332. Which material falls under the C category
authorizes a materials handling agent to of ABC analysis?
move the tray to a specified destination?
a. Type 4
a. Vendor authorization card
b. Type 3
b. Product authorization card
c. Type 1
c. Conveyance authorization card
d. Both a & b d. Type 2
09
(Questions 329 to 332) Assume that JKL 333. A Kanban system uses different types of
Industries uses 5 types of materials in its cards to initiate material transactions.
production process. The quantity of each type Which of the following type of Kanban
20
of material used per year and the cost per unit card authorizes the production department
is given in the table below. Use this data to to commence the production process?
answer the following four questions.
a. Conveyance authorization card
of
Material Quantity used per Cost per b. Production authorization card
type year unit c. Vendor authorization card
s
1 2000 20
as
2 4500 10 334. The primary objective of which of the
following approaches in operations
3 1500 35
Cl management is to identify the net
requirement of components needed to
4 3000 20 manage the production process and meet
customer expectations?
y
5 2500 25
nl
329. Use ABC analysis to identify the type of b. Materials requirement planning
material that has the most usage value. c. Master production schedule
O
a. Type 2 d. Inventory management

b. Type 4
335. An MRP system translates the demand for
c. Type 3
se
products into raw material and component

d. Type 5 requirements. What type of information is
U
330. What is the least usage value of a material required for successful operation of an
that requires lowest allocation of MRP system?
resources? i. Available inventory at the beginning of the
BS
a. 40000 planning time period

b. 35000 ii. Information on production capacity that
helps anticipate and correct resource
c. 45000
rI
shortage
d. 42500
iii. Number of customer orders pending
331. Which type of material can be classified iv. Demand forecasts that specify the quantity
Fo
under ‘A’ category? of products required

a. Type 1 and 2 a. i, ii, and iii
b. Type 5 b. i, iii, and iv
c. Type 2 and 3 c. ii, iii, and iv
d. Type 2 d. i, ii, iii, iv
37
336. Which of the following is not an c. i and iii

advantage of an MRP system? d. ii and iv
a. Improved customer service
b. Greater investment in inventory 341. The MRP system helps an operations
manager find the net requirement of a
c. Improved operating efficiency component. Which of the following have
d. Faster response to market changes to be considered by the manager to achieve
this?
09
Bill of Materials (BoM) is incorrect? a. Material inventory on hand
i. It lists all the sub-assemblies and b. Finished goods inventory on hand
20
intermediates that go into a parent c. Scheduled receipts from the vendors
assembly d. Scheduled order releases for production
ii. It contains information about whether a
particular item was produced internally or 342. Improving operating efficiency is one of
of
purchased from external sources the objectives of MRP. What does this
iii. It specifies the purchase or production signify?
lead-time to acquire an item i. Better control over inventory of raw
s
material and components
iv. It shows the hierarchical levels or phases a
as
product goes through during production ii. Quick response to production requirements
iii. Speed-up or delay of material supply to
a. i and ii
Cl production centers as per requirements
b. i, ii, and iii iv. Speed-up or slow-down of the distribution
c. i and iii of finished goods from warehouses
d. i, ii, iii, iv
y
a. Only i
338. Which of the following is not an b. Only i and ii
nl
advantage of MRP system? c. i, ii, and iii

a. Ability to price competitively d. i, ii, iii and iv
O
b. Better customer service (Questions 343 to 348) Given below is the bill
c. Longer idle time of materials which specifies the quantities of
se
d. Reduced set-up and tear-down costs different items required to product one unit of
end product alpha. Assume that items F, G, H
339. What basic information does a master are purchased from external sources and the
U
production schedule contain? remaining (B, C, D, E and I) are produced in-

a. Required quantities and delivery dates of house. The given lead times are in hours.
final products Answer the following six questions using this
BS
b. Required quantities and delivery dates of information.

all sub-assemblies 343. Find the quantities of F & G respectively,
c. Inventory on hand for each final product which are required to produce 5 units of B.
rI
d. Scheduled receipts for each final product a. 20 and 30

b. 30 and 20
340. What is the primary objective of an MRP
c. 45 and 30
Fo
system?
d. 30 and 45
i. Manage demand-dependent inventories
ii. Manage demand-independent inventories 344. What is the total time required to produce
B?
iii. Schedule production activities
a. 6 hours
iv. Initiate purchase activities
b. 5 hours
a. i and ii c. 7 hours
b. iii and iv d. 4 hours
38
Part A
Alpha
LT = 2
09
B (4) C (1) D (4)
LT = 1 LT = 2 LT = 4
20
H (2) I (2)
E (3) LT =3 LT = 3
of
LT = 2
H (3) G (3)
s
LT = 2 LT = 2
as
F (2) G (3)
LT = 1 LT =2
Cl
345. Find the quantities of G & H respectively, 349. Processing is one of the components of the
which are required to produce 8 units of D. MRP system. Here the inputs are
y
processed and outputs are generated.
a. 45 and 45
Which of the following is not a step
nl
b. 35 and 35 involved in MRP information processing?

c. 48 and 48 a. Explosion
O
d. 38 and 38 b. Netting
c. Offsetting
346. What is the total time required to produce
d. Order release
se
D?
a. 6 hours 350. The first step in MRP information
processing is explosion. Explosion uses
U
b. 7 hours
information from which of the following
c. 8 hours sources to generate the sequence of
d. 9 hours activities in producing the end product?
BS
347. Find the quantity of G required to produce i. Master production schedule

10 units of product alpha. ii. Inventory records file
iii. Bill of materials
a. 360 units
rI
iv. All of the above

b. 120 units
c. 240 units a. i and ii
Fo
d. 600 units b. i and iii

c. ii and iii
348. What will be the total time required to d. Only iv
produce product alpha?
a. 9 hours 351. Developing a materials requirement plan
for each item in the bill of materials file
b. 11 hours for each time bracket is carried out in
c. 13 hours which step of MRP information
d. 21 hours processing?
39
a. Explosion a. Low in-process material inventory

b. Netting b. Better response to market demand
c. Offsetting c. Reduced set-up and tear-down costs
d. Consolidation of material requirements d. Longer implementation time
352. Planned order releases are determined in 356. Identify the factors that help in effective
which of the following steps of MRP implementation of the MRP system.
information processing?
09
i. Greater accuracy in all operations
a. Explosion ii. Commitment from top management
b. Netting iii. Continuous collection of information
20
c. Offsetting regarding the materials used
d. Both a & b iv. Training and educating the personnel
353. The planned order releases for the finished a. i, ii, iii
of
product or component becomes the gross b. i, iii, iv
product requirement for items at the c. i, ii, iv
___________ level in the product structure d. i, ii, iii, iv
s
chart.
357. Which of the following factors can lead to
as
a. Next lower the failure of MRP system?
b. Next higher a. Highly trained and involved workforce
c. Lowest level
Cl
b. Obsolete data
d. Highest level c. Consistent lead times for purchase of items
d. Both b & c
354. The components of an MRP system can be
y
divided into inputs, processing and 358. Smith & Smith is a specialty machine
nl
outputs. Match the following outputs of manufacturing company that manufactures

MRP system with their respective customized machinery for customers. As
descriptions. part of this manufacturing approach the
O
company stores the required components

i. Performance reports
and sub-assemblies and only the final
ii. Exception reports assembly of the machine is made as per the
se
iii. Suspension reports customer specifications. Which of the

iv. Planning reports following types is discussed in this case?
U
a. Assemble-to-stock
p. Generated to cancel an order due to
b. Manufacture-to-order
changes in MPS
c. Assemble-to-order
q. Contain information about material
BS
d. Fabricate-to-order
requirements
r. Contain information about errors and 359. An MRP system takes the input
deviations from planned objectives information, processes the information and
rI
s. Helps identify a problem and verify gives the output in the form of structured
reports. In which step of information
whether the system can achieve planned
processing in the MRP system, end
Fo
objectives product is disassembled into components

a. i/p, ii/q, iii/r, iv/s required for its production to determine
production process or purchase activity for
b. i/s, ii/q, iii/r, iv/p
each such component?
c. i/s, ii/r, iii/p, iv/q
a. Explosion
d. i/s, ii/r, iii/q, iv/p b. Netting
355. Which of the following is not an c. Offsetting
advantage of MRP system? d. None of these
40
Part A
360. An MRP system takes some inputs, a. Production activities are scheduled by their
processes them and gives certain outputs. due dates
Which of the following is not considered b. Service delivery schedules are known in
an input? advance
a. Master production schedule c. Work-in-process inventory level is high
b. Planning report d. Jobs are assigned according to the latest
c. Bill of materials available time
09
d. Inventory records file
366. Repetitive operations normally involve
361. Jobs A – G involve processing on mass production of a product or a service.
workstation 1 and 2. The time required at Which of the following is not a
20
each workstation for each job is given in characteristic of repetitive operations?
the table below. Use Johnson’s rule to a. Mass production of a product
sequence these jobs.
b. Need to control flow of materials and
Jobs A B C D E F G
of
application of labor resources to minimize
Workstation 1 9 8 7 6 1 2 4 idle time
Workstation 2 6 5 7 3 2 6 7 c. Focus on synchronizing customer demand
s
with production activity
as
a. A-B-C-D-E-F-G d. There are large variations in the production
b. E-F-G-C-A-B-D process and the equipment is designed for
a broad range of applications
c. E-F-G-D-C-B-A
Cl
d. E-D-B-A-F-C-G 367. In which of the following type of labor-
362. Which of the following scheduling intensive scheduling approach, are
employees given the freedom of choosing
y
methods is more suitable for an industry
where jobs are processed in multiple stages their start time, but have to work for eight
nl
of production? hours each day?

a. Line balancing a. Flextime approach
O
b. Sequencing rules b. Flextour approach

c. CRAFT c. Compressed work week
se
d. Linear programming d. Staggered times approach
363. In which type of scheduling method, are 368. Which of the following is not an
U
orders scheduled according to their due application of Gantt charts?

dates? a. Help sequence jobs in a way that idle time
a. Forward is minimized
BS
b. Backward b. Depict work load levels for equipment,

c. Routing workstations or departments
d. Hybrid c. Track job progress as they go through
rI
various departments
364. Which of the following is not a d. Help adapt to changes in scheduling
disadvantage of varying workforce requirement
Fo
strategy?
a. Increased hiring and layoff costs 369. Which of the following statements about
queuing analysis is incorrect?
b. Increased training costs
c. Increased overtime costs a. Study of waiting lines and queuing
systems
d. Adverse effect on employees’ morale
b. Helps balance the costs of waiting time
365. Which of the following is not true of with the costs of providing additional
backward scheduling? service facilities
41
c. It helps maximize the number of service 373. Operations managers generally use several
workstations required techniques to schedule jobs in various
d. A queue will result if customer arrival rate departments. Which of the following is
is greater than service delivery rate one of them?
a. Routing
370. The critical ratio method is a job
sequencing technique that an operations b. Loading
manager can use to verify whether a job is c. Scheduling
09
being performed on schedule. In this d. Critical ratio
technique, ________ the critical ratio,
_______ the priority. 374. Which of the following is not an effective
20
a. Lower, lower criterion for scheduling?
b. Higher, higher a. Minimizing customer waiting time
c. Lower, higher b. Minimizing completion time
of
d. Higher, lower c. Maximizing flow time
(Questions 371 & 372) Jagson Ltd. has started d. Maximizing resource allocation
three jobs and engaged three teams to execute 375. In which scheduling activity is the capacity
s
each job. Today is day 20. The due dates and limitation of each work center to be
as
scheduled time remaining for each job are considered while assigning jobs?
given in the table below. Answer the following
a. Loading
two questions.
Cl
b. Sequencing
Job Due Date Work Days Remaining c. Expediting
1 25 7 d. Routing
y
2 32 14 376. In which of the following personnel
scheduling approaches are employees
nl
3 27 5
given an option of choosing their work
371. Calculate the critical ratios for job 1, 2 & 3 timings, provided they complete a
O
specified number of hours a week?

respectively?
a. Flextime approach
a. 1.400, 0.714, 0.857
b. Flextour approach
se
b. 2.8, 1.840, 1.428

c. Compressed work week
c. 0.714, 0.857, 1.400
d. Staggered times
U
d. 0.714, 1.400, 0.857

(Questions 377 to 382) Use the following table
372. Which job should get highest priority? to answer the following six questions. The
BS
a. Job 1 table shows two jobs on two machines and

b. Job 2 their respective routing sequences. Both jobs
should be completed in 9 hours.
c. Job 3
rI
d. Both job 1 and 3
Job X Route Sheet Job Y Route Sheet

Fo
Routing Machine Processing Routing Machine Processing

Sequence Time Sequence Time
(Hours) (Hours)
1 1 3 1 2 2
2 2 2 2 1 3
3 1 2 2 1
Total 7 Total 6
42
Part A
377. Which of the following gives the correct a. 9 hours

representation of forward scheduling for b. 8 hours
Jobs X and Y? c. 7 hours
a. d. 6 hours
Time 1 2 3 4 5 6 7 8 9
M1 X1 X1 Y2 Y2 Y2 X3 X3 381. What is the latest start time for Job X in

M2 Y1 Y1 X2 X2 X2 Y3 Y3
backward scheduling?
a. 1 hour
09
b. b. 2 hours
Time 1 2 3 4 5 6 7 8 9
c. 3 hours
20
M1 X1 X1 X1 Y2 Y2 X3 X3
d. 4 hours
M2 Y1 Y1 Y3 X2 X2 X2 Y3
382. What is the latest start time for Job Y in
backward scheduling?
c.
a. 1 hours
of
Time 1 2 3 4 5 6 7 8 9
M1 X1 X1 X1 Y2 Y2 Y2 X3 b. 2 hours
M2 Y1 Y1 X2 X2 X2 Y3 Y3 c. 3 hours
s
d. 4 hours
d.
as
Time 1 2 3 4 5 6 7 8 9 383. Which scheduling activity describes the
M1 X1 X1 X1 Y2 Y2 Y2 X3 X3
‘specification of work flow’ in operations
Cl scheduling?
M2 Y1 Y1 X2 X2 Y3
a. Routing
378. Which of the following gives the correct b. Loading
representation of backward scheduling for
y
c. Dispatching
Jobs X and Y? d. All of the above
nl
a.
Time 1 2 3 4 5 6 7 8 9 384. Assigning specific jobs to each work
M1 X1 X1 Y2 Y2 Y2 X3 X3 center for the planning period is called
O
M2 Y1 Y1 Y1 X2 X2 Y3 Y3
___________.
b. a. Routing
Time 1 2 3 4 5 6 7 8 9
se
M1 X1 X1 X1 Y2 Y2 Y2 X3 X3 b. Loading
M2 Y1 Y1 X2 X2 Y3 c. Dispatching
U
c.
Time 1 2 3 4 5 6 7 8 9
M1 X1 X1 X1 Y2 Y2 Y2 X3 X3 385. Which of the following dispatching rules
do firms use when they want to maximize
BS
M2 Y1 Y1 X2 X2 X2 Y3 Y3
the number of completed jobs and reduce
d. the number of jobs in waiting?
Time 1 2 3 4 5 6 7 8 9
M1 X1 X1 Y2 Y2 X3 X3 a. Longest processing time
b. Shortest processing time
rI
M2 Y1 Y1 Y1 X2 X2 Y3
c. First in, first serve
379. Using forward scheduling what is the d. Slack time remaining
Fo
earliest finish time of Job X?

(Questions 386 to 396) Sriram Welders
a. 9 hours undertakes customized welding and fabrication
b. 8 hours works for different customers across the
c. 7 hours country. Jobs A, B, C, D and E are to be taken
d. 6 hours up at the beginning of the week. Processing
times and due dates for these jobs are given in
380. What is the earliest finish time of Job Y in the following table. Use this data to answer the
forward scheduling? following eleven questions.
43
Job (In order Processing Due date a. 5.2 days

of arrival) Times (days) (Days b. 5.4 days
hence) c. 5.6 days
A 4 4 d. 5.8 days
B 5 8
392. Using the slack time remaining (STR) rule,
C 4 6 the job with the shortest slack time is
D 2 5 dispatched first. Which of the following
09
E 3 7 jobs have the shortest slack time?
a. A
386. What is the order in which jobs are taken
b. B
20
for processing using the earliest due date
rule? c. C
d. D
a. C–D–E–A–B
393. What is the time delay for the last job
of
b. B–A–C–D–E
c. A–D–C–E–B processed using the slack time remaining
(STR) rule?
d. A–B–C–D–E
a. 8 days
s
387. What is the average time of a job using the b. 9 days
as
earliest due date rule? c. 10 days
a. 4.2 days d. 11 days
Cl
b. 4.4 days
394. What is the average delay if the STR rule
c. 5.4 days is used to dispatch jobs?
d. 3.2 days a. 5.3 days
y
388. The shortest processing time among all b. 5.0 days
nl
jobs is for job D. What is the total delay c. 4.8 days

for job D if the longest processing time d. 4.6 days
rule is used?
O
395. What is the average time if the shortest

a. 9 days processing time rule is used?
b. 7 days a. 4.2 days
se
c. 13 days b. 4.4 days

d. 11 days c. 4.6 days
U
d. 4.8 days
389. What is the average delay using the
longest processing time rule? 396. Which dispatching rule would you suggest
to Sriram Welders if the objective is to
BS
a. 5.8 days
reduce the average delay in the work?
b. 6.8 days a. Earliest due date
c. 5.3 days b. First in, first serve
rI
d. 6.3 days c. Shortest processing time

390. What is the delay for the last job processed d. Slack time remaining
Fo
using the first in-first serve rule? 397. The scheduling of operations is different
a. 9 days for different types of operations. In which
of the following operations is flow of
b. 10 days
material given utmost importance?
c. 11 days a. Job operations
d. 12 days b. Repetitive operations
391. What is the average delay when the first c. Labor-intensive operations
in-first serve rule is used? d. All of the above
44
Part A
(Questions 398 & 399) Given below is a c. Gi = Ai1+Ai2+Ai3+…+Aim-1

Workload Gantt chart where X, Y, Z represents Hi= Ai2+Ai3+Ai4+…+Aim
three machines. A, B, and C represent jobs to
d. Gi = Ai1+Ai2+Ai3+…+Aim-1
be performed on these machines during a
particular week. Answer the following two Hi= Ai2+Ai3+Ai4+…+Aim-1
questions. 402. Which of the following situations leads to
Week Number the formation of a queue in a service
Work organization?
09
Center 1 2 3 4 5 6 7 8 a. Rate of arrival of customers is less than
rate at which service is rendered
X A B C
20
b. Rate of arrival of customers is equal to the
Y C A rate at which service is rendered
c. Rate of arrival of customers is greater than
Z B C A the rate at which service is rendered
of
d. Both b and c
398. Identify the number of weeks required to
complete job A. 403. Which of the following is not a benefit
s
associated with queuing analysis?
a. 2 weeks
as
b. 4 weeks a. To minimize waiting costs
c. 7 weeks b. To determine optimum number of
work/service stations
d. 5 weeks
Cl
c. To balance waiting costs with the costs of
399. From the Gantt chart select the machine providing additional service stations
most utilized.
d. To minimize processing time of jobs
y
a. Machine X
b. Machine Y 404. Critical ratio method is a sequencing
nl
c. Machine Z technique used by the operations managers

d. Machines Y & Z in scheduling work. Identify the correct
O
formula for calculating the critical ratio.

400. Operations managers generally use several a. Total time to complete the job / work
techniques to schedule jobs in various remaining
se
departments. How does the sequencing of b. Planned time remaining / work still
jobs using Johnson’s job sequencing rules remaining
U
help a firm?
c. Actual work remaining / planned time
a. It minimizes processing time remaining
b. It maximizes operating efficiency d. Total time remaining / actual time
BS
c. It reduces processing costs remaining

d. All of the above
(Questions 405 to 407) Crescent SoftDesign, a
401. Under Johnson’s sequencing rule, a designing company, currently has five projects
rI
problem of m machines and n jobs can be A, B, C, D, and E on hand which require150

simplified into two fictitious machines and days, 135 days, 180 days, 140 days and 120
n jobs. Using this criterion, identify the
Fo
days respectively to complete. After 100 days,

correct mathematical representation of the operations manager identifies that these
simplifying m machines into two projects still require 60 days, 30 days, 70 days,
machines. 45 days and 30 days respectively for
a. Gi = Ai1+Ai2+Ai3+…+Aim completion. Based on the given information,
Hi= Ai2+Ai3+Ai4+…+Aim answer the following three questions.
b. Gi = Ai1+Ai2+Ai3+…+Aim 405. Which of these projects has the least
Hi= Ai2+Ai3+Ai4+…+Aim-1 critical ratio?
45
a. A a. Customers have become selective due to

b. B availability of wide range of products from
c. D various marketers
d. E b. Marketers have to maintain customer
relationships effectively in a competitive
406. Which of the following projects is ahead market
of schedule? c. Changes in the marketplace have forced
09
a. A and D marketers to think about their business
b. A and E processes
c. B and C d. Marketers can take speedy decisions in a
20
d. B and E dynamic market environment
407. Using the critical ratio method, give the 412. Business modeling is a precursor to
order of priority based on the revised time business process reengineering, ERP
of
of completion after 100 days? implementation, etc. What is the purpose
a. A – B – C – D – E of business modeling?
b. E – D – A – C – B a. To provide details of activities performed
s
c. E – A – D – C – B and workflow structure
as
d. E – A – D – B – C b. To provide an overview of operations
without focusing on processes and systems
408. Which of the following is not a basic c. To provide details of processes and
Cl
objective of scheduling activities? systems
a. To meet customer requirements on time d. Both a & b
b. To carry out the production process most
y
efficiently 413. A good business model should be
comprehensible, coherent and complete.
nl
c. To minimize service delays

Which of the following is not a primary
d. To minimize inventory costs basis for developing a business model?
O
409. Which of the following is not true about a. Goals

ERP? b. Objectives
a. ERP uses multiple databases to store
se
c. Strategic plans
information
d. Market structure
b. It integrates all business functions of an
U
organization 414. One of the critical steps of ERP

c. Implementation costs are high implementation is the development of an
d. It provides smooth information flow integrated data model. How does this help
BS
through the organization an organization?

i. Increases connectivity between
410. The implementation of ERP in an departments
organization has undergone a sea change
rI
ii. Helps in smooth flow of information

over the years primarily due to which of
between departments
the following factors?
iii. Increases data redundancy
Fo
a. Changes in the ERP concept

iv. Ensures availability of right information
b. Changes in organizational structures
c. Advances in software and hardware a. i, ii, iii
technologies b. i, ii, iv
d. None of the above c. ii, iii, iv
411. Which of the following is a result of BPR? d. i, ii, iii, iv
46
Part A
415. To guarantee the success of ERP 419. What is the basic objective behind defining
implementation, organizations have to corporate needs of an organization before
concentrate on three issues – functionality, ERP implementation?
technology and implementability. Which a. To assess the readiness of the organization
of the following statements hold true for to accept change
technology issues? b. To identify the gaps in terms of handling
i. Technology used in ERP package should information
have low compatibility with other c. To facilitate speedy implementation
09
information systems d. All of the above
ii. Technology used should be flexible and 420. An organization is required to undergo a
adapt to any future changes
20
brief business process redesign exercise
iii. Technology used should not be too costly before actual ERP implementation. Why?
to upgrade in future a. To assess the readiness of the organization
to change
a. i and ii
of
b. To assess the implications of the changes
b. ii and iii
c. To facilitate speedy implementation
c. i and iii
d. To identify the gaps in terms of handling
s
d. i, ii, iii information
as
416. Which of the following costs are not 421. Strong leadership is an important success
associated with ERP implementation? factor in implementing an ERP system.
a. Cost of consulting
Cl Which of the following will enable the
b. Cost of process redesign steering committee to produce successful
results in ERP implementation?
c. Cost of training
i. The committee should understand the
y
redesign and integration
nl
417. Which of the following types of ii. The committee should be trained in
information are required to customize an process mapping
ERP package as per an organization’s iii. The committee should be fully involved in
O
requirements? process redesign so that it can guide the

i. Information from mapping of business team members
processes
se
a. Only i
ii. Information from gap analysis b. i and ii
iii. Market information c. ii and iii
U
iv. Information about the company’s d. i, ii, and iii

competitors
422. To gain competitive advantage,
BS
a. Only i organizations should understand what

b. i and ii factors are required to make them a
c. ii and iii qualifier for purchase from customers. In
addition, they should know what factors
rI
d. Only iii could enable them to eventually win an

418. The key activity of _____________ is to order. Which of the following is a clear
example of an order winner?
Fo
monitor the implementation process

continuously in order to identify a. ISO certification to compete in the global
markets
deviations, cost overruns, resource
requirements, etc. during implementation. b. Minimum quality required to enter into a
market
a. Project member
c. Standardized products produced at low
b. Project leader costs
c. Project team d. Customized products produced at
d. Steering committee reasonable costs
47
423. When an ERP marketer uses price as an iii. Divide suppliers into different categories:
order winner, it should focus on certain first tier, second tier and so on.
areas to reduce the costs involved during iv. Define customer base in term of sales,
ERP implementation. Which of the profitability, size, etc.
following will not facilitate this objective?
v. Improve information infrastructure within
a. Identify the cost centers and devise plans
the organization to accommodate ESCM
to reduce production costs
requirements.
b. Set up tough cost targets
09
vi. Constitute a team with representation from
c. Set up tough quality targets various functions within the organization
d. Set up a rigorous monitoring system to and representatives from suppliers and
make the production process cost efficient
20
customers to plan and implement.
424. Quality encapsulates many dimensions like vii. Identify leaders who are capable of
performance, features, reliability, guiding the implementation process
conformance, durability, serviceability and competently.
of
aesthetics. A measure of a product’s life in
terms of both its technical and economic a. iv, iii, ii, v, vi, vii. i
aspects is associated with which of the b. i, ii, iii, iv, v, vi, vii
following dimensions?
s
c. iv, v, vi, vii, i, ii, iii
a. Performance
as
d. i, ii, iii, iv, vii, vi, v
b. Reliability
c. Durability 428. Which of the following is not considered a
Cl ‘member’ of a supply chain?
d. Conformance
a. Manufacturer
425. If HDFC Bank offers a wide range of
b. Supplier
products that cover every market segment;
y
it can be termed as an order winner with c. Distributor
respect to _____________. d. Customer
nl
a. Price
429. Which of the following is an intangible
b. Product range
O
benefit of SCM?
c. Quality a. Growth in revenue
d. Delivery reliability
b. Improved facility utilization
se
426. The logistics-related decisions of an c. Optimum inventory management

operations manager focus on which of the d. Improved customer satisfaction
following?
U
a. Modes of transportation, distribution and 430. What is the relationship between the
inventory management location of a facility and the supply chain
BS
b. Selection of suppliers for raw material performance of the firm?

supply a. Facilities close to the target market
c. Layout of warehouse, administrative improve the performance of the supply
facilities and plants chain
rI
d. Effective management of material flow in b. Facilities away from target markets

the organization improve the performance of the supply
chain
Fo
427. Arrange the following steps in electronic

supply chain management implementation c. Facilities close to target markets worsen
in the correct sequence. the performance of the supply chain
i. Understand and evaluate the level of d. The location of a facility and supply chain
integration within the organization. efficiency of a firm are in no way related
ii. Determine the number of suppliers who
have direct influence over the products or 431. Which of the following statements about
services delivered to customers across the designing of a logistics network in a
entire supply chain. supply chain is incorrect?
48
Part A
a. Firms design a logistic network to meet 435. The health and well-being of suppliers is
average requirements of all customers critical for organizations, which largely
b. Firms design a logistic network to meet depend on suppliers for their requirements.
even the toughest requirements of a single Which of the following hampers
development and maintenance of long-
customer
term relationships with suppliers?
c. Firms never custom design a logistic a. Show commitment for long-term
network to meet the individual profitability of suppliers
09
requirements of customers
b. Lay down mutually understood rules for
d. Firms design a logistic network so that building a long-term relationship
some amount of customization is built in c. Strive for heavy discounts to improve the
20
to meet the requirements of customers organization’s short-term profitability
432. If an organization follows the principles of d. All of the above
supply chain management, it can attain a 436. Measurement is an SCM ‘enabler’. How
of
balance between customers’ expectations are measurements helpful in supply chain
and growth and profitability objectives. management?
Which of the following is not a ‘principle’ i. They provide information about inputs,
s
of supply chain management? outputs, performance etc.
as
a. Quality and performance management ii. They are used to evaluate the performance
b. Customize the logistics network of business processes
c. Enhance ability to meet customer
Cl
iii. They provide insights into supplier’s
requirements performance in terms of delivery
performance, quality of material supplied
d. Have a supply chain-wide technology etc
y
strategy iv. They ensure periodic evaluation of the
performance of processes, programs and
nl
433. Order-to-delivery process is an SCM

component. It can be used to evaluate the systems that support continuous
performance of a _________ on the basis improvement
O
of on-time delivery, costs, defects, etc. a. i and ii

a. Production manager b. i, ii and iv
se
b. Supplier c. ii, iii, iv

c. Purchase manager d. i, ii, iii
U
d. Distributor 437. Which of the following supply chain

434. Every organization takes steps to maintain members traditionally assumed the role of
monitoring consumer preferences?
BS
certain standards in terms of quality.

a. Retailer
Which of the following ‘components’ of
SCM is not concerned with these b. Wholesaler
initiatives? c. Distributor
rI
i. Human resources management d. Manufacture

ii. Order-to-delivery process 438. Which of the following statements
Fo
iii. Business relationship management correctly describes the differences between

demand chain and supply chain?
iv. Quality and performance management
i. Every member in the demand chain has to
a. i and ii collect customer information unlike the
b. i, ii, iii retailer in the supply chain
ii. Any member in the supply chain can
c. ii, iii, iv
monitor consumer needs and wants, unlike
d. i, iii, iv only retailers in the demand chain
49
iii. In demand chains, any information iii. Suppliers can replenish the inventory as
regarding relevant consumer trends and soon as the need arises
products should be shared by all members iv. ESCM requires the firm to carry high
unlike in traditional supply chains inventory levels
iv. The members in today’s emerging demand
chains are different from those in a. i and iv
traditional chains. b. i, ii, and iii
c. i, iii, and iv
09
a. i, ii, iii
d. iii and iv
b. ii, iii, iv
c. i and iv 443. Electronic supply chain management has
20
d. Only iv many benefits, but together with the
benefits, there are issues that must be
439. Which of the following is not a method to addressed to improve the efficiency of
collect customer information? ESCM. Which of the following can be
of
a. Focus groups considered the most sensitive issue?
b. Quantitative survey a. Information security
c. Point-of-sale databases b. Order taking
s
d. Value analysis c. Order delivery
as
d. Customer information
440. Which of the following are common
misconceptions about the ‘supply chain 444. Which of the following are essential
concept’?
Cl conditions for a JIT system to be
i. All customers buy from retailers successful?
ii. Industrial marketers should focus on client i. Teamwork
preferences and not end users ii. Discipline
y
iii. All members of the supply chain should iii. Supplier involvement
nl
work in unison to improve profitability

iv. Employee performance
iv. To improve supply chain efficiency it is
necessary to have a supply chain-wide a. i, ii, and iv
O
technology strategy b. i, iii, and iv

a. Only i c. i, ii, and iii
se
b. i and iv d. i, ii, iii, iv

c. i and ii
d. i, iii and iv [c, pg.228]
U
correctly depicts the characteristics of a

441. How does electronic supply chain JIT production system?
management cut procurement costs? a. Producing on need basis
BS
a. By transporting goods quickly b. No room for surplus or safety stock

b. By enabling customers to directly order c. Doing it right the first time
products d. All of the above [c, pg.230]
rI
c. By reducing communication costs

d. By providing suppliers instant access to 446. Which of the following is a feature of the
information JIT strategy related to production?
Fo
442. Electronic supply chain management helps a. Produce in small lots

better inventory management. Which of b. Every worker is responsible to the
the following statements support this immediate customer (worker)
benefit? c. Continuous improvement
i. ESCM results in an extended organization d. Customer satisfaction
that sums up supplier activities
ii. Inventory level status can be 447. Which of the following is not true of a JIT
instantaneously accessed by suppliers system?
50
Part A
a. It eliminates all inventory c. The JIT firm invites suppliers to

b. It is a ‘pull’ system participate in product design and suggests
c. It is a ‘push’ system changes and/or improvements
d. Firms place very small and frequent orders d. The JIT firm always maintains only one
for inventory supplier for each type of material
453. Building effective partnerships depends on
448. Which one of the following is not a result
four elements: trust, communication,
of implementing JIT systems?
09
linearity of production and time to make
a. Small lot sizes changes. Under which element do JIT
b. Varying workstation loads firms employ special teams or departments
to enhance their relationship with
20
c. Quick and economic set-ups
d. Preventive maintenance suppliers?
a. Trust
449. Identify the Japanese term related to JIT b. Communication
of
where a machine is enabled to detect c. Linearity in production
defects automatically.
d. Time to make changes
a. Andon
454. Suppliers require time to respond to
s
b. Soikufu
changes in demand. This is one of the four
as
c. Shojinka elements that help build effective
d. Jikoda partnerships. Which statement correctly
describes this element?
Cl
450. “Nothing is produced until it is required”
is a fact practiced in which concept? a. It involves development of production
schedules with uniform workloads
a. Make-to-stock process
b. Suppliers inform the JIT firm about their
y
b. Materials requirement planning new initiatives to improve quality
c. Just-in-time manufacturing
nl
c. It focuses on building confidence in each

d. Inventory management other that helps further improve the
relationship
O
451. Firms that practice JIT production systems d. Suppliers purchase new machinery, hire
require reliable suppliers. Therefore, JIT and train labor to meet requirements
firms maintain long-term business
se
relationships with a few selected suppliers. 455. JIT adopts the concept of ‘immediate
Which of the following is true about a customer’ to increase product quality and
supplier relationship under the JIT system? improve customer service. What does the
U
a. The JIT firm derives more mileage than term ‘immediate customer’ signify?
the supplier from the relationship in the a. Every worker in the JIT firm is considered
a customer
BS
long run
b. The supplier derives more mileage from b. A person outside the firm who buys its
the relationship products for use or consumption
c. The relationship should be profitable to c. Each worker in the firm considers the next
rI
both the firm and the supplier worker in the production line as a
customer
d. The supplier need not stick to the terms of
d. Each worker is fully responsible for a task
Fo
supply under the contract

and inspect his or her own work
characteristic of JIT system? 456. Which of the following is not a
characteristic of the JIT system?
a. The JIT firm shares production plans and
a. Uniform workstation loads
schedules with suppliers
b. Large lot sizes
b. The JIT firm can provide assistance to
suppliers to improve quality and c. Quick and economic set-ups
productivity d. Flexible facilities
51
457. Quick and economic set-ups is a 461. A company can compete on different
characteristic of a JIT system. What does quality functions. Which of the following
this signify? is not a function of quality?
i. Lesser inventory a. Performance
ii. Smaller production lot size b. Features
iii. Higher number of set-ups c. Reliability
iv. Higher costs d. Warranty
09
a. i, ii, and iii 462. Control charts do not _________.
b. ii, iii, and iv a. Display the measurements of every item
20
c. i, iii, and iv being produced
d. i, ii, iii, and iv b. Display upper and lower limits for process
variables or attributes and signal when a
458. How are workers in a JIT firm different process goes out of control
of
from that of a non-JIT firm? c. Indicate to the process operator the
i. JIT workers are trained continuously average outgoing quality of each lot
ii. JIT workers are trained to perform
s
d. Indicate to the operator the defective
multiple jobs percentage in each lot
as
iii. JIT workers are specialized in a particular
operation 463. Control charts are used extensively to
Cl monitor quality. Suppose some individual
a. Only i parts measured are below the lower control
b. i and iii limit. What does this clearly indicate?
c. i and ii a. The process is out of control and the cause
y
d. i, ii and iii should be established

nl
b. The process is in control

459. Having quick and economic set-ups is a c. The process is within established control
characteristic of a JIT system. Firms adopt
O
limits with natural causes of variation

a procedure to reduce set-up times.
d. The process is outside established control
Arrange the steps in the correct sequence.
limits with only natural causes of variation
se
i. Analyze existing set-up procedures

ii. Separation of internal and external set-up 464. Small boxes of peanuts are labeled ‘net
weight 250 gm’. To construct control
U
activities
charts, random samples of 5 boxes were
iii. Convert internal set-up activities into
weighed. You can assume the value of D4
external set-up activities
as 2.114 for the sample. Based on
BS
a. i, ii, iii observations given in the table below,

b. ii, iii, i determine the upper control limit for the
R-chart.
c. i, iii, ii
rI
d. iii, i, ii Sample Mean weight (X) Range (R)
460. JIT does not focus on one of the 1 240 30

Fo
following. Identify. 2 260 20

a. Eliminating external demand variations 3 250 20
b. Reducing unreliable delivery of raw
4 270 30
materials
c. Reduction of inventory 5 240 60
d. Reducing excessive set-up times TOTAL 1260 160
52
Part A
a. 60.49 470. Which of the following can be a measure

b. 68.53 of output associated with productivity in
service organizations?
c. 67.65
a. Number of calls made by a telemarketer
d. 69.52
b. Number of complaints received by a call
465. Quality in services can be measured in center
terms of tangible and intangible aspects in c. Amount of time spent in counseling a
service delivery. Which among the student
09
following is not an example of intangibles d. Number of cars serviced in a period
in service delivery? 471. How can training employees increase
20
a. Promptness productivity?
b. Courteousness a. It helps acquire new skills
c. Ambience b. It helps improve existing skills
of
d. Timeliness c. It helps motivate employees
466. Quality control is an important function d. All of the above
that helps increase customer satisfaction. 472. Which function of quality focuses on
s
At which of the following stages does
analyzing the defect rates of a product
as
quality control begin?
during production, and the number of
a. Procurement of raw material customer complaints after product sale?
b. Start of production
Cl
a. Conformity
c. Finished goods inventory
b. Aesthetics
d. Dispatch to customers
c. Serviceability
y
467. Productivity is measured as the output d. Perceived quality
produced with a given set of inputs. Which
nl
of the following is not a measure of 473. Identify the function of quality used by
productivity? marketers to target a niche market that is
O
influenced by individual preferences.

a. Number of kilograms of rubber produced
per day a. Conformity
b. Number of toys produced in one hour b. Aesthetics
se
c. Average length of the rods in a lot c. Serviceability

d. Number of patients treated in day d. Perceived quality
U
468. Bottlenecks in the production process can 474. At one point cost of inspection and cost of
hamper productivity. Which among the undetected faults is optimum. What does
BS
following cannot be an example of a this statement signify?

bottleneck that can hamper productivity? a. The cost of inspection is high
a. Layout b. The cost of undetected faults is high
rI
b. Slow processing equipment

c. The total cost of quality control is minimal
c. Proper scheduling
d. The average cost of quality control is
d. Inventory shortage
Fo
minimal
469. How can scheduling help increase
475. At one point, there is an optimal trade-off
productivity?
between the cost of inspection and the cost
a. By decreasing idle time
of an undetected fault. At this point, the
b. By increasing running time of machinery cost of total quality control is minimal.
c. By decreasing wastage Which of the following is not an
d. All of the above inspection cost?
53
a. Cost of training personnel a. Kaizen

b. Loss of goodwill b. Andon
c. Supervision of inspectors c. Jikoda
d. Cost of inspection facilities d. Shojinka
476. The cost of quality can be divided into 481. Universal responsibility is one of the
different categories. Evaluating quality and principles of TQM. Identify the statement
that best represents and underlines the
performance of products and machinery is
09
spirit of this principle.
associated with which type of costs?
a. Top management is responsible for the
a. Prevention costs quality of products entering the market
20
b. Failure costs b. Production department is responsible for
c. Appraisal costs product quality
d. Both a & b c. Every employee at every level in the
organization is responsible for quality
of
477. Failure costs, which are a type of quality d. Emphasis is on continuous improvement in
costs, can be divided into internal and process, skill sets, systems or operations
external failure costs. Which of the
s
following is not an internal cost? (Questions 482 to 487) Use the following data
as
to answer the following six questions. Given
a. Scrap costs below is the table that shows the means and
b. Downtime costs ranges of 8 samples. Every sample contains 5
Cl
c. Retesting costs items. Conversion factors are given as A2 =
d. Cost of returned products 0.373, D3 = 0.136, D4 = 1.864.
Sample 1 2 3 4 5 6 7 8
478. Control charts are used extensively to
y
25 36 31 33 27 34 32 25
monitor quality. They can be categorized x
nl
under control charts for variables and R 8 9 7 6 6 7 5 8
control charts for attributes. Which of the 482. Calculate the mean of means for the given
following come under the former?
O
data.
i. X-chart a. 31.145
ii. R-chart b. 31.375
se
iii. P-chart c. 30.375

iv. C-chart d. 30.145
U
a. i & ii 483. Calculate the mean of ranges from the

b. ii & iii given data.
BS
c. i & iii a. 6.8

d. ii & iv b. 7.0
c. 7.3
479. Which of the following control charts is
rI
used to determine the proportion of d. 6.7

defective items in a selected sample? 484. What is the upper control limit if an X-
chart is developed?
Fo
a. X-chart
b. R-chart a. 32.986
c. P-chart b. 35.275
d. C-chart c. 35.505
d. 34.275
480. In which of the following approaches are
continuous improvements in process, skill 485. What is the lower control limit if an X-
sets, systems and operations considered? chart is developed?
54
Part A
a. 27.764 c. Type II error

b. 26.135 d. Cost of detection
c. 25.245
491. Under TQM, every department in an
d. 25.135 organization should treat every other
486. If one has to plot an R-chart for the given department as its _________.
data, what would be the lower limit for this a. Producer
chart? b. Customer
09
a. 0.16 c. Distributors
b. 0.952 d. Supplier
20
c. 0.93 492. What explains how well an acceptance
d. 1.12 plan differentiates between good lots and
bad lots?
487. Calculate the upper limit for the R-chart.
of
a. AOQ
a. 0.93
b. OC curve
b. 16.38
c. Lot Tolerance Percent Defective
c. 13.048
s
d. Acceptable Quality Level
d. 0.16
as
493. The cost of quality can be divided into
(Questions 488 & 489) When the quality
three major categories - cost of prevention,
control department of Ambuja Rayon inspected
Cl cost of detection/appraisal and cost of
7 carpets manufactured in its plant, it identified
failure. Which of the following is a
the following number of defects in the process. prevention cost?
Based on the information, answer the following
a. Disposition of defective items
y
two questions.
b. Equipment maintenance
nl
Sample 1 2 3 4 5 6 7 c. Quality training

Number of 5 3 4 2 3 1 4 d. Warranty charges
Defects
O
494. Which of the following is not an objective

488. Calculate the average number of defects. of remedial maintenance?
a. 3.14
se
a. To minimize production losses by getting

b. 2.34 equipment back into working condition as
c. 3.54 quickly as possible
U
d. 3.64 b. To minimize investments in spare parts

and standby machines used when
489. If the data in the above question is used to equipment is under repair
BS
construct a C-chart, then what would be c. To perform appropriate maintenance based

the upper and lower control limits for this on the extent of the problem
chart? d. Regular monitoring of vital parameters of
rI
a. 8.456 and -2.176 a machine

b. 8.546 and 2.176 495. Preventive maintenance can be classified
c. 8.546 and 0 into periodic maintenance and irregular
Fo
d. 8.650 and 0 maintenance. Irregular preventive

maintenance does not include one of the
490. What is the condition in which a customer following.
runs the risk of accepting a lot with minor a. Repair
defects? b. Overhaul
a. Cost of prevention c. Reducing machine vibration
b. Type I error d. Tasks like cleaning up oil spills
55
496. Which of the following is not an activity a. i, ii, iii

of maintenance management? b. i, ii, iv
a. Improving efficiency of raw material c. iii and iv
purchase d. i and iii
b. Minimizing loss of productive time
c. Prolonging asset life 501. Why do vendors prefer to enter into long-
term contracts with firms to undertake
d. Effective utilization of assets
facilities management services?
09
497. Which of the following is not a goal of i. To enable firms retain control over
maintenance management? activities
20
a. Minimizing the availability of the firm’s ii. To cover high initial costs at the beginning
assets for production purposes of the contract
b. Improving the quality of products and iii. Long term contracts fetch more profits to
increasing the firm’s productivity the vendor
of
c. Using maintenance personnel and iv. To help firms reduce costs over time
equipment efficiently
d. Preserving the value of a firm’s machinery a. ii and iii
s
and reducing deterioration b. ii, iii and iv
as
c. iii, iv and i
498. A facilities manager has to consult
d. i, ii and iv
different personnel while performing
Cl
alterations to facilities or expanding them 502. Vendors replace skilled workers with
for better design. Who among the semi-skilled workers in a manufacturing
following would be the least preferred facility after some time. What could be the
choice for the facilities manager?
y
possible reason behind this move?
a. CEO i. To reduce direct operating costs
nl
b. Production manager ii. To train semi-skilled workers

c. Architect and designers iii. To use them for new clients
O
d. Marketing manager iv. To improve clients profits

499. The process of hiring outside workers or a. i and ii
se
specialized vendors to accomplish a

b. ii and iii
particular task is called _________.
c. i and iii
U
a. Outsourcing
d. ii and iv
b. Out-tasking
c. Overtime 503. Despite several disadvantages, firms prefer
BS
d. Processing to outsource facilities management tasks.

Which of the following does not support
500. Loss of control is one of the costs of this statement?
outsourcing certain or all activities to
rI
a. Increases quality of work

external service providers. Identify the b. Helps develop core competence
possible consequences that may arise from
c. Increases flexibility
Fo
loss of control.
d. Increases operational costs
i. Vendor can take undue advantage of
control 504. Which of the following statements does
ii. Client may lose the voice in crucial not support the importance of maintenance
decisions of machines in a facility?
iii. Costs reduce over a period of time a. Machine failures do not hinder
iv. Client may not be able to control the productivity
vendors’ deviation from standards b. Repairing a machine can be expensive
56
Part A
c. Equipment malfunction may reduce r. Water supply pipes

product quality s. Buildings
d. Fixing a broken-down machine can stop
production and may consume time a. i/p, ii/q, iii/r, iv/s
b. i/q, ii/p, iii/r, iv/s
505. Mr. Suresh Kumar was promoted as
c. i/r, ii/p, iii/s, iv/q
maintenance manager in Unicorn
Manufacturing. He was a design engineer d. i/r, ii/q, iii/p, iv/s
in the same plant earlier. What benefits can
09
509. Identify the distinct difference between
Kumar offer to Unicorn in his new preventive and predictive maintenance
position?
a. Predictive maintenance is done after a
20
i. Focus on regular maintenance to improve machine breaks down while preventive
productivity maintenance is done before a machine
ii. Help increase the life of assets and breaks down
machinery b. Preventive maintenance is done after a
of
iii. Help preserve the value of equipment machine breaks down while predictive
maintenance is done before a machine
iv. Minimize the salvage value of machinery
breaks down
s
a. i and ii c. Preventive maintenance involves regular
servicing of equipment while predictive
as
b. iii and iv
maintenance involves monitoring
c. i, ii, iii equipment continuously
d. i, ii, iii, iv
Cl
d. Preventive maintenance focuses on the
past while predictive maintenance focuses
506. Maintenance of air conditioners is an
on the future
example of which type of maintenance?
y
a. Mechanical maintenance 510. Krishna, a production worker detected
some minor vibrations in a lathe machine
nl
b. Civil maintenance
that is very sensitive to movement. What
c. Electrical maintenance does this indicate?
O
d. All of the above i. The cutting precision will reduce

ii. Rate of production can go up
507. If a 5hp motor is a critical component in
iii. Quality of product can come down
se
the manufacture of a certain product in a

large organization, its maintenance is iv. The equipment needs maintenance
given utmost importance. Who would
U
a. i, iii, iv
appropriately undertake maintenance of b. ii, iii, iv
such equipment? c. i, ii, iii
d. i, ii, iii, iv
BS
a. Machine mechanic
b. Plumber 511. Periodic maintenance is associated with
c. Electrician ______.
rI
d. Supervisor a. Preventive maintenance

b. Predictive maintenance
508. Match the following personnel with their
c. Remedial maintenance
Fo
respective maintenance responsibilities.

d. Mechanical maintenance
i. Plumbing personnel
ii. Electrical personnel 512. What is the term used for the maintenance
iii. Housekeeping personnel activity that attempts to detect problems
while the equipment is still performing at a
iv. Instrumentation personnel
satisfactory level?
p. Lighting equipment a. Remedial maintenance
q. Electronic routers b. Predictive maintenance
57
c. Periodic maintenance 516. Remedial maintenance is termed reactive.

d. None of the above What does this mean?
a. Remedial maintenance is taken up when
513. Which of the following is not a cost machinery breaks down
associated with preventive maintenance? b. Remedial maintenance is done to avoid
a. Cost of replacing materials and parts breakdown
b. Cost of replacing the entire machine c. It occurs before purchase of new
c. Cost of instruments used in preventive machinery
09
maintenance d. It is carried out regularly
d. Wages of staff and technicians 517. Which among the following is not an
20
514. ‘Condition monitoring’ is associated with objective associated with remedial
___________. maintenance?
a. Predictive maintenance a. To minimize investments in spare parts
and standby machines used when
of
b. Remedial maintenance equipment is under repair
c. Periodic maintenance b. To minimize production loss by getting
d. Irregular preventive maintenance equipment back into working condition as
s
quickly as possible
515. ‘Condition monitoring’ uses various
as
c. To perform appropriate repair at
instruments to measure machine appropriate levels
parameters like operating temperature, d. To minimize failures or malfunction to the
pressure, vibration, etc. Which of the
Cl
lowest possible extent
following instruments is not associated
with condition monitoring? (Questions 518 to 521) A manufacturing plant
has 25 machines of the same type. The
y
a. Amplitude meter probability of failure of a machine depending
b. Vibration analyzer on time lapsed (in months) after the last
nl
c. Audio detector maintenance is given in the following table.

Answer the following four questions based on
d. Richter scale
O
the given information.

Elapsed time 1 2 3 4 5 6 7 8 9 10 11 12
after last
se
maintenance
(in months)
U
Probability of 0.04 0.04 0.05 0.05 0.06 0.06 0.10 0.10 0.10 0.10 0.15 0.15
failure
520. What can be the probable number of
BS
518. What is the mean time between failures? break-downs per year for all machines in a
a. 7.83 months plant?
b. 6.48 months a. 37.50
rI
b. 38.25
c. 7.98 months
c. 45.25
d. 6.63 months d. 46.25
Fo
519. Calculate the probable number of break- 521. If the yearly cost of servicing a broken
downs per year for a machine. down machine is Rs.12000, what is the
average cost of repairs per machine per
a. 1.53
occasion?
b. 1.50
a. Rs.314
c. 1.81 b. Rs.265
d. 1.85 c. Rs.260
d. Rs.320
58
Part A
(Question 522 to 524) The probability of 526. Prioritizing work is very important in
failure after maintenance for a machine is given maintenance planning. On what basis are
in the table below. Answer the following three tasks prioritized when resources are
questions, based on the given information. scarce?
Months after 1 2 3 4 5 a. Type of tools used to perform each task
maintenance b. Significance of tasks in maintaining
Probability of 0.1 0.2 0.3 0.3 0.1 production flow
break-down c. Based on personnel who carry out tasks
09
d. All of the above
522. If there are 15 identical machines in the
plant, what is the expected number of 527. Which of the following is a precaution
20
break-downs between maintenance, if the taken by maintenance managers during
maintenance is performed every two maintenance planning?
months? a. Ensuring sufficient inventory of frequently
a. 3.5 used tools and equipment within the plant
of
b. 3.65 b. Reducing inventory costs by cutting
c. 4.5 inventory of tools and equipment used
d. 4.65 during maintenance
s
c. Storing frequently used tools and
523. What is the expected number of break-
as
equipment in a centralized location in case
downs between maintenance, if the of multiple plants
maintenance is performed every three
d. All of the above
months?
Cl
a. 9.5 528. What is the difference between a JIT
b. 9.465 manufacturing system and a traditional
manufacturing system with respect to
c. 9.765
y
simple preventive maintenance?
d. 9.565
i. Simple preventive maintenance is done by
nl
524. If the average cost of preventive specialized maintenance staff

maintenance is Rs.650 and that of remedial ii. Simple preventive maintenance is done by
O
maintenance per machine is 5500, production workers

calculate the average total cost of
iii. Simple preventive maintenance is carried
maintenance per month, if the maintenance
out at the beginning of every shift
se
is performed every 3 months. Assume the

number of machines as 15. iv. Shop floor workers should assist repair
specialists in case of a major break-down
a. Rs.63457.50
U
b. Rs.54765.50 a. i and ii
c. Rs.45254.50 b. i, ii, and iii
BS
d. Rs.21152.50 c. ii, iii, and iv

525. Identify the correct sequence of steps d. i, iii, and iv
followed in maintenance planning.
529. To provide a clean and conducive work
a. Develop plan – identify problem –
rI
environment and enable efficient and

estimate work to be done – carry out the effective progress of the core functions of
sequence of tasks
an organization is an objective of
Fo
b. Identify problem – develop plan – estimate ____________.

work to be done – carry out the sequence
of tasks a. Quality management
c. Identify problem – estimate work to be b. Facilities management
done – develop plan – carry out the c. Maintenance management
sequence of tasks d. Inventory management
d. Develop plan – carry out the sequence of
tasks – identify problem – estimate work 530. Which of the following is not an example
to be done of a project?
59
a. Developing a new product or service a. Crashing is not effective when applied to

b. Production of radiator caps tasks with zero slack
c. Airport expansion b. Crashing shortens the length of the critical
d. Implementing six sigma to bring down path
cost overruns by 20% c. Crashing can be achieved by
subcontracting
531. The extent of time by which an activity d. Crashing can be achieved by employing
can be delayed beyond its earliest start
more workers
09
time without extending the project is called
__________. 536. The following activities are part of a
a. Slack time project to be scheduled using CPM.
20
b. Latest start time Identify the correct network diagram for
c. Optimistic time the given data.
d. Expected start time Activity Immediate Predecessor
of
532. Minimum amount of time that must lapse A -
before beginning an activity is called B A
________.
C A
s
a. Expected start time
D C
as
b. Earliest start time
E B, D
c. Latest start time
F D
d. Expected finish time
Cl
G E, F
533. What are the benefits of a project plan?
B E G
a. It guides project execution a.
y
b. It documents project planning assumptions
A
nl
c. It provides a baseline for progress

measurement and project control
C D F
O
d. All of the above

534. Which of the following statements is b. B E G
false?
se
a. Project management differs from the A

management of more traditional activities
U
due to the limited lifetime of projects

C D F
b. In linear programming, dummy activities
are added to paths to make them equal in
BS
length c.
B E G
c. A Gantt chart contains no precedence
relationships, but may be useful for simple
A
rI
projects
d. Slack time is the extent of time by which
an activity can be delayed without C D F
Fo
delaying the entire project, assuming its

preceding activities are completed as early
as possible B E G
d.
535. The process of reducing the duration of the A
project by reducing scheduled time of
some activities is called crashing. Which
of the following statements on project C D F
crashing is false?
60
Part A
537. Dummy activities are introduced in c. Dispatching

PERT/CPM methods. Which of the d. Johnson’s rule
following statements about them is not
true? 542. A project contains critical and non-critical
a. Dummy activities are used to indicate activities. Which among the following
zero-length activity duration correctly defines a critical activity?
b. Dummy activities are used to ensure that a. Critical activities are those activities,
which if advanced, extend the project
09
two activities have the same beginning and
end nodes duration
c. Dummy activities are used to ensure that b. Critical activities are those activities,
20
the network reflects the project under which if delayed, reduce the project
consideration duration
d. Dummy activities are used to represent c. Critical activities are those activities,
activity predecessors which if delayed, extend the project
of
duration
538. Which of the following is not true about
d. Critical activities are those activities,
projects?
which if advanced, reduce the project
s
a. It is a temporary endeavor duration
as
b. It is used to create a unique product or
service 543. Which of the following is an outcome of
an activity in a project?
c. It is an operation constrained by limited
Cl
resources a. Critical path
d. It involves continuous flow of repetitive b. Event
work c. Optimistic time
y
539. Managers use many terms as part of d. Critical path

nl
networks in project management. In this 544. Which of the following correctly describes
context, what is the term used for an ‘pessimistic time’?
O
outcome of an activity or group of

activities? a. It indicates the best guess for the
completion of an activity
a. Project
se
b. It is amount of time that an activity is

b. Event expected to consume
c. Critical path c. It is the maximum time an activity can take
U
d. Node considering obstacles and unfavorable

circumstances
d. It is amount of time that should be
BS
‘critical path’ is true? consumed before beginning an activity

a. It describes the longest of all paths through
a network 545. Which of the following terms, associated
with networks in project management, is
rI
b. Some activities on the critical path may be

referred to as ‘float’?
slack
a. Optimistic time
c. Every network has exactly one critical path
Fo
b. Pessimistic time
d. It is the longest path of interrelated
activities in a project with zero slack time c. Most likely time
d. Slack time
541. Which of the following methods can be
used to identify the best possible schedule 546. If in a certain project, the only precedence
for a project? relationship is that activity A has to
precede activities B and C, then which of
a. PERT the following network diagrams correctly
d. Routing represents this situation?
61
a. c. (Latest finish time) - (given time)

B
d. (Latest start time) - (earliest start time)
A 549. For projects where time values are affected
by chance variations, PERT is used. To
b. C apply it certain conditions have to be
satisfied. Which among the following is
A B C not such a condition?
09
a. Activities should have identifiable start
c. and finish times
A b. The project must have a large number of
20
interrelated or overlapping activities
C c. The activities should be clearly
distinguishable from each other
B d. The project should be flexible and
of
accommodate different sequences and
timings
B
d.
(Questions 550 to 554) The following table
s
A
gives the optimistic, pessimistic and most
as
C likely times for the network diagram. Use this
data to answer the following five questions.
547. Activity A and activity B precede activities
Cl Activities Optimistic Pessimistic Most
C, D and E. Activities A and B are time to time tp likely
independent of each other. Activities D
(Weeks) (Weeks) time tm
and E follow activity C. Identify the (Weeks)
y
correct network diagram for this situation.
1-2 3 5 4
a.
nl
1-4 3 5 4
A B C D E
2-3 2 3 2
O
2-5 3 5 4
b. A B D E
3-6 5 7 5
se
C 3-7 7 10 8
U
A D 4-3 4 6 5
c. 5-3 2 3 2
C
BS
B E 6-7 6 9 8
[
A 550. What is the expected time for the activity

5-3 in the project?
rI
a. 5.33 weeks
D b. 2.17 weeks
c. 4.0 weeks
Fo
B C d. 7.83 weeks
E 551. What is the sum of the expected times of
d. the activities on the critical path?
548. What is the formula for calculating ‘float’ a. 23.33 weeks
in the critical path method? b. 23.0 weeks
a. (Expected time) + (given time) c. 22.33 weeks
b. (Expected time) - (earliest start time) d. 22.0 weeks
62
Part A
552. What is the sum of the variances of the 2

activities on the critical path?  t p − t o 
c.  
a. 0.59  6 
b. 0.632
c. 0.611 d.
(t o + 4t m + t p )
d. 0.582 6
553. What is the probability of completing the 558. What must the prototype of a product
09
project in 24 weeks? necessarily possess?
a. 0.8510 a. The final product in a smaller version
20
b. 0.8023 b. A model with the basic product
c. 0.9217 characteristics
d. 0.7902 c. A model with final physical attributes
d. Blueprint of the product
of
554. What is the probability of finishing the
project in 23 weeks? 559. A CAD system incorporates computer
a. 0.3336 graphics and computer-aided engineering
s
b. 0.4910 systems. In what ways can managers make
as
c. 0.4024 use it?
d. 0.4332 i. Creation of a design
Cl
ii. Analysis of a design
555. There are both benefits and limitations in
PERT. Which of the following statements iii. Modification of a design
is not a benefit of PERT? iv. Developing a prototype
y
a. Users understand the relationships between
a. i & ii
the activities through graphical displays
nl
b. Used in tactical level planning and b. i, ii, iii

operational level control c. ii, iii, iv
O
c. Effective in planning single project d. i, iii, iv

activities in any type of industry
560. Communication with which of the
d. Effectively handles situations in which two
se
following departments provides maximum

or more projects share available resources
assistance to operations managers in
556. A certain activity in a project has to be deciding the quantity, quality and other
U
crashed. Calculate the time-cost ratio for specifications of the product or service to
this activity using the given details: Crash be produced.
cost = 25000, Normal cost = 20000, Crash
BS
a. Finance department
time = 13 weeks, Normal time = 17 weeks.
b. Purchase department
a. 5000
b. 2500 c. Marketing department
rI
c. 1250 d. Suppliers
d. 625 561. Unlike conventional computer systems that
Fo
557. Which of the following formulae correctly manipulate numbers to solve problems,
represents the ‘expected time’? systems with artificial intelligence
n
manipulate _______.
a. ∑ iP
i =1
i
a. Factors
b. Symbols
D−E c. Instructions
b. Z=
σ 2 cp d. Signals
63
562. What is the term used for computers that 568. Automation is generally not possible in
are capable of performing the tasks of a which of the following?
human being that require higher a. Automobile production
intellectual ability? b. Thermal power stations
a. Automation c. Consultancy activities
b. CNC technology d. Tablet manufacturing
c. Artificial intelligence
09
d. Robotics advantage of automation?
563. Which of the following is not a benefit a. Reduction in lead time
20
derived by a firm adopting automation? b. Reduction in wastage
a. Low level of maintenance c. Higher initial investment
b. Reduced lead-time d. Higher productivity
c. Improvement in work environment
of
d. Efficient use of materials
disadvantage of automation?
564. _________ refers to a computer a. High initial investment
s
application that integrates various b. Higher level of maintenance
computerized systems into a single multi-
as
c. Lower flexibility to different job
functional system.
requirements
a. Computer integrated manufacturing d. Higher product quality
Cl
b. Artificial intelligence
c. Expert system 571. Which of the following is a disadvantage
d. Flexible manufacturing system of using Computer Aided Manufacturing?
y
a. Reliability in labor inputs
565. ________ is a form of flexible automation b. Reduction in labor costs
nl
in which several machine tools are linked

to a material-handling system. c. Improvement in productivity
O
a. Computer integrated manufacturing

b. Artificial intelligence 572. ‘It involves two or more machining centers
c. Expert system which are automated to process different
se
d. Flexible manufacturing system kinds of jobs’; identify this technology?

a. CAD
566. _____________ is a technology that
U
b. CAM
includes a set of procedures and guidelines
based on which machines can c. FMS
d. CNC
BS
automatically execute activities performed

by humans. 573. Which of the following technologies
a. Automation integrates CAD/CAM, group technology
b. Artificial intelligence systems, MRP II, financial reporting
rI
c. CAD systems, etc and brings in automation in

each of the processes involved?
d. CAM
Fo
a. FMS
567. Automation is mostly used by b. CNC
manufacturers in which of the following c. CIM
functions of operations management?
a. Staffing
b. Planning 574. CIM system integrates various
computerized systems. It is also termed as
c. Organizing _____________ due to the integration
d. Control involved.
64
Part A
a. Automated manufacturing system a. Transfer of material

b. Multi-functional system b. Loading of material
c. Flexible system c. Welding activities
d. Non-functional system d. Unloading of material
575. What is the primary difference between 580. In manufacturing, robots are used in three
conventional computer systems and functions – material handling, processing
computer systems with artificial operations, and assembly and inspection.
09
intelligence? Which of these operations involve the
handling of a tool by a robot to perform a
a. Speed
particular action?
20
b. Automation
a. Material handling
c. Better performance
b. Processing operations
d. Ability to reason c. Assembly and inspection
of
576. Despite many advantages, CIM has not d. Both a & c
been implemented on a large scale. 581. Employing robots is not justified in which
Identify the reasons for this. of the following areas?
s
i. Huge costs of installation and a. Tasks that are repetitive and involve the
as
implementation same basic work motion in every cycle
ii. Standardized interfaces between CIM b. Tasks to be performed under hazardous
components were absent conditions and unsafe environment for
Cl
iii. Lack of integration humans
iv. Increased operating costs c. Tasks that require a part or tool that is
heavy and difficult to handle
a. i and ii
y
d. Tasks where contingency decision making
b. ii and iii is needed
nl
c. iii and iv 582. What are the advantages of EDI in

d. iv and i operations management?
O
i. Reduces paper work

577. Expert systems are programs designed to
ii. Helps track orders placed with vendors
provide users with the expertise of
iii. Increases inventories
se
professionals in a particular field. Inputs to

this knowledge base and the rules to obtain iv Improves coordination across departments
a solution are obtained from which of the a. Only i
U
following sources? b. i, ii, and iii

a. Users c. i, ii, and iv
BS
b. Professionals d. ii, iii, and iv

c. Programmers
583. Globalization promotes free and fair trade
d. All of the above among member countries, but sometimes
results in unfair trade. Which among the
rI
578. Robots are used in different industries like following does not support this statement?
electronics, automobile, etc. Which area of
manufacture does not use robots a. All member countries of WTO have to
Fo
treat every other member nation as their

extensively?
most favored nation
a. Material handling b. Tariffs and duties with respect to import of
b. Processing operations goods have to be liberalized
c. Assembly and inspection c. Member countries do not lift existing
d. Facility location quantitative restrictions
d. All member countries have to gradually
579. Which of the following operations are not open up their markets to foreign
done by robots in materials handling? companies
65
584. Some countries have certain competitive a. Economies of scale in production

advantages over others. Which of the b. Economies of scale in purchasing
following competitive advantage does
c. Economies of scale in marketing
India have over America and Western
Europe? d. All of these
a. Technology 589. Which of the following conditions can be a
b. Labor constraint to achieve economies of scale
c. Trade surplus globally?
09
d. Nuclear fuel i. Markets across the globe demand the same
kind of product
585. Many MNCs have established their
ii. Every market needs customized products
20
production and development centers in
India to reduce operation costs. Which to meet its requirements
source of competitive advantage has led to iii. The same product with slight variations is
India becoming a production and demanded by different markets
of
development hub for foreign companies?
a. Comparative advantage a. Only i
b. Economies of scale b. i and ii
c. ii and iii
s
c. Proprietary product knowledge
d. i, ii, and iii
as
d. All of the above
586. Chinese companies have become dominant 590. There are certain impediments to
players in the global manufacturing sector. globalization that can block an
Cl
They make products in bulk quantities that organization in its globalization endeavor.
allow them lower the costs per unit For instance, MNCs operating in different
produced. What type of competitive markets find it difficult to achieve
advantage is discussed in this example?
y
economies of scale due to varied
a. Comparative advantage preferences and requirements in each
nl
b. Economies of scale market. Identify the type of impediment

c. Proprietary product knowledge faced by the MNCs.
O
d. All of the above a. Economic impediment

587. Organizations operating globally can b. Managerial impediment
obtain economies of scale not only in c. Institutional impediment
se
manufacturing but also in purchasing. d. None of the above

Which of the following examples supports
U
this statement? 591. What is the primary reason for countries to

a. Toyota's leadership in the low-end truck put in place institutional impediments for
market worldwide due to large volume foreign players?
BS
production a. To encourage foreign companies to

b. GM’s strategy to outsource manufacture of operate in the country
$7.5 billion worth of auto components b. To encourage local companies to
c. Satyam Computers strategy to produce cooperate with foreign companies
rI
customized software for its clients to suit c. To encourage exports from local
their requirements
companies
d. Nokia launching new cell phone models to
Fo
maintain market leadership d. To protect local companies from the threat

of foreign companies
588. Punj Lloyd is an engineering construction
company involved in construction of 592. Managers cannot simply apply marketing
pipelines, oil storage tanks, power plants, knowledge gained in one market to another
etc, throughout the globe. If it uses the market due to varying preferences and
same salesforce to acquire orders in cultures. This statement reflects which of
different countries, what kind of approach the following impediments for the
is the company adopting? marketer?
66
Part A
a. Economic impediment c. Bureaucratic in nature

b. Managerial impediment d. Behavioral in nature
c. Institutional impediment 597. Why do global organizations recruit local
d. Both a & c people for subsidiaries in each country?
593. What are the reasons for global a. Local people can provide information on
organizations to look out for more the local climate
competent managers across the world? b. Local people can provide better insights
09
i. International markets are complex and into the local business environment
require acumen to understand c. Local people can use technology more
ii. Managers must be able to look out for efficiently than outsiders
20
global market opportunities and grab them d. Local people can provide global
as they come information on products and markets
iii. Managers should be capable of providing 598. A global company can enter a new market
insights into developing future products either through joint ventures or by
of
iv. Companies can get good managers at low establishing a wholly-owned subsidiary.
salaries Identify the possible drawbacks of a
wholly-owned subsidiary?
a. Only iv
s
i. Full control on operations
b. i and ii
as
ii. Low risks
c. ii and iv iii. Takes a lot of time to understand the
d. i, ii, and iii market
Cl
594. Which of the following is an ideal iv. No means to spread the risk
interaction approach between headquarters a. i and ii
and a subsidiary of a global company to
b. ii and iii
y
develop new products for a certain market
in a certain country? c. iii and iv
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a. Leave the entire new product development d. iv and i

process to the local subsidiary or division 599. Tornado (an American cellular phone
O
b. Collective efforts from both headquarters manufacturer) wants to establish a

and the subsidiary manufacturing plant in India to cater
c. Centralize the new product development specifically to the Indian market. Which of
se
process at headquarters the following factors should Tornado

consider while deciding on the location of
d. Outsource R & D to a third party a plant in India?
U
595. In the case of global organizations, the i. Level of demand for the product
concept of ‘resource allocation’ is broad in ii. Infrastructure availability
BS
scope. Which of the following is iii. Availability of cost-effective labor

considered a scarce resource by global iv. Export policy
organizations?
a. i, ii, iii
a. Capital
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b. i, ii
b. Raw material
c. iii, iv
c. Technology
d. Only iv
Fo
d. Technologists and managers

600. In which of the following methods of entry
596. It is difficult to design organization into foreign markets does a company have
structure for a global organization. Most minimal control over the marketing
global organizations prefer which of the strategy?
following approaches to organization a. Joint venture
structure? b. Alliances
a. Centralized in nature c. Subsidiary
b. Decentralized in nature d. Licensing
67
Part A: Answers and Explanations
09
20
s of
as
Cl
y
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This section contains answers and explanations for the multiple-choice questions
O
in part A given earlier in the book

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U
BS
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Fo
Part A: Answers and Explanations
1. (b) Importance and recognition given to employees

Elton Mayo in 1927 carried out studies at Western Electric’s Hawthorne plant. The initial studies
tried to examine the relationship between light intensity on the shop floor and employee
productivity. Finally, Mayo and his team concluded that it was not light or other physical
09
conditions, but the attention and importance the workers received during the study that was
responsible for their increased productivity.
20
2. (b) Ford Motors
Henry Ford applied the concepts of scientific management of Taylor in the assembly line
production system of Ford Motors in 1911.
of
3. (b) Reducing clerical costs
The computerization of operations began when the first computer was installed in General Electric
Appliance Park in 1954. The sole purpose of computerization those days was to reduce manual
s
labor and the costs involved in tasks like preparing salary statements and accounts statements.
as
4. (b) Motivating
Motivating is one of the activities of operations managers. It involves encouraging workers
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through praise, recognition, and other intangibles.
5. (a) Strategic decisions
Strategic decisions are long-term and broad in nature and usually span five years or more. Long-
y
term strategic decisions are concerned with production and process design, facility location and
nl
layout, capacity, expansion of existing facilities, etc. These decisions impact the long term
profitability of an organization.
O
6. (a) Analyzing the firm’s financial position

Analyzing the firm’s financial position falls under the basic function of financial management and
not operations management.
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7. (c) Scientific management

Division of labor or work specialization is a development of scientific management. According to
U
Taylor, each worker should be assigned a task based on his or her skill, strength and ability to
learn.
BS
8. (c) Planning
The planning function oversees decisions regarding what products to make and when. It also
includes activities like planning the product-service mix, location and capacity planning,
rI
production methods to use for each item, procurement of equipment, number of shifts and work
hours etc.
9. (b) One or two years
Fo
Tactical decisions are medium-term in nature and have a time-frame of one or two years. These
decisions are concerned with identifying manpower requirements, determining the appropriate
inventory level for various materials, determining reordering level and order quantity, identifying
vendors and so on.
10. (d) All of the above
Operations management, as a whole, deals with design of products and processes, acquisition of
resources, transformation of resource inputs into outputs and distribution of goods and services.
11. (b) Organizing

Operations under the organizing function include: decisions to centralize or decentralize
operations; decisions on kind of functions, products, or organization structure; establishing work-
center assignments; assigning responsibility for every activity; arranging supplier and
subcontractor networks and establishing maintenance policies.
12. (a) i, ii, iii
Inclusion of purchasing functions, dispatch, and other allied activities in this field and the
09
influence of service-related concepts and procedures broadened the scope of this field of study. As
the term ‘Production Management’ did not cover the entire field, it was replaced with ‘Operations
Management.’
20
13. (a) In the early 1940s during World War II
During World War II (1939-45), the United States and many European nations formed operations
research teams in most of their military branches to find efficient ways to utilize resources like
of
men, weapons and machinery. The massive deployment of manpower, supplies, planes, ships and
other resources created the need to find the most efficient way to utilize them. At the end of World
War II, the successful operations research techniques were incorporated into decision-making in
s
many business organizations.
as
14. (c) Elton Mayo
In 1927 Elton Mayo and his team carried out studies at Western Electric’s Hawthorne plant. The
Cl
initial studies tried to examine the relationship between light intensity on the shop floor and
employee productivity. Finally, Mayo and his team concluded that it was not light or other
physical conditions, but attention and importance the workers received during the study that was
y
responsible for their increased productivity.
nl
15. (c) Expert systems

In the 1990s, many new concepts and technologies like artificial intelligence and expert systems
O
influenced manufacturing systems. Programmable machines (like robots) were introduced in the
production process to perform tasks that were repetitive or hazardous for a human being to
perform.
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16. (c) Higher maintenance costs

Higher maintenance costs are a major disadvantage of computerization. Initial establishment and
U
implementation costs are so huge that they prompt organizations to defer computerization.
Besides, the cost of maintaining these systems is also high.
BS
17. (b) ii & iii

The key objectives of an operations manager are to minimize inventory and maximize resource
utilization. Maximizing customer satisfaction is a primary concern for the top management and the
marketing department. However, customer satisfaction is only a secondary objective for the
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operations manager.
18. (a) Quality and on-time delivery

Fo
In customized product design, the emphasis is on quality and on ensuring delivery on-time, rather
than on cost. In standardized product design systems, importance is given to cost-control and
quality rather than on the flexibility of the system.
19. (c) Labor costs

Labor costs fall under direct costs while administrative costs, maintenance costs, and rentals fall
under indirect costs.
72
Part A
20. (b) Top-level managers

In an organization, corporate objectives are developed by the top-level managers.
All the options are considered while formulating corporate objectives.
22. (b) Standardized product design
Standardized production is used when a company manufactures a limited variety of products in
large batches to reduce costs.
09
23. (c) i & iii
Feasibility studies evaluate whether the idea generated is feasible both technically and
20
economically. Such studies test whether production is technically feasible and the product
profitable to produce and market.
24. (b) Strategic business units
of
Strategic business units (SBU) are autonomous operating divisions which have independent
control over their own functions. Every SBU has its own business strategy, objectives and
competitors and these will often be different from those of the parent company.
s
25. (c) Lower costs
as
As a result of manufacturing steel by processing steel scrap, costs are substantially lower to the
company than to the large steel plants producing primary steel from iron ore. This lower-cost
process gives Nucor a price advantage over competitors.
Cl
26. (a) Designing the production system
Designing the production system is one of the key responsibilities of any operations manager. It
involves selecting the product design, the production system and the inventory policy for finished
y
goods for each product line.
nl
27. (a) i and ii

Industrial products like boilers and turbines are made based on specific requirements of customers,
while televisions and ceiling fans are produced in large numbers (also termed as standardized
O
production) where customization of each piece is not possible.

28. (b) Growth stage
se
During growth stage the sales volume grows exponentially and profits are registered for the firm.
In introduction stage, sales growth is weak, in maturity stage it is stagnant, and in the decline stage
the sales decline.
U
29. (b) The role of operations department decreases as the product moves up the lifecycle
As the product moves up the lifecycle, the organization’s focus shifts towards increasing the
BS
market share and improving the quality of the product. Hence, the role of operations department
decreases.
30. (b) A prototype helps test the product performance under standard conditions
rI
A prototype may not have all the features of the final product however it has all the product’s basic
characteristics. The prototype is tested under standard conditions and defects are noted. This would
enable the organization to improve the product in terms of quality and performance. Once the final
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structure of the prototype is in place, the prototype design is evaluated for profitability.
31. (d) Facility planning
Facility planning deals with location of the facility and its layout. Decisions regarding facility
location are based on the accessibility to raw material and nearness to markets. Allocation of
resource deals with the allotment of existing resources like men, machines, material, etc, to
different strategic alternatives. Technology selection and process development deals with selection
of the most suitable technology for producing products and product design and development is
used to develop new products.
73
32. (a) Organization strategy

The operations strategy should be in accordance with the organization strategy, and the
organization strategy should in turn be in line with the corporate vision and mission. If the
organization strategy is not consistent with the corporate vision and mission, the organization
cannot survive in the competitive marketplace. Further, operations strategies should be consistent
with strategies in other functional areas such as marketing, finance and human resources.
33. (a) Strategic planning is concerned with long-term planning while operational planning
09
involves short-term day-to-day planning
Strategic planning is different from operational planning in the scope of its application. Strategic
planning is concerned with long-term planning and involves selection of target markets and
20
distribution channels, whereas operational planning is concerned with short term, day-to-day
planning.
34. (c) It should focus on having short-term operational superiority over competitors
of
Operational superiority is very important for maintaining the competitive position of
manufacturing and service organizations. The operations strategy should be flexible so that it can
support a product or service through its entire life cycle and accommodate future changes in
s
market demand or business objectives.
as
35. (b) Product variety
When an organization focuses on product variety as a competitive advantage it offers a large
Cl
number of different products to various customer segments. This is true in the case of HDFC that
offers different financial products to different segments.
36. (a) 5 years

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Payback period = Net investment / Expected annual income

nl
= 10,00,000/2,00,000 = 5 years
O
37. (b) 4.8 years

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= 12,00,000/2,50,000 = 4.8 years
38. (c) 5.3 years

U

= 8,00,000/1,50,000 = 5.3 years
BS
39. (b) Project B

Of all the investments, Project B is the best option. Though Rs.12, 00,000 are invested in this
project, the payback period is the shortest due to greater expected annual income.
rI
40. (b) Optimize the use of resources for best strategic use
The main objectives behind allocating resources to different alternatives (which are also called
Fo
strategic alternatives) include minimizing wastage in the facilities and employing resources to the
best possible use.
41. (d) i, ii, iii and iv

Demand for a product is influenced by conditions like the price of the product, price of substitutes,
price and availability of complementary products, income of consumers, their tastes and
preferences, and their reactions to changes in price.
74
Part A
42. (b) Responsiveness

Forecasted demand may not be equal to actual (true) demand. The organization has to adjust its
operations according to the actual demand on a real-time basis. This characteristic of the
organization is termed as responsiveness. The quicker the organization is in responding to the
changes in the forecasted demand, the more successful it would be in meeting the actual demand.
43. (b) Forecast error

A forecasting error is the difference between the forecasted demand for a particular period and the
09
actual demand in that period.
44. (b) Decrease the value of α
20
Overreacting to the most recent demand implies that the demand forecasted is very optimistic.
Therefore to reduce the forecasted demand, the value of α should be reduced.
45. (a) Low
of
A high alpha is used to stabilize unstable demand (like that for new products) and a low alpha is
used to even a stable demand.
s
as
Demand forecasting is used to develop marketing plans, facilities plans and financial plans.
47. (b) Delphi Method
Cl
Qualitative methods are judgmental and subjective in nature and are based on the estimates and
opinions of individuals like experts in case of Delphi method and consumers in case of market
research method.
y
48. (d) Exponential smoothing is used to determine independent demand
Exponential smoothing is used to determine dependent demand
nl
49. (d) Forecasts are created using only quantitative data

O
Forecasts use both qualitative as well as quantitative data to forecast demand.

50. (a) Time-series methods
se
Time-series methods uses past (historical) data to predict future demand.

51. (d) Plant capacity
U
Plant capacity is not a factor that is considered to forecast demand. Operations managers may
increase or decrease the running capacity of the plant depending on the demand. Hence, it cannot
be considered a factor that influences demand. Rather plant capacity is influenced by the demand.
BS
52. (d) Mean absolute percentage error

Mean absolute percentage error (MAPE) provides information on the extent of forecast error in
relative terms while the other measures provide information in absolute terms.
rI
53. (c) Spare parts inventory

Spare parts inventory does not generally require long-term forecasts as they are more an
Fo
operational issue than strategic issue.

54. (d) Extent of accuracy of demand forecasts
Demand is influenced by conditions like the price of a product, and the price of its substitute and
complementary products; the incomes of customers, their expectations regarding price changes,
and their tastes and preferences; the number of customers and their travel costs to the point of
purchase (PoP). Accurate forecasts of demand help organizations to suitably increase or reduce
production. Therefore accurate forecasts, as such, do not influence the demand for the product.
They instead help the management in decision-making relating to product demand.
75
55. (d) Increased locking up of working capital as inventory

Working capital is locked up as inventory, only when there is excess production. Excess
production happens when demand is overestimated. However, when demand is underestimated,
production will not be sufficient to meet the demand. Hence, there are greater chances of locking-
up of working capital in the form of inventory as a consequence of overestimation of demand
rather than underestimation.
56. (a) Short-term demand
09
Short-term demand estimates for individual products are generally very detailed, and are used to
plan and schedule production operations. Long-term and medium-term demand forecasts are used
for making location, layout and capacity decisions.
20
57. (b) Aggregate product demand forecast
On the basis of the aggregate product demand forecast (that is obtained in terms of sales volume)
individual forecasts are made for labor and/or material requirements. Hence, raw material demand
forecast and labor demand forecast (types of short term demand forecasts), are derived from
of
aggregate product demand forecast.
58. (d) Planning and controlling
s
Forecasting demand is most important to the planning and control functions of management.
as
Forecasting is a step in the planning process where plans are developed based on forecasts. Under
the control function, actual results are compared with that of planned standards (based on
forecasts) and deviations are identified and corrected.
Cl
59. (b) The geographical distance between the experts
In Delphi method, forecast is made by the coordinator after considering the opinions of a panel of
y
experts who are geographically apart. Also, as the membership of each expert is concealed from
others, no issue of leadership arises during the process. Thus geographical distance between the
nl
experts cannot be a hindrance to the success, as the experts need not communicate with each other.
The success of this technique depends on the talent of the coordinator and the absence of bias on
O
the part of the experts. Two main problems inherent in this method are that opinions of members
might be influenced by a socially dominant individual. Members may fear loss of credibility if
they back away from a publicly stated opinion.
se
60. 87
In the six-month simple moving average technique, the forecast for the seventh month will be the
U
average of the preceding six months. Thus, the forecast for the month of July is the average
demand of generator sets during Jan, Feb, March, April, May, and June. Similarly, the forecast for
January 2007 would be the average of demand during July, Aug, Sep, Oct, Nov, and Dec months.
BS
Forecast for January 2007 = (87 + 88 + 86 +89 + 86 + 87) / 6 = 523/6 = 87.1666 (approx 87)
January 78
February 80
rI
March 85
April 82
May 84
Fo
June 85
July 87 82.33
August 88 83.83
September 86
October 89
November 86
December 87 86.83
87.17
76
Part A
61. (a) 1
Each element in the weighted moving average method is weighted by a factor and the sum of the
weights should be equal to one.
62. (c) Trial & error
Certain weights are assigned to each element and managers use past experience (not future
forecast) as well as the trial and error method to calculate these weights. The simple moving
average method and exponential smoothing are other types of time series forecasting methods like
09
the weighted forecasting method.
63. (c) Exponential smoothing
20
The exponential smoothing method is based on the assumption that the most recent data is a better
indicator of future trends than past data. The method is useful when demand for products exhibit
seasonal tendencies. The simple moving average method is effective only when a product does not
of
experience fluctuation in demand over a period of time and past demand for the product was not
seasonal. Delphi method is a qualitative forecasting method
64. (c) Larger data storage space
s
The advantages of the exponential smoothing method are: availability of standard software
as
packages; relatively little data storage and computational requirements; accuracy of forecasts and
easy understanding of results.
Cl
65. (a) Latest time period
In the exponential smoothing method, the demand for the most recent time period is given
maximum weightage. The weights assigned to the preceding periods decrease exponentially.
y
n
∑C A
nl
66. (b) WMAt+1 = t t

t =1
O
n
The formula for calculating the weighted moving average is WMAt+1 = ∑C A
t =1
t t
se
Where,
WMAt+1 = Weighted moving average at the end of the time period t, At = Actual demand in time
U
period t, Ct = Percentage weight given to time period t, 0 ≤ Ct ≤ 1 and C1 + C2 + C3+... + Ct = 1

67. (c) i and ii
BS
Smoothing constant ‘α’ shows the effects of past demand on future demand forecasts and helps
smoothen out the effects of any noise. But, α is not used to predict future trends in demand.
68. (d) Y intercept or constant value
rI
In linear regression, the relationship between the dependent variable and a single independent
variable is defined by a straight line.
Fo
Y = a + bX where, Y = Value of the dependent variable, X = Value of the independent variable, a

= Y intercept (Constant value), and b = Slope of the line, ‘a’ is the Y-intercept and its value
defines the point at which the regression line crosses the Y-axis.
69. (a) If the slope is positive, then the trend line increases positively
If the slope is positive, then the trend line increases positively. If the slope is negative, then the
trend line decreases negatively.
77
70. (b) 6.67

Slope represents the variation in Y for a unit change in X. Here, Y represents sales and X
represents advertising expenditure. To calculate the slope, change in sales, represented in units,
should be converted into percentage. Hence, slope can be calculated by:
Percentage of change in sales/percentage of change in advertising

{[(20000-15000)/15000] x 100} / 5 = 6.666 = 6.67 (approx)
09
71. (a) Exponential smoothing
For short-range decisions like purchasing, job scheduling, project assignment and machine
20
scheduling, time series techniques like moving averages (SMA or WMA) and exponential
smoothing are the most preferred forecasting methods. Regression analysis is used in medium
range forecasting as well as long term forecasting. Linear regression analysis is useful in long term
forecasting of major occurrences and aggregate planning.
of
72. (b) Delphi method
Delphi method is used when no data is available or if it is too expensive to collect data. The other
s
three methods primarily require data to forecast demand.
as
73. (d) None of the above
No forecasting method, either qualitative, time series or causal, gives 100% accurate forecasts.
Cl
They can only be highly accurate and 100% accuracy is not possible.
74. (a) Cost is directly proportional to extent of accuracy

y
Accuracy of forecasts depends on data availability. Forecasts can be more accurate when more
data is available. Also, it is costly to collect huge volumes of data. Hence, to avoid these costs,
nl
some organizations use readily available data at low costs and end up with inaccurate forecasts.
Thus, accurate forecasts come at a dearer price.
O
75. (b) 6
Demand Forecast Actual Demand (A - F) |A - F|

se
(F) (A)
500 510 10 10
U
510 510 0 0
BS
520 515 -5 5
540 550 10 10
rI
550 545 -5 5
Sum 10 30
Fo
Solution:
n
1
Mean absolute deviation = MAD =
n
∑ A t − Ft
t =1
= 30/5
= 6
78
Part A
76. (c) 50
Demand Actual (A - F) (A - F)2
Forecast (F) Demand (A)
500 510 10 100
510 510 0 0
09
520 515 -5 25
540 550 10 100
20
550 545 -5 25
Sum 10 250
of
Solution:
n
1
Mean Square Error = MSE = ∑ (A − Ft ) 2
s
t
n t =1
as
= 250/5
= 50
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77. (a) 2
Demand Forecast Actual Demand (A - F)
y
(F) (A)
nl
500 510 10
510 510 0
O
520 515 -5
se
540 550 10
550 545 -5
U
Sum 10
BS
Solution:
n
1
MFE =
n
∑ (A
t =1
t − Ft )
rI
= 10/5
=2
Fo
78. (c) 1.14

Demand Actual Demand (A - F) |A - F| (|A-D|/2) x 100
Forecast (F) (A)
500 510 10 10 1.96
510 510 0 0 0
79
520 515 -5 5 0.97

540 550 10 10 1.82
550 545 -5 5 0.92
Sum 10 30 5.67
09
Solution:
100 n A t − Ft
MAPE = ∑
20
n t =1 At
MAPE = 5.67/5 = 1.134
79. (a) 1.67
of
Demand Forecast Actual Demand Deviation
(A-F)
500 510 10
s
510 510 0
as
520 515 -5
540
Cl
550 10
550 545 -5
Sum 10
y
n  Actual Demand − Forecast demand 

nl
TS = ∑  
i =1 MAD 
O
TS = 10/6
= 1.67
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80. (d) Base demand

Base demand is the average of sales over a given time period. This figure can be taken as the right
forecast if the demand for a product is not impacted by seasonal, trend, cyclic, or promotional
U
factors.
81. (c) Cyclical component
BS
Cyclic component refers to changes in demand patterns, which exist for more than a year. These
changes could either show an upward or downward movement. A good example is the demand for
luxury products that is linked with the business cycle. Sales usually increase during the boom
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phase and slow-down during recession.

82. (b) Promotional component
Fo
The sales of LG televisions doubled when LG increased its advertising budget. Here, LG gave
more weightage to the promotional component to arrive at an aggressive estimate.
83. (c) The demand for camera mobile phones in India has increased steeply since 2001
The demand for camera mobile phones has shown a positive trend over a period of time. The long-
term pattern is clearly visible in this example. The prices of gold increased and decreased, leading
to rise and fall in demand. Hence, it is cyclical. The Airtel example highlights the promotional
component, and the demand for wrist watches displays the irregular component.
80
Part A
84. (d) Understand objectives – identify influencing factors – identify customer segments –
select forecasting technique
The forecasting process starts with understanding its objectives. Then, all the major influencing
factors are identified. Next, all possible customer segments in the market are marked out and their
impact on the forecast has to be understood. Finally, a suitable forecasting technique has to be
selected.
85. (b) Time series methods
09
Time series analysis can be categorized into two broad categories, based on the complexity
involved: static and adaptive. Static methods assume that estimates of trend and seasonal
components do not vary from year to year. Adaptive forecasting is an advanced form of time series
20
analysis, where trend and seasonal components are adjusted after each demand observation.
86. (b) Static forecasting method
Static forecasting methods assume that estimates of trend and seasonal components do not vary
of
from year to year. In this method, estimates of trend and seasonal components are determined
based on historical data, which is projected to obtain future demand data.
s
87. (d) Provides optimal solutions that are always practical
as
One of the main drawbacks of these models is that the solution obtained may not always be the
optimal one for the real problem. This is because these models do not take into account non-
quantifiable criteria. Sometimes, models may provide a solution that cannot be put into practice.
Cl
88. (b) Nature of demand
There are three elements of constrained optimization models: decision variables, objective
y
functions and constraints.
nl
89. (c) Motivation

Motivational levels are qualitative in nature. Linear programming deals with different variables
O
that need to be quantified.
90. (c) Feasible solution

se
A feasible solution satisfies all the restrictions of a linear programming problem.

91. (a) Constraint
U
Constraints are practical limitations restricting the choice of decision variables. In this case the
practical limitation is the availability of man hours that is restricted to 600 hours.
BS
92. (c) Linear programming

Linear programming is used to allocate resources to strategic alternatives to ensure that they are
utilized optimally. Exponential smoothing and regression analysis are methods to forecast demand
for a product. Decision tree analysis is another operations technique helpful in decision-making
rI
like linear programming.

93. (c) Destination requirements
Fo
Destination requirement is a constraint considered while arriving at transportation decisions and

not production plan decisions.
94. (b) Maximize Z = 200x + 150y

As profits have to be maximized, profits from each telephone model have to be considered. Hence,
the objective function would be maximize Z = 200x + 150y, where 200 and 150 represent profit
per unit of each model in rupees.
81
95. (a) 2x + y ≤ 650

Total machine hours are 650. The superior quality telephone takes two hours (2x) while the other
takes one hour (y) to be produced. Hence, the total number of telephones produced using available
machine hours has to be less than or equal to 650 hours. Thus, 2x + y ≤ 650
96. (d) x + y ≤ 600

The total demand is 600 units and production should not exceed demand. Hence, x + y ≤ 600.
09
97. (b) Rs. 70000
Substitute the number of telephones manufactured in the objective function.
20
Z = 200x + 150y
= 200(200) + 150(200)
= 40000 + 30000
of
= 70000
98. (d) x = 200, y = 200

Options (a) and (b) are not feasible as they violate the constraint on total machine hours (650
s
hours). Substituting the number of telephones manufactured in the objective function Z = 200x +
as
150y for options (c) and (d), option (d) gives a maximum profit of Rs.70000.
99. (b) Optimality

Cl
The assumptions that are made while constructing a linear programming problem are
proportionality, additivity, divisibility, and certainty. Using these, problems are solved for
achieving optimality, i.e., achieving an optimum solution. Hence, optimality is not an assumption
y
but a result.
nl
100. (a) Profits

Profits can be maximized while inventory, advertising expenditure and production costs have to be
O
minimized. Hence, profits can be considered for a maximizing function.
101. (c) 3x + 2y = 120

se
The coordinates of the line are (40, 0) and (0, 60). When these coordinates are substituted in each
of the above options, we get LHS = RHS only in option (c). Hence, the constraint is 3x + 2y = 120.
U
102. (d) (0,60), (40,0), (80,0), (80,60)

ABCS is the feasible region.
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Coordinates of A – (0,60), Coordinates of B – (40,0), Coordinates of C – (80,0), and Coordinates

of S – (80,60).
103. (a) x = 80
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The line passes through the coordinates (80,0) At that point, the value of x=80 and y=0. Thus, x =
80 would be the equation of the line.
Fo
104. (c) 800

The coordinates are (0,60), (40,0), (80,0), (80,60)
At A(0,60), Z = 20(0) + 35(60) = 2100
At B(40,0), Z = 20(40) + 35(0) = 800
At C(80,0), Z = 20(80) + 35(0) = 1600
At S(80,60), Z = 20(80) + 35(60) = 3700
82
Part A
105. (d) The resources considered in the linear programming problem should have unlimited
supply
The resources in any linear programming problem are scarce and the objective is to use them
optimally.
106. (a) ii, i, and iii
The first and foremost step in formulating a linear programming problem is to identify the decision
variables. Next is to identify the objective function, and finally comes identifying constraints
09
present in the problem.
107. (c) In the feasible region
20
A feasible region is obtained when constraints are plotted on the graph. The optimum solution
always lies in the feasible region.
108. (a) Adding a slack variable
of
A slack variable is always added to the left-hand side of the ‘lesser than or equal to’ inequality
(constraint) to convert it to an equation.
109. (b) Iteration
s
An iteration of the simplex method forms the sequence of steps in moving from one basic feasible
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solution to another.
110. (c) To minimize the sum of all transportation costs
Cl
The objective of any transportation problem is to minimize the transportation costs.
111. (d) Stepping stone method
y
While methods mentioned in options (a), (b), and (c) can be used to develop the initial feasible
solution, the stepping stone method is used to test the solution for optimality.
nl
112. (c) Vogel’s approximation method

O
Vogel’s Approximation Method is most effective and preferred over other methods as it usually
results in an optimal or a near-optimal solution.
113. (b) Additivity
se
The objective function and constraints include several decision variables. Here, it is assumed that
the total value of the objective function and each constraint is equal to the sum of individual
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contributions from each decision variable. It means that the model does not consider any
synergistic or anti-synergistic effects among decision variables while calculating the total value for
the objective function.
BS
114. (d) Customized service

Industrial design services vary from company to company and depend upon their products and
target markets. Hence they are categorized as customized services.
rI

The term ‘structure’ has a broad meaning and includes issues like the number of plants, size of
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plants and their location, plant capacity, choice of equipment and process technology, production
control, workforce management, etc.
116. (c) Increases to a certain level
As the price of a commodity decreases, demand increases as consumers buy more of the
commodity. However, this is observed only until a certain point. Beyond this there will not be a
proportionate increase in demand when prices are decreased.
83
117. (c) Backward integration

Backward integration refers to gaining ownership over the source of raw material supplies and
other materials required for production. Forward integration refers to gaining ownership of front-
end activities (distribution networks through which products are distributed to the customers).
118. (a) Level of training for distributor employees
Option (a) is not a factor while making decisions on backward integration. It is among forward
integration issues. Backward integration decisions are concerned with ‘make or buy’ decisions,
09
availability of funds, return on investments, and long-term relationships with the suppliers of raw
materials.
20
119. (d) i, ii, and iii
The basic objectives of process planning and design in an organization are to produce products
with desired quality, at the right time, and in required quantities. To produce products below
competitor prices is not a basic objective; rather it is dependant on the strategy of the company.
of
120. (a) Product flexibility
Product flexibility is the ability of the production system to shift quickly from producing one
s
product to another. Some business strategies call for the production of many custom-designed
as
products/services, in small lots. Product/service flexibility is required in such cases.
121. (a) Square
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In an assembly chart, operations are represented by circles and inspections by squares.
122. (b) Less manufacturing cycle time
y
The process-focused production system may lead to loss of time, especially when a major portion
of production time includes the time in which jobs are waiting to be processed in different
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departments. Also, process-focused production systems require greater employee skill, more
employee training, supervision, and complex production control.
O
123. (b) Lower initial investments

Product focused production systems entail high investments initially in terms of capital equipment
and machinery.
se
124. (c) Discrete unit processing

U
Discrete unit manufacturing refers to the production of distinct products like radio or television
sets. These products can be made in batches, and the system can be shifted to produce other
products in similar batches. However, assembly lines and continuous processing do not help in
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changing jobs. Job shop process is used to produce highly customized products where one job can
be carried out at one point of time on one machine. The flexibility is minimal here. Hence, ABC
must use discrete unit processing.
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125. (c) Process planning

Process planning forms the basis for designing factory buildings and facility layouts, and selecting
production equipment. It also has a bearing on quality control, job design and capacity in different
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facilities of the organization.

126. (c) Employee skill level requirements
Operations managers generally make process-design decisions after taking into consideration
several factors like nature of demand, degree of vertical integration, flexibility, degree of
automation, quality level, and degree of customer contact. However, employee skill level
requirements are dependent on the type of process plan decided and are considered only after
developing the process plans.
84
Part A
127. (a) As demand is seasonal Pepsi cola should not be produced in winter season
Seasonality of demand is not directly linked to the production because companies focus on
meeting annual demand. A company may bring down production capacity in the lean season and
increase it to peak capacity during high demand. Also, production can be beefed up just before the
season begins and inventory can be stocked to meet the excess demand.
128. (d) Ability of the organization to market its products
Ability of the organization to market its products is a factor that affects the forward integration
09
process of the organization, while the remaining options refer to the factors affecting the backward
integration in an organization.
129. (b) It helps decentralize the overheads
20
Vertical integration relieves an organization from excessive dependence on the purchasing
function and provides flexibility in manufacturing. This can result in an increase in profits due to
centralized overheads, pooling of R&D and design efforts, and economies of scale.
of
130. (b) Backward integration
The raw material for a readymade garment retailer is fabrics. Hence, when Eastside acquired a
textile mill, it gained ownership of a supplier leading to greater control over fabric production and
s
supply. This is a backward integration strategy.
as
131. (a) Product-focused systems
In this type of process design, products or services tend to flow along linear paths without
Cl
backtracking or sidetracking. Items follow a similar production sequence, which can be anything
from a pipeline (for oil) to an assembly line (for televisions or radios).
132. (b) Process manufacturing
y
Process manufacturing involves the movement of materials between different operations such as
screening, crushing, storing, mixing, milling, blending, cooking, fermenting, evaporating and
nl
distilling. It is widely applied in the cement, plastic, paper, chemical, steel and brewing industries.
O

Product-focused systems require higher initial investments because of the use of specialized and
expensive fixed position processing equipment in the production process.
se
134. (c) i, ii, and iii

In process-focused production systems, all operations are grouped according to the type of process.
U
The system is also referred to as an intermittent production system because production is

performed on products intermittently (that is on a start and stop basis). In this system, the products
move from department to department in batches (jobs) that are usually determined by customers’
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orders. The diversity of customer orders is a primary criterion for adopting a process-focused
production system.
135. (d) It requires high employee skills
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Organizations draw the following benefits by implementing a coding system. Coding gives a clear
picture of the steps that are involved in producing a part. Hence, it is easy to route the parts during
production. Coding results in standardization of part designs. A database can be maintained with
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the design details of old parts. Whenever a new product is to be designed, the codes of existing
products can be accessed to identify similar parts present. This simplifies the process of
manufacturing new products. Parts with similar characteristics can be grouped into families as
similar products are generally produced in similar ways.
136. (d) Increase in the in-process inventory
In cellular manufacturing, parts spend less time in waiting before they are processed. Hence, the
in-process inventory levels get reduced.
85
137. (a) Assembly charts

In assembly charts it is standard practice to indicate operations by circles and inspections by
squares. Gantt charts and flow charts are entirely different in the sense that they are used for
scheduling of operations in a manufacturing plant. Assembly and process charts are used for
process planning.
138. (a) Job shop production systems
Job shop production systems involve production of customized products. As a result, product
09
designs vary between different customer orders. Since the customization is high, number of
products produced in a given time period is very low.
139. (c) The total cost of production increases as the output volume increases
20
The product-focused systems require initial investments in the form of expensive machinery and
this result in high initial fixed costs. But, as the product-focused systems produce a single or few
varieties of products, the variable costs remain low. Product-focused systems are used to produce
bulk volumes and as the volume of output increases, the total cost of production decreases.
of
140. (b) Higher fixed costs and lower variable costs
Product focused systems need high initial costs (fixed costs); however operating variable costs
remain low due to limited scope for product variety.
s
as
141. (c) i, ii, iii
Except alternative ‘iv’, all others are reasons for companies to set up facilities in select zones. Low
cost of manpower is a country-specific factor and does not significantly differ within and outside
Cl
exclusive zones.
142. (b) Proximity to input sources
y
A manufacturing facility that uses bulk raw materials has to be in proximity to raw material source.
In this case, bauxite is the basic raw material for aluminum production and it is available from
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mines.
143. (c) Healthcare industry
O
Hospitals are service organizations where location plays a major factor. People prefer to go to a
hospital close to their homes. Since services cannot be stored, they have to be developed and
delivered in close contact with customers. Hence, proximity to customers is necessary.
se
144. (b) The physical distribution of various departments for ease in production
A facility layout represents the physical spread of all the equipment, machinery, parts, etc. in a
U
plant/facility. They are distributed so as to ensure smooth work flow and maximum efficiency.
145. (a) Equipment is dedicated to the manufacture of a narrow product line
BS
Product layout is used to produce a narrow product line and all machinery and equipment is
dedicated for this. Material handling costs are low as there is less scope for product change over.
Product layouts are extensively used to produce standard products and not customized products.
rI
146. (a) Graphic and schematic analysis

In Graphic and schematic analysis templates, two-dimensional cutouts of equipment drawn to scale
are the most common layout-planning tools. Templates are moved about within a scaled model of
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the walls and columns of a facility to identify the best layout through trial and error. These
templates are also used for developing product and fixed-position layouts. Managers can use
various models like load distance and computer models. CRAFT is a type of computer model.
147. (c) Suitability of climate
Cotton yarn manufacturing units require a certain level of humidity in the atmosphere throughout
the year which is present in only certain places. This is because cotton is affected by high humidity
levels. Hence, many companies are set up in low humidity locations.
86
Part A
148. (b) To serve the customer better

Better customer service is a primary objective of the marketing department and not the operations
department.
149. (d) Cost of technology
Plant location decisions fall within the internal environment of the organization while technology
is part of the macro environment. The cost of acquiring technology is not a direct function of plant
location.
09
150. (c) Fixed position layout
Fixed position layout involves movement of men, machines and equipment to the product, which
20
remains stationary. The product here may be bulky, large, heavy or fragile. Layout adopted in ship
building is an example of fixed position layout.
151. (d) CRAFT analysis
of
CRAFT analysis is used for developing a process layout and not for determining plant location.
152. (a) A retailer
s
The success of a retail organization primarily depends on the number of customers visiting the
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facility. Here, the location is more market/customer oriented than supply oriented. For example,
discount stores are present in downtown areas of most cities in America where the low income
population resides.
Cl
153. (c) Employee layout
Employee layout is not a type of facility layout. The various types of layouts are process layout,
y
product layout, hybrid layout and fixed position layout.
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154. (b) Grouping technology layout

In a grouping technology layout (also called cellular manufacturing layout), dissimilar machines
O
are grouped into cells and each cell functions like a product layout within a larger job shop or
process layout.
se
155. (b) When expansion of the existing plant is possible

A new location is necessary under all conditions except option ‘b’. The need for selection of
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facility location also arises when there is no possibility of expanding the existing plant and the firm
is compelled to search for a new location.
BS
156. (c) iii, ii, i, iv

A firm first looks out for a location and identifies two or more possible locations. It then selects the
best location from available choices. After selecting the location, it designs a layout. Firms can
then revise or redesign the layout in the future depending on its strategies (expansion etc,).
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157. (b) In a town/city

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The location of the facility affects the company’s ability to serve its customers quickly and
conveniently. Rahul must set up the printing press within reach of target markets. In this case, a
town or city is an ideal location as people who wish to publish their work live largely in cities.
158. (b) High transportation costs

If selection of a location leads to high transportation costs, it would reduce profitability of the firm.
Low labor costs, availability of public utility services and tax holidays are factors that would
encourage firms to choose a particular location.
87
159. (c) Close to the raw material source

Cement plants are generally located near limestone quarries. This is because raw material required
is huge and transportation cost over long distances cannot offset the benefits accrued from other
options mentioned in the question.
160. (a) Functional layouts
Process layouts, also known as functional layouts or job-shop layouts, involve grouping of similar
equipment or functions (for instance, lathe machines in one section, drilling machines in another
09
section and all activities related to assembling the product in another area, etc.).
161. (b) Proximity to markets
20
The major markets for auto-ancillary units are auto makers like Hyundai and Ford. Proximity to
these plants enables them to service clients more effectively.
162. (d) Availability of real estate
of
Government provides many benefits to industries that set up operations in special export zones. In
addition to tax holidays, infrastructure support and low interest loans from banks, etc, companies
are provided land at low costs. The land provided is not prime real estate as SEZs are located away
from cities or towns.
s
163. (c) Define location objectives – identify relevant decision criteria – relate objectives to
as
the criteria – evaluate alternative locations – select the best location
Though there is no standard procedure, the following steps serve as a guideline for location
Cl
decisions. The correct sequence includes: define location objectives and associated constraints,
identify relevant decision criteria, relate objectives to the criteria using appropriate models, do
field research to relevant data and use models to evaluate alternative locations and select the
location that best satisfies the criteria.
y
164. (d) Competitors

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Location objectives and associated constraints are defined on the basis of the views and
requirements of promoters, owners, employees, suppliers and customers of the firm. Competitor
O
views are not an important factor.

165. (a) Revenue
se
From the figure it is evident that there is only one line representing revenue for the two locations,
while fixed costs, variable costs (difference between total and fixed costs) and total costs are
different for the two locations. Hence, revenue can be considered the same for both locations.
U
166. (c) 25000

Solution:
BS
Price per unit = variable cost + contribution

50 = 30 + contribution
Hence, contribution per unit = (Rs50 - Rs30) = Rs.20
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Break-even point = fixed cost / contribution per unit

= 500000/20
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= 25000 units
Hence, 25000 units are required for the firm to break even.
167. (c) Delhi
Solution:
Total costs = total variable cost + fixed cost
Chandigarh = (300 x 1000) + 400000 = 700000
88
Part A
Gurgaon = (285 x 1000) + 450000 = 735000

Delhi = (275 x 1000) + 500000 = 775000
Delhi would have the highest total cost per year if annual output of a firm located there is 1000
units.
168. (a) Chandigarh
Solution:
09
Total revenue when annual ouput is 1000 units = 1000 x 1000 = Rs.10,00,000
Profit = Total revenue – Total costs
20
Profit at Chandigarh = 1000000 – 700000 = 300000
Profit at Gurgaon = 1000000 – 735000 = 265000
Profit at Gurgaon = 1000000 – 775000 = 225000
of
Chandigarh would have the highest annual profit if annual production is 1000 units and selling
price per unit is Rs.1000.
169. (a) Chandigarh
s
Though variable costs are higher, annual profits are highest at Chandigarh. Hence, in terms of
as
profit, it is a better choice over Delhi and Gurgaon.
170. (c) It reduces space utilization
Cl
A good layout always helps increase space and machine utilization.
171. (a) Process layout
y
Process layouts, which are also known as functional layouts or job-shop layouts, involve grouping
of similar equipment or functions (all lathe machines in one area, all drilling machines in another
nl
area and all assembling works in some other area).

172. (b) General purpose machines
O
Process layouts mostly use general purpose machines that can change rapidly to new operations for
different product designs.
se
173. (d) Increased utilization of men and material

In process layouts, men and machines are utilized most efficiently, owing to use of general purpose
U
equipment. The other options are not advantages. Production requires more time as work-in-
progress has to travel from one place to another. This increases accumulation of work at different
stages of production.
BS
174. (b) Product layout

Product layouts are designed to accommodate only a few, mostly one or two, standardized
products and process designs. Process, hybrid and fixed position layouts allow production of
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customized products.
175. (c) Ship-building
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Ship-building is an example of fixed position layout where all the men, material and equipment are
brought to the ship that is stationary.
176. (b) Process, product
In a fabrication and assembly plant, fabrication is done on process layout while assembly is done
on product layout. Fabrication involves different processes like drilling, grinding, etc. Hence, it
requires a process layout. In the assembly section, each part is assembled one after the other and
does not require any deviations. Thus, a product layout can be used for assembly.
89
177. (b) CRAFT model

Except line balancing, all other options are models used in process layout development. CRAFT
model finds a layout by evaluating thousands of alternatives quickly. CRAFT has the capacity to
handle plants comprising up to 40 work centers of different shapes and sizes. It can account for
mobile and immobile process centers. The model considers various types of layouts and different
materials-handling methods that a firm can use in its work centers.
178. (c) Load distance model
09
The load distance model is an important model used to minimize material flow in a layout. In this
model, the number of loads (standardized amount of material) moved between each pair of process
20
centers over a period of time and distances between them are considered. Line balancing is used to
determine product layouts.
179. (b) Japan
of
In Japan, space availability is a major constraint as it is a very small nation in terms of geographic
area. Hence, layouts were designed to use minimal available space. In contrast, in USA, India and
China, as space is not a problem, comparatively larger layouts are designed.
s
180. (d) i/q, ii/r, iii/p, iv/s
as
CRAFT is used to analyze and evaluate thousands of alternative layouts very quickly. Load
distance model is used to reduce material movement costs in a production plant. Line balancing is
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used to study workflow in an assembly line. Graphic and schematic analysis is used to study two-
dimensional scaled drawings of equipment and machinery to arrive at the best possible layout.
181. (a) Layouts focusing on customer receiving and servicing
y
Two extremely different types of layout of service facilities exist based on degrees of customer
nl
contact. At one extreme is the layout totally designed around customer-receiving service functions.
The other is the layout designed around technology, processing of physical materials and
production efficiency.
O
182. (c) Restaurants

In a restaurant, the service layout has to cater to activities of receiving and servicing customers
se
(customer focus) as well as processing and preparation of food items (process layout).
183. (d) 8.11, 10.06
U
Solution:
The coordinates of the center of gravity can be identified by
BS
Xc =
∑ (X V ) i i
∑V i
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Yc =
∑ (Y V )
i i
∑V
Fo
i
Where,
Xc = X coordinate of the center of gravity, Yc = Y coordinate of the center of gravity, Vi = Volume
of items transported to and from location i, Xi = X coordinate of location i, Yi= Y coordinate of the
location i
90
Part A
Distribution X Y Volume ViXi ViYi

Center (Vi)
A 4 4 60 240 240
B 12 6 90 1080 540
C 10 14 110 1100 1540
D 5 13 100 500 1300
09
Total ∑V i = 360 ∑V X
i i = 2920
∑VY
i i = 3620
20
Substituting these values in the equation for
∑ (X V )
of
i i
Volume-weighted X coordinate = Xc =
∑V i
Xc = 2920/360 = 8.11
s
∑V Y
as
i i
Volume-weighted Y coordinate = Yc =
∑V i
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Yc = 3620/360 = 10.06
The X and Y coordinates of the point of center of gravity are 8.11 and 10.06.
y
184. (d) Historical analogy method
The historical analogy method is a forecasting method. The other options – point rate method,
nl
center of gravity method and analytical Delphi method are standard methods to locate the optimal
location for a firm.
O
185. (a) Form panels - Identify trends and opportunities - Determine directions and strategic
goals of the organization - Develop alternatives - Prioritize alternatives
se
Analytic Delphi Method helps managers take complex multi-location decisions. This method
requires the participation of a coordinating panel, forecasting panel and strategic panel. The
U
coordinating team selects two teams from within the organization, the forecasting and strategic
panels. These two panels participate in two Delphi inquiries. In the first, the coordinating panel
uses a questionnaire to elicit information from the forecasting panel regarding future trends, threats
BS
and opportunities. In most cases, the process is repeated several times till consensus is reached. In
the next step, information collected through the first Delphi inquiry is given to the strategic panel.
This information is used by the strategic panel in the second Delphi inquiry to identify the
organization's direction and goals. After strategic goals have been identified, the strategic panel
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develops various alternatives. Finally, all alternatives generated in the previous step are presented
to members of the strategic panel to obtain their subjective value judgments.
Fo
186. (d) They can be generalized to all organizations

LDRs cannot be generalized to all the organizations. They are organization-specific and must be
tailor-made to fit each organization’s requirements. Extensive mathematical analysis is required to
arrive at the LDRs for a specific organization.
187. (b) Job design

Job design is the basis for job analysis.
91
188. (c) Job description

Job description describes the tasks, duties and responsibilities of a job. It includes information
regarding job content, job requirements in terms of necessary and desirable qualifications, work
experience, mental and physical effort involved, scope of responsibilities, nature of reporting
relationships and so on.
189. (b) Job analysis
Job analysis investigates job content, physical conditions in which the job is done, and
09
qualifications necessary to carry out job responsibilities.
190. (b) Jobs are consistent with organizational goals
20
An effective job design ensures that jobs are consistent with the organization’s goals. It also
ensures that employees are sufficiently paid and not over-paid. Measuring work done by
employees falls under work measurement and does not include job design.
of
191. (d) i/r, ii/p, iii/q, iv/s
Skill varieties mean the various abilities and skill sets required for a particular job. Task identity
defines identifiable tasks to complete a job. Task significance is the influence the job has on
s
individuals inside and outside the organization. Autonomy is the flexibility and discretion available
in carrying out the job. Feedback is the level of information provided to employees on their
as
performance. Cl
192. (c) Increase in worker inputs
One of the objectives of a good job design is to reduce (not increase) worker inputs like time and
physical effort.
y
193. (a) i, ii, iv
Job design should be technically, behaviorally, and economically feasible for workers as well as
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the organization. Political issues are external and not internal to the organization.
O
194. (a) It gives the detailed set of activities to be performed on the job
Job content is the central aspect of job design. It defines the set of activities to be performed in the
job. These include duties, tasks and job responsibilities to be carried out by the jobholder,
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equipment, machines and tools to be used and the required formal interaction with others.

U
Job content determines the qualifications and skills an organization should seek when selecting
personnel. Job content also determines the nature of training programs to be conducted and level of
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compensation that is to be given.
196. (c) Lower flexibility in job rotation

Lower flexibility in job rotation is not an advantage of work specialization. This is because in the
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absence of a worker, it is difficult to shift workload to other available workers as they may not
possess the required variety of skills or expertise.
Fo
197. (b) Ease of supervision and training workers

Ease of supervision and training workers is an advantage of work specialization while the other
options are probable problems that might arise as a result of work specialization.
198. (a) Only i

Salary is the basic compensation for work done. A fixed salary fulfils basic needs. A bonus can act
as a source of employee motivation. Promotion fulfils self esteem needs and health insurance
fulfils security needs.
92
Part A
199. (d) Low interest loans

Monetary benefits are tangible benefits other than salary. Monetary benefits may include company
shares, retirement benefits, health insurance, low interest loans, bonuses, etc. Low interest loans
come under monetary benefits as employee saves some amount of money due to low interest rates.
The other three options are types of non-monetary benefits.
200. (d) iii, i, ii
09
The correct sequence is Job design, followed by Job analysis and Job description.
201. (c) Using stop watch
20
In time study, work measurement is done through time using a stop watch
202. (c) i, ii, and iv

Setting work standards helps work measurement by providing benchmarks for evaluating workers’
of
performance leading to comparison of efficiency of different work methods and improved machine
utilization by reducing idle time. Delegation is based on the experience and skill levels of
employees and the authority of the superior.
s
203. (c) Work sampling
as
Work sampling uses several random observations made during everyday work in the organization
instead of historical or stored data.
Cl
204. (c) Delphi method
Delphi method is not a technique of work measurement but is used in forecasting and decision-
making.
y
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205. (a) The average of observations made always represents time required to perform each
elemental task
O
The averages of observations made in a time study need not always represent the standard time
required to perform each elemental task. Workers tend to behave differently while conducting a
time study. Some may become nervous and perform poorly while others may produce more output
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than in usual circumstances. Hence, the readings have to be recorded several times to smooth out
such behavior. Apart from this, certain other allowances have to be considered like working
conditions, environmental disturbances, etc. while computing the standard time.
U
206. (c) Dearness allowance

Dearness allowance is associated with compensation. It is calculated as a percentage of the basic
BS
pay of the employee. Contingency, interference and relaxation allowance are considered in the
time study to calculate standard time.
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207. (b) 3.375 minutes

Normal time = average cycle time x worker rating
= 3.75 x 0.90
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= 3.375 minutes
208. (c) 3.835 minutes

Standard time = normal time/available fraction time
= 3.375/(1- 0.12)
= 3.375/0.88
= 3.835 minutes
93
209. (b) Pre-determined Motion Time Study

Pre-determined Motion Time Study (PMTS) is the technique of setting work standards that use
recorded standard time data for each of the basic motions associated with performing a task and
summing them up to determine time required to perform the whole task.
210. (c) PMTS provides time for basic motions while Standard Data provide time for job
specific motions
PMTS differs from standard data in that PMTS provides time for basic motions (which are generic
09
in nature) rather than job-specific work elements.
211. (d) Work sampling
20
Work sampling is a technique of analyzing work by taking several observations, usually at
random, to see the relative frequency with which various elemental activities take place.
212. (a) Ratio delay
of
Ratio delay, performance measurement and time standards are primary applications of work
sampling. Ratio delay refers to the activity time percentage for an employee or equipment. Ratio
delay shows the percentage of time an employee or equipment was occupied or idle.
s
213. (c) Time standards
as
Time standards refer to identification of the standard time for completion of a task. Companies use
time standards to generate time schedules and assign tasks.
Cl
214. (b) ii and iii
The employee self-timing technique is cost effective and simple to use, but not that accurate as
other work measurement techniques. Also, it does not take allowances into consideration while
y
measuring work.
nl

O
The time consumed by an average worker, working at average speed, to perform a specific task
under normal operating conditions is generally referred to as time standard, work standard, or just
standard. It is expressed in terms of time elapsed per unit of output, or units of output per unit of
se
time. Managers use these standards in planning, controlling and scheduling operations.
216. (a) Maynard Operations Sequence Technique

U
MOST stands for Maynard Operations Sequence Technique.
217. (d) Varying the compensation method

BS
Strategies for aggregate planning include varying utilization of the workforce, varying workforce
size in response to output requirements, varying size of inventory, back orders, sub-contracting and
plant capacity. Varying the compensation method is part of human resource management function.
rI
218. (a) Master production schedule

Master production schedule translates the aggregate plan into production schedules. The Master
Production Schedule (MPS) defines the type and volume of each product to be produced within the
Fo
planning horizon. The MPS is a detailed plan that specifies the exact timing for production of each
unit.
219. (a) Time series analysis
Time series analysis is not an aggregate planning technique. It is associated with forecasting.
220. (a) Heuristic approach
Heuristic models are based on historical aggregate planning data available with organizations.
94
Part A
221. (b) Maintaining fixed plant capacity

Varying workforce utilization is a strategy where the firm maintains a stable workforce and varies
workforce utilization in accordance with demand or required output. Other pure planning strategies
are back-orders, sub-contracting and varying plant capacity. Adjusting or varying plant capacity by
changing equipment capacity over short-term or long-term is a pure strategy to absorb demand
fluctuations.
222. (b) Defining how resources can be best employed to meet market demand
09
Except ‘b’ all other options are part of capacity planning. Aggregate plans define how resources
can be best employed to meet market demand for given products. The objective of an aggregate
20
plan is to minimize production costs, make appropriate changes in production rates and workforce
levels. It is also to improve profits, customer service and utilize resources. Capacity requirement
planning is primarily concerned with ensuring sufficient capacity available to meet market
demand.
of
223. (b) Medium range
Medium-range planning focuses on a period of six to 18 months. Examples of medium range
s
planning are aggregate planning, master production scheduling and materials requirement
planning.
224. (d) Customers
as
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A production plan contains information about the production process, manufacturing facilities,
inventory requirements, suppliers, etc. Such a plan is usually made based on sales estimates.
225. (d) 0 units

y
25 workers in 26 days can produce 2600 units. This is exactly equal to the demand for the month
nl
of June, as given in the table. Hence, existing inventory will remain untouched as there is no
necessity to use it to meet demand. The available inventory at the end of June is the same i.e. 500
units.
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226. (a) Rs.6000

In July, 25 people working for 25 days with a daily output of 4 units can produce 2500 units for the
se
month. As the demand is 2700 units, the additional 200 units are taken from the inventory on hand
of 500 units. Hence, the inventory left is 300 units. Thus, inventory carrying cost will be Rs. 20 x
U
300 units = Rs.6000.
227. (c) 0 units

BS
In August, 25 people working for 25 days with daily output of 4 units can produce 2500 units for
the month. As demand is 2800 units, additional 300 units are taken from the inventory. Hence,
there will be no inventory available.
rI
228. (d) Rs.1500

In September, 25 people working for 26 days with a daily output of 4 units can produce 2600 units
Fo
for the month. As the demand is 2750 units, there is shortage in supply of 150 units. Thus, the
shortage cost in September will be 150 units x Rs. 10 = Rs.1500.
229. (c) To evaluate the performance of a specific plan

Computer simulation is used to evaluate the performance of a specific plan, based on real-world
variables and situations. Simulation provides what-if analysis of different situations, using
different variables with alternative values attached, to judge the system performance under
different conditions.
95
230. (b) Estimation of overall demand for the end product

MPS is based on an estimation of overall demand for the end product. A final assembly schedule is
developed only when customer orders are received.
231. (c) Back orders are common in make-to-stock organizations
Back orders are common in make-to-order (not make-to-stock) organizations. This is because
actual production does not begin until customer orders are placed.
09
232. (a) 55 units
In the first month, demand is 60 units, which can be met from inventory on hand. Hence, at the end
of the first month inventory available = inventory on hand + MPS quantity – projected
20
requirements for the month. That is = 75 + 0 - 60 = 15. For the second month, customer orders are
60 and inventory on hand is 15. There is a deficit of 45. To meet demand for the second month,
production has to start in the first month as production lot size = 100 units. Then, inventory at the
end of the second month = 15 + 100 - 60 = 55 units. (See the following table)
of
1 2 3
Forecast 60 55 65
s
Orders 55 60 65
MPS quantity
as 0 100 100
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Projected on-hand inventory 15 55 90
MPS start 100 100
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233. (c) 75 units

nl
The inventory at the end of the second month is 55 units. The order for the third month is 80 units.
The inventory on hand at the end of the third month = 55 + 100 - 80 = 75 units. (See the following
O
table)
1 2 3
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Forecast 60 55 65
Orders 55 60 80
U
MPS quantity 0 100 100

Projected on-hand inventory 15 55 75
BS
MPS start 100 100

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234. (d) Revising and updating master production schedule

Forecasted demand and actual demand for a product may differ significantly due to unexpected
events. Transactions, records, and reports developed as part of MPS are updated and reviewed
Fo
continuously to accommodate these differences. This process of continuous reviewing and

updating is called ‘rolling through time’
235. (a) Capacity planning

Capacity planning is important to determine adequate production capacity to meet forecast demand
levels. Capacity planning is also used by organizations when deciding on issues like whether or not
to use sub-contracting or overtime to achieve production goals.
96
Part A
236. (c) Identifying the right layout design for the desired capacity
The capacity planning process involves identifying available capacity and additional capacity
requirements and evaluating and summing up capacity required at each work center. If there is any
gap between planned and available capacity, it is increased by overtime, sub-contracting, etc. or
the master production schedule is revised. Designing a plant layout precedes capacity planning and
is part of plant layout.
237. (a) i, ii, iii, iv
09
The correct sequence of activities in a capacity plan is to identify current capacity, forecast future
capacity, identify and evaluate sources to meet capacity requirements and select the most
appropriate alternative.
20
Capacity used
238. (b) Capacity utilization rate = ×100
Capacity available
of
Capacity utilization rate measures the rate at which available capacity is used in production. It is
obtained by dividing used capacity by available capacity. To measure in terms of percentage,
multiply the obtained value with 100.
s
239. (d) Increased complexity in operations
as
The complexity in operations can lead to diseconomies of scale or increase in per unit cost.
Efficient processes decrease fixed costs, while automation reduces per unit cost considerably.
Cl
All the stated options can be reasons for diseconomies of scale. Complexities in operations can
lead to high cost due to production bottlenecks. When modifications in machinery or replacements
y
take place frequently, it may prove costly. Further, when scale of production increases, distribution
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and storage costs also increase.
241. (c) A service firm with a single office cannot efficiently serve customers in another
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geographical area
Unlike manufacturing organizations, a service organization based in one geographical location
cannot usually serve customers efficiently in other geographical areas. The service capacity should
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be located near customers because most service delivery processes involve customers. As a result,
service organizations generally operate through branches or franchises in different locations.
U
242. (d) Both i & ii

The two major sources of inputs that influence the MPS are forecasts and customer orders. Make-
BS
to-stock environment takes inputs from forecasts in deciding the MPS. On the other hand, make-
to-order environment takes inputs from customer demand and generates an MPS based on that.
243. (a) Long range planning

rI
Long-range planning focuses on a period of over one year and is generally carried out annually.
Process planning and strategic capacity planning are examples of long-range planning. Medium-
range planning focuses on a period of six to 18 months. Examples of medium range planning are
Fo
aggregate planning, master production scheduling and materials requirement planning. Short-range
planning focuses on a period less than six months. Order and workforce scheduling are examples
of such planning.
244. (d) Material receiving costs
Carrying costs include opportunity costs besides storage costs, staffing costs, equipment and
maintenance costs, insurance costs, loss of inventory due to pilferage, spoilage or breakage in
warehouses and the cost of obsolescence.
97
245. (a) Demand is greater than expected

Buffer stocks come in handy when demand for a product suddenly increases. In such situations
buffer stocks help meet the excess demand.
246. (b) Estimated demand during lead-time
The calculation of the reorder point should ensure that inventory level reaches zero at the end of
each reordering cycle. This is because a positive inventory level at the end of the cycle raises
average inventory and associated costs. To ensure this condition is satisfied, reorder level is set
09
equal to the number of units estimated to be used during lead-time.
247. (c) The cost of ordering varies and is dependent on the quantity ordered
20
Under the EOQ model, the cost of ordering (Co) is fixed and independent of quantity ordered (Q).
The model makes the following assumptions: The price of the inventory item (p) is independent of
the order quantity. It means that the benefits of economies of scale are not taken into consideration
while purchasing. The total holding cost of inventories is proportional to the number of inventory
of
items stored. Demand for a product or its usage rate is constant over time. Materials are always
issued in equal quantities to the indenting departments and the inventory supply rate is always
greater than or equal to the usage rate (i.e. there is no scope for shortage of inventory). The lead-
s
time for material delivery is known with certainty and it remains constant. The quantity of
inventory ordered is delivered in a single lot and there is no scope for splitting of deliveries.
248. (a) Carrying costs
as
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Carrying costs include opportunity costs, storage costs, staffing costs, equipment and maintenance
costs, insurance costs, interest charges for financing inventories, taxes, security and other expenses
associated with holding materials in warehouses.
y
249. (d) i, ii, iii, iv
Acquisition (purchase) costs, holding costs, ordering costs and stock-out costs are considered in
nl
calculating inventory costs.

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250. (c) Total inventory costs

EOQ model always aims to reduce total inventory costs, which include ordering costs, purchasing
costs, carrying costs and stock-out costs.
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251. (c) Stock-out cost

Stock-out costs arise only when the inventory is exhausted and the firm is unable to meet demand.
U
Such costs are penalty costs and come into the picture only when there is no inventory to meet
demand. Hence, it is a secondary inventory cost.
BS
252. (a) Lead-time

Lead time refers to the time between placing the order for the material and receiving it.
253. (c) 1000 units

rI
Opening inventory = 500 units, Closing inventory = 200 units, Sales forecast = 1300 units
Fo
Assuming actual sales is equal to forecast (1300 units), Sales = 500 units (inventory) + 800 units
(produced). But, closing inventory is 200 units, which means that it is part of the total lot produced
(as the opening inventory of 500 units was sold). Hence, total units produced = 800 units (sold) +
200 units (inventory) = 1000 units.
254. (d) i, iii and iv

Finished product inventories offer organizations the ability to show products to customers, not raw
material inventories.
98
Part A
255. (d) The purchase price per unit varies depending upon quantity ordered
One of the assumptions of the EOQ model is that purchase price per unit is fixed and is
independent of order quantity. It means that benefits of economies of scale, if any, are not taken
into consideration.
256. (b) 200 units

Assuming 50 units /week as weekly demand, EOQ can be calculated using the formula:
09
2C o D
EOQ =
Ch
20
Where, Co is the ordering cost (Rs. 200), D is the demand in units per unit time (50 units), Ch is the
holding cost per unit per unit time (Rs. 0.50). Hence, EOQ = √((2 x 200 x 50)/ 0.5) = 200 units.
of
257. (a) Q system
Under the Q system (also called Fixed Order Quantity System), inventory is continuously checked
and a new order is placed when the inventory level reaches the reorder point.
s
as
258. (b) To avoid backlogs in customer order
Organizations maintain finished goods inventory to avoid backlogs in customer orders. Finished
goods inventory helps during sudden increase in customer demand.
Cl
259. (b) Work-in-progress inventory
Work-in-progress goods are semi-finished items stored temporarily during the production process.
y
260. (c) Finished products
nl
Firms maintain adequate levels of inventory to successfully operate in an uncertain environment.

Inventories help firms take advantage of unexpected opportunities. For instance, a sudden and
O
unexpected increase in demand can be met with larger finished goods inventory.
261. (d) Hiring cost

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Hiring costs are those incurred by an organization as part of recruitment. It is not a factor that
influences the quantity of material ordered. Purchase, carrying and ordering costs influence the
quantity ordered.
U
262. (a) Purchase costs

The cost of purchasing a unit of a particular item is its purchase cost. Suppliers sometimes provide
BS
discounts to customers (manufacturers) based on purchase costs (quantity of purchase). Discounts

are usually given while purchasing quantities in bulk.
263. (d) Material-receiving costs

rI
While pilferage, spillage and maintenance costs come under carrying costs, material-receiving
costs fall under ordering costs.
Fo
264. (d) i/r, ii/p, iii/s, iv/q

Discounts are given by suppliers on the basis of total cost of purchase when material is purchased
in bulk. Damage to inventory either in the warehouse or in production facilities can increase
carrying costs. Ordering costs are considered fixed and so decrease with increase in order size.
Marketers may lose customer goodwill if they cannot supply goods on time due to non-availability
of finished goods in the inventory.
99
265. (b) Q system

In Q system, order quantity (Q) is always constant and the order is placed when the level of
inventory reaches the reorder point. This system is also referred to as the reorder point system.
266. (b) Time required for replenishing inventory after placing an order
Lead time gives the time required to replenish inventory once the order is placed. Lead time is an
important consideration in inventory management.
09
267. (a) i and ii
The calculation of the reorder point should ensure that inventory level reaches zero at the end of
each reordering cycle. This is because a positive inventory level at the end of the cycle results in a
20
rise in average inventory and associated costs. To ensure this condition is satisfied, reorder level is
set equal to the number of units estimated to be used during the lead-time.
268. (b) 175 units
of
Reorder point = average daily demand x lead time
= 25 x 7
= 175 units
s
as
269. (d) Stock-out costs
One of the assumptions of EOQ concept is that stock-outs are not allowed. It implies that inventory
Cl
is replenished just before the time when it becomes zero. Hence, the total cost of maintaining
inventory can be assumed to have only three components: ordering costs, holding costs and
variable item costs.
y
270. (b) Rs.8000
Total order cost (A) = fixed cost per order x (demand / quantity per order)
nl
= 2000 x (300000/75000)
= 2000 x 4
O
= 8000
271. (c) Rs.150000

se
Holding costs per order (B) = holding costs per unit x (quantity per order /2)
= 5 x (75000/2)
U
= 5 x 37500
= 150000
272. (b) Rs.3000000
BS
Total Variable cost (C) = item cost x demand

= 10 x 300000
= 3000000
rI
273. (b) Rs.3158000

Fo
Total cost of maintaining inventory = Total order cost (A) + Holding cost per order (B) +
variable cost (C)
= 8000 + 150000 + 3000000
= 3158000
274. (b) Reorder level
Reorder level is the quantity of inventory where a new order is placed for replenishment. In the Q
system, the reorder level is equal to quantity used in lead time plus safety stock. But in EOQ
model, it is equal only to the quantity used in the lead time.
100
Part A
275. (c) EOQ

In the EOQ system, lead time is known and is assumed to remain constant.
276. (d) Producing and transporting in larger batches reduces material-handling and
production costs
The first three options are reasons for holding raw material inventory while option (d) is a reason
to hold semi-finished goods inventory. Producing and transporting in larger batches reduces
material-handling and production costs of semi-finished goods for a firm.
09
277. (a) ABC
ABC is one of the most widely used inventory classification models. It is also known as ‘Always
20
Better Control’ model. As per ABC classification, items are classified on the basis of their annual
consumption value. Items with highest value are classified as A, next lower value items are
classified as B and the lowest value items are classified as C.
of
278. (a) Minimizing total inventory cost
EOQ method is used to identify order quantity to minimize total cost i.e. the sum of ordering and
carrying costs.
s
279. (d) i, ii and iii
as
All the above factors must be taken into consideration by the purchase department while buying
material and supplies from a supplier.
Cl
280. (a) Materials purchased
Value analysis aims at reviewing design of materials to be procured and attempts to modify the
design to replace high cost and obsolete parts with cost effective parts and designs. Value analysis
y
mainly aims at controlling costs of purchasing material.
nl
281. (d) Quality control

Quality control is part of raw material purchase. It is an activity taken up by the production/ quality
O
control department, sometimes in conjunction with the purchase department.

se
Processing requisition for materials and supplies, locating suppliers or vendors, and negotiating
purchasing contracts are tasks carried out by the purchase department.
U
283. (d) Standardized packaging for all types of components

Standardized packaging for all kinds of parts is a characteristic of modern purchasing. Earlier, the
type of packaging depended on the type of components.
BS
284. (a) Procurement requests

Procurement requests are placed by individual departments, which require materials and the
purchase manager only facilitates requests. This is more so in a bio-pharmaceutical company
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where the R&D department requests for specialty chemicals and instruments.
285. (d) Public relations
Fo
Maintaining public relations does not fall under the purview of the purchase department in a
production-centric firm. It is the responsibility of the marketing or corporate communications/PR
department.
286. (b) Purchase indent -Quotation - Purchase order
A purchase indent from a department within the firm initiates the purchase process. This is
followed by request for quotations from suppliers by the purchase department.. After selecting a
supplier, the purchase order is placed by the purchase department.
101
287. (c) Value engineering

Value engineering is related to product review and components in terms of design and other
features so as to retain all properties of the item while reducing cost as much as possible.

All three options are factors that influence vendor selection. The cost, quality and reliability of a
product along with the delivery and service determine the preference for a particular vendor.
09
289. (b) Decentralized purchasing
When specific material requirements vary between production facilities, a firm must adopt a
decentralized purchasing system. Centralized purchasing reduces flexibility and outsourcing
20
reduces control of the firm over the purchasing function.
290. (d) ABC analysis
of
ABC analysis is used in materials management and is not performed by the purchase manager.
291. (d) i, ii, iii, iv

All the options provide information about vendors and suppliers.
s
as
292. (d) Negotiate with suppliers
Value analysis deals with measuring and enhancing the value of a material/product. It reviews the
design of products and identifies costly components in the product. Attempts are made to replace
Cl
high-cost parts with economical ones. Negotiating with suppliers is not an activity under value
analysis, though it is part of the purchase function.
y
293. (c) Can the vendor supply the material at the right time?
Value analysis is concerned about increasing product value by reviewing design and modifying the
nl
product without affecting its usability. Option (d) relates to vendor supply and does not come
under value analysis.
O
294. (a) Purchase requisitions

Purchase indents are also called requisitions, which include a clear specification of materials
se
required.
295. (a) User department

U
The user department that utilizes material or goods issues purchase indents. They are issued to the
purchase department, which requests for quotations from vendors for the materials.
BS
296. (d) Name of the user department

The name of the user department is present in the purchase indent or requisition and not in the
supplier’s quotation. The latter usually contains price per unit, delivery schedule, mode of
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transportation, special terms and conditions, etc.
297. (c) Purchase order

Fo
The purchase order is the legal document authorizing the supplier to supply goods. It represents the
buyer’s obligation to buy materials against specified terms.
298. (b) Purchase department

The purchase department is responsible for proper delivery of goods purchased. As this department
acts as an interface between the user department and suppliers, it is answerable to the user
department for delays in delivery of material.
102
Part A
299. (d) When the quantity of the part required is small

India Rubber can buy the part when the quantity required is small or when total costs to make it
are more than buying costs.
300. (d) To take advantage of knowledge and expertise of suppliers

Organizations opt for in-house production when they want to control all value chain activities, to
use excess plant capacity productively, or when they do not want competitors to get to know the
09
product design. Suppliers’ knowledge and expertise is a factor when the organization decides to
outsource rather than produce in-house.
301. (a) ABC
20
The ABC classification system is also referred to as ABC (Always Better Control) analysis. The
purpose is to alter expenses associated with controlling materials according to their usage value
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302. (a) Conveyance authorization card
A Kanban system uses three types of cards to initiate material transactions: production
authorization card, vendor authorization card and conveyance authorization card. A conveyance
s
authorization card authorizes a materials handling agent to move the tray to a specified destination.
as
This specifies the product’s name, its identification number and delivery destination. The dual-card
Kanban system makes use of two Kanban cards, a conveyance card and a vendor card.
Cl
303. (a) Vendor analysis
The functions of materials management are production control, materials handling and inventory
control. Vendor analysis is associated with purchase management (purchase department).
y
304. (c) The system considers availability of materials
nl
Resource allocation is made based on value of the inventory. The more valuable the inventory is,
the more the resources allocated. Even though the method facilitates selective control of materials,
O
the method suffers from several limitations. One limitation is that ABC analysis does not consider
the aspect of availability of materials.
305. (a) 1 & 2
se
Calculate usage value of each material and arrange them in the descending order of their usage
values.
U
Type of material Usage Value % of usage value Cumulative value

(cost per unit x annual usage)
BS
1 20000 37.90 37.90

2 20400 38.65 76.55
rI
3 6000 11.37 87.92

4 5500 10.42 98.34
Fo
5 500 0.95 99.29

6 375 0.71 100
Total 52775 100
Here, we can see that two materials (materials 1 and 2) out of 6 materials account for 76.55% of
total costs. That means 76.55% of total resources are to be assigned to control 33.33% of the
materials (two out of six materials). So, materials 1 and 2 are categorized ‘A’ type materials.
103
306. (c) i, ii and iii

Alternatives i, ii and iii are tasks carried out by the raw material inventory department. Alternative
‘iv’ is associated with the receiving department. The tasks of the receiving department include
unpacking incoming materials, checking quantity and inspecting quality and then generating
receiving reports.

Storing raw materials safely is a task of the raw material department. All other tasks are carried out
09
by the shipping department.
308. (a) An item is critical if its usage is high
20
In ABC analysis, an item is said to be critical if its usage is high. The purpose of this analysis is to
alter expenses associated with controlling materials according to their usage value.
309. (a) Characteristics of products
of
The details of product characteristics need not be entered in inventory records file as the inventory
department has nothing to do with product attributes.
s
310. (c) Locating and receiving raw materials
as
Locating and receiving raw materials is the function of the raw materials inventory department. All
the other options are functions of the production department. The function of production control
Cl
aims at directing and regulating goods movement through the entire manufacturing cycle from the
process of purchasing materials to making the finished product. The departments involved in this
function are purchasing department, receiving department, raw materials inventory department and
production department.
y
311. (b) Processing requisitions for materials

nl
Processing requisitions for material is done by the purchase department and not by the receiving
department. The main task of the former is to acquire the required materials in the right quantity,
O
of the right quality, from the right source, at the right time and at the least possible cost. The
primary responsibility of the receiving department is to process incoming shipments of materials.
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312. (c) Materials management

Materials management is the study of flow of materials through various operations in a production
U
facility. Inventory management deals with managing inventory and maintaining it at optimum
levels. Operations management encompasses both materials management and inventory
management. Purchase management is a separate sub-function under materials management.
BS
313. (b) i, ii and iv

Shortage in materials supply affects the firm in many ways. They include stoppage or breakage in
production, delay in delivery to customers, increase in operational expenses, etc. On the other
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hand, the efficiency of the production process actually decreases rather than rising.
314. (a) Stock large volumes of materials to avoid shortage

Fo
To reduce shortages it is not advisable for a materials manager to stock huge volumes of inventory.
This will lead to heavy carrying costs, which will eat into the firm’s profitability.
315. (b) 25% increase

Solution:
Sales = Rs.60 lakhs, Profit = Rs.12 lakhs (20% of sales), Material cost = 30 lakhs (50% of sales). If
3 lakhs are saved in material costs, the amount is passed onto profits. The percentage change in
profit = (3/12) x 100 = 25%. The profit now is 15 lakhs. Hence, profit increases by 25%
104
Part A
316. (a) To maintain low inventory turnover

One of the objectives of materials management is to maintain high inventory turnover (not low) so
that less capital is tied up in inventory.
317. (c) Finished goods inventory department
Purchase department, raw material inventory department, receiving department and production
department are associated with production control. The finished goods inventory department is
associated with inventory control function.
09
318. (c) Non-uniformity in maintaining records
Under centralized purchasing, purchase records are uniformly maintained. This is not the case
20
under decentralized purchasing where there is a great deal of difference in record maintenance
across purchase departments in different units of the firm.
319. (d) Information on inventory levels
of
A materials receiving report contains quantity of material, price, description and other technical
specifications. Information on inventory levels is associated with an inventory records file.
s
320. (b) Maintaining stocks of material at various stages of production
as
The tasks of raw material inventory department include labeling raw materials to make them ready
for use in the production process, storing raw materials safely and protecting them from damage
and pilferage, updating and maintaining records of quantities of various raw materials, arranging
Cl
for replenishment of stocks in liaison with the purchase department and auditing raw materials
periodically. Maintaining stocks of material at various stages of production is the task of the
inventory control department.
y
321. (a) Purchase department

nl
The inventory control function is represented in three departments - Raw materials inventory
department, production department and finished goods inventory department. Purchase department
O
is associated with the inventory control function of materials management.

322. (c) To move materials to the required location in a timely and cost-effective way without
se
affecting the primary objective of production control and inventory control

Materials handling refers to managing the physical movement of materials into, through, and out
of the firm. The primary objective of materials management is to move materials to the required
U
location in a timely and cost-effective way without affecting the primary objective of production
control and inventory control functions.
BS
323. (b) Physical distribution

The sub-function ‘physical distribution’ is associated with the movement of finished products and
other materials. The sub-function ‘traffic’ deals with arranging the most economic transportation
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method for both incoming and outgoing materials. Finally, the sub-function ‘logistics’ deals with
obtaining, producing and distributing materials and products at/to the desired place, at the right
time.
Fo
324. (c) Variable-sequence robot

The function of variable-sequence robots is similar to that of fixed-sequence robots, but the
sequence of tasks can be changed depending on the nature of operations to be performed.
325. (c) Maintain minimum inventory till the next replenishment
JIT purchasing implies that inventory can be replenished just-in-time for manufacture. The method
advocates reduction in size of purchased quantities to the extent that materials reach the production
point directly. Hence, safety stocks need not be maintained.
105
326. (d) Reduced flexibility

In JIT purchasing, flexibility is higher in terms of ability to change materials required at the last
minute depending on changes in customer/client preferences, etc. Thus, flexibility is not reduced.
It rather increases.
327. (b) Toyota Motor Company

The Kanban system was developed by Toyota Motor Company, Japan.
09
328. (c) Conveyance authorization card
A conveyance authorization card authorizes a materials handling agent to move the tray containing
material or component parts to a specified workstation. Here, this material is used in the
20
production process.
329. (d) Type 5
of
Material type Quantity used per year Cost per unit Usage value
(quantity used x cost per unit)
1 2000 20 40000
s
2 4500 10 45000
as
3 1500 35 52500
4 3000 20 60000
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5 2500 25 62500
330. (a) 40000

y
Material type Quantity used per year Cost per unit Usage value
nl
1 2000 20 40000
2 4500 10 45000
O
3 1500 35 52500
4 3000 20 60000
se
5 2500 25 62500
331. (b) Type 5
U
From the above table it is evident that Type 5 material have the highest usage values of Rs.60000
and Rs.62500 respectively. Hence, it falls under ‘A’ category.
BS
332. (c) Type 1

Type 1 material has the least usage value of Rs.40000. Hence, this material is under C category.
333. (b) Production authorization card
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authorization card, vendor authorization card and conveyance authorization card. The production
authorization card authorizes the production department to start the production process. This card
Fo
describes the product’s name, identification number and description and the list of materials
needed for continuing the production process.
334. (b) Materials requirement planning

The primary objective of an MRP system is to manage the inventories of parts which are demand-
dependent and schedule production activities. MRP system helps an operations manager compute
the net requirement of a component after taking into consideration inventory on hand, scheduled
receipts and order releases.
106
Part A
335. (d) i, ii, iii, iv

An MRP system requires a host of information that includes: customer orders pending for future
deliveries; unfinished orders that must be completed in the planned production period; demand
forecasts that specify the quantity of products demanded and the time period in which these
demands are to be satisfied; capacity information that helps anticipate and correct resource
shortage; details of dependent demand inventory items at various stages of the transformation
process and the stages through which these items traverse to make an end product; changes in
inventory requirements due to product design changes expected during the planning time period;
09
available inventory at the beginning of the planning time period; quantities of ordered, purchased
or contracted inventory items that an organization expects to receive during the planning time
period
20
336. (b) Greater investment in inventory
The primary purpose of MRP is to provide adequate supply of demand-dependent inventory as and
when required. By doing so it helps an organization improve customer service, reduce (not
of
increase) investment in inventory, improve operating efficiency and speed up response to market
changes
s
337. (d) i, ii, iii, iv
as
All the statements are true. The Bills of Material contain the list of materials along with the
quantity required to produce one unit of a product. It shows the hierarchical levels or phases a
product goes through during production (from raw material to end product). It consists of the
Cl
complete list of all end products, the structure (subassemblies, parts, and raw materials which
constitute the product assembly) of the products, and the quantity of each item required for
producing each higher-level product in the hierarchy. It also contains information about whether a
particular item was produced internally or purchased from external sources. The purchase or
y
production lead-time to acquire the item is also specified.
nl
338. (c) Longer idle time

Ability to price competitively, better customer service, and reduced set-up and tear-down costs are
O
advantages. In addition, comprehensive material tracking and optimized production scheduling are
also advantages of MRP system. They help in better response to market demand and lower the lead
time.
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339. (a) Required quantities and delivery dates of final products

U
The Master Production Schedule (MPS) file contains information about when and how many units
of finished products are required. It also gives the available cumulative lead-time for purchasing,
receiving, fabricating, and assembling.
BS
340. (c) i and iii

The primary objective of an MRP system is to manage demand-dependent inventories and
schedule production activities.
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341. (b) Finished goods inventory on hand

MRP system helps an operations manager find the net requirement of a component after taking
Fo
into consideration inventory on hand, scheduled receipts and order releases. Finished goods
inventory is not considered under MRP as it is the final output of production and MRP system is
part of the production process.
342. (c) i, ii and iii
The operating efficiency can be improved by controlling the raw material inventory, and by
responding quickly to production requirements by speeding up or delaying the material supply.
Controlling the movement of finished products is not under the scope of MRP.
107
343. (d) 30 and 45

One unit of B requires 3 units of E. One unit of E requires 2 units of F. Therefore, total quantity of
F required = (3 x 2 x 5) = 30 units.
One unit of E requires 3 units of G. One unit of B requires 3 units of E. Therefore, total quantity of
G required = (3 x 3 x 5) = 45 units.
344. (b) 5 hours
F & G are required to produce E. Lead times of F & G are 1 hour and 2 hours respectively.
09
Therefore, production of E will start only after 2 hours when both F & G are ready. The lead time
to produce E is 2 hours. Hence, to produce E the total time required is 4 hours. After E is
produced, it takes one hour before production of B can commence. Therefore, the total time to
20
produce B is (2 + 2 + 1) = 5 hours.
345. (c) 48 and 48
One unit of I requires 3 units of G. One unit of D requires 2 units of I. Therefore, total quantity of
of
G required = (3 x 2 x 8) = 48 units
One unit of I requires 3 units of H. One unit of D requires 2 units of I. Total quantity of H required
= (3 x 2 x 8) = 48 units
s
as
346. (d) 9 hours
G & H are required to produce D. Lead times of G & H is 2 hours each. Hence, production of I
will start only after 2 hours. The lead time to produce I is 3 hours. To produce I the total time
Cl
required is 5 hours. After I is produced, it takes 4 hours to produce D. Therefore, the total time to
produce D is (2 + 3 + 4) = 9 hours
347. (d) 600 units
y
One unit of E requires 3 units of G. One unit of B requires 3 units of E. One unit of alpha requires
nl
four units of B. Therefore, total quantity of G required = (3 x 3 x 4 x 10) = 360 units.

One unit of I requires 3 units of G. One unit of D requires 2 units of I. One unit of alpha requires 4
units of D. Therefore, total quantity of G required = (3 x 2 x 4 x 10) = 240 units
O
Total units of G required are 360 + 240 = 600 units.

348. (b) 11 hours
se
B, C, & D are required to produce alpha. Time required to produce B is 5 hours, for C it is 5 hours
and for D it is 9 hours. Hence one must wait for 4 hours for D to be ready. Once D is ready, it takes
U
2 hours to produce alpha. Hence, total time required to produce alpha is 9+2 = 11 hours.
349. (d) Order release
BS
Order release is part of the primary reports, which is an output component of the MRP system. The
steps in information processing include explosion, netting, offsetting and finally consolidation of
material requirements.
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350. (b) i and iii

Explosion uses the information from MPS and BOM to develop the sequence to be followed to
produce the end product.
Fo
351. (b) Netting

Netting is the step in MRP information processing that is used to develop a materials requirement
plan for each item in the BOM file for each time bracket.
352. (c) Offsetting
Offsetting uses the information obtained from explosion and netting to determine planned order
releases i.e. the quantities to be ordered (either internally through production or from an external
supplier) so that the materials arrive as and when they are needed.
108
Part A
353. (a) Next lower

The planned order releases for the finished product or component become the gross product
requirement for items at the next lower level in the product structure chart.
354. (c) i/s, ii/r, iii/p, iv/q
Performance reports contain information about the performance of an MRP system. They also help
identify a problem and verify whether the system can achieve planned objectives. Exception
reports contain information about errors and deviations from planned objectives. Suspension
09
reports are generated to cancel an order due to changes in MPS. Planning reports contain
information about material requirements.
20
355. (d) Longer implementation time
The implementation of an MRP system involves huge costs and takes long time for installation.
Hence, longer implementation time is a disadvantage of the MRP system
of
356. (d) i, ii, iii, iv
The factors that ensure the effective implementation of MRP systems include commitment from
top management, educating and training the employees about the system, continuous collection of
s
information regarding the materials used and a high degree of accuracy in all operations.
as
357. (b) Obsolete data
Obsolete data like an outdated BOM can badly affect the success of an MRP system. Hence, all the
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data pertaining to materials should be accurate and up-to-date.
358. (c) Assemble-to-order
In assemble-to-order approach in materials requirement planning, only the final assembly of the
y
machine is made based on the customer order specifications. Smith & Smith also does the same. In
nl
assemble-to-stock approach, the firm combines multiple component parts into a finished product,
which is then stocked in inventory to satisfy customer demand. In manufacture-to-order approach
the items are either fabricated or assembled completely in adherence to customer specifications.
O
Items are manufactured by machines to customer orders and do not involve any assembly in
fabricate-to-order approach.
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359. (a) Explosion

The first step in the MRP information processing is that of explosion in which end product is
U
disassembled into components required for its production. It starts with the time when the product
is required and then proceeds backward to determine each production or purchasing activity that is
necessary to make each higher-level item in the product structure chart.
BS
360. (b) Planning report

While master production schedule, bill of materials and inventory records file are inputs to a MRP
system, planning report is an output.
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361. (b) E-F-G-C-A-B-D

The least time on workstation 1 is for job E. Place E at the beginning of the sequence. Least time
Fo
on workstation 2 is again job E, which is already placed. The next least time is for job D on
workstation 2. Place D at the end of the sequence. Continue this process to arrive at the sequence:
E-F-G-C-A-B-D.
362. (b) Sequencing rules
When jobs are processed in a single stage of production, they can be scheduled one after another.
If two or more stages of production are required, firms should ensure that jobs are sequenced in a
way that idle time is minimized. Operations managers can use job sequencing rules and develop a
job sequence that minimizes total time required to complete a given job.
109
363. (b) Backward

The backward scheduling method schedules orders as per their due dates. The operations manager
schedules production activity based on due dates for job orders so that the production activity can
be timed to complete the order on time. Forward and hybrid scheduling are also types of
scheduling methods. Routing is a scheduling activity.
364. (c) Increased overtime costs
09
An increased overtime cost is a disadvantage of a fixed workforce strategy. In this strategy, regular
workers are made to work overtime as part-time workers are not employed to meet additional
demand.
20
365. (c) Work-in-process inventory level is high
Work-in-process inventory will be high in forward scheduling because jobs are assigned based on
earliest available time slots. As the jobs start at the earliest possible time, they are completed
of
before they are required at subsequent work centers.
366. (d) There are large variations in the production process and the equipment is designed
for a broad range of applications
s
as
There are few variations in the production process for repetitive operations. In these operations,
labor is trained and the equipment designed for a narrow range of applications.
Cl
367. (b) Flextour approach
Under Flextour, employees are given some freedom in choosing their start time, but they must
work eight hours a day.
y
368. (a) Help sequence jobs in a way that idle time is minimized
nl
Gantt charts do not help sequence jobs in a way that idle time is minimized. This is possible
through the use of Johnson’s sequencing rules.
O
369. (c) It helps maximize the number of service workstations required

Queuing analysis helps determine the optimum (not maximum) number of workstations required to
se
meet demand.
370. (c) Lower, higher

U
The lower the critical ratio, the higher the priority in sequencing the job in the next day’s
production activities.
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371. (c) 0.714, 0.857, 1.400

Critical ratio = Planned time remaining / actual work remaining
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Job Due Actual work Planned time Critical ratio

Date remaining remaining
1 25 7 25-20 = 5 0.714
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2 32 14 32-20 = 12 0.857
3 27 5 27-20 = 7 1.400
372. (a) Job 1

The critical ratio for job 1 is the least at 0.714. Hence, it is given first priority over job 2. Job 3 is
already ahead of schedule.
110
Part A
373. (d) Critical ratio

The critical ratio method is a job sequencing technique an operations manager can use to verify
whether a job is on schedule. Whatever the method employed, the process of scheduling involves
three activities: routing, loading and dispatching.
374. (d) Maximizing resource allocation
One of the basic objectives of scheduling jobs is to optimize the resources allocated to meet
customer requirements.
09
375. (a) Loading
When assigning specific jobs to each work center, loading decides capacity limitations of centers
20
as well.
376. (a) Flextime approach

Under flextime, employees are given the option of choosing their work timings provided they work
of
for a specified number of hours in a given time period, say a week.
377. (d)
s
Time 1 2 3 4 5 6 7 8 9
as
M1 X1 X1 X1 Y2 Y2 Y2 X3 X3
M2 Y1 Y1 X2 X2 Y3
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In forward scheduling, both jobs start immediately after job orders are received. Job X starts on
machine 1 (M1) and job Y on machine 2 (M2). X runs on M1 for 3 hours and Y runs on M2 for 2
y
hours. Y remains idle for the third hour as X is under process on M1. In the fourth hour Y goes to
M1 for 3 hours and X goes to M2 for 2 hours. Hence in the sixth hour X has to wait to be
nl
processed on M1 as Y is still on M1. In the seventh hour, X goes to M1 for 2 hours and Y goes to
M2 for 1hour. Hence, Job Y gets completed at the end of seventh hour and Job X gets completed at
O
the end of eight hour.
378. (b)
se
Time 1 2 3 4 5 6 7 8 9
M1 X1 X1 X1 Y2 Y2 Y2 X3 X3
U
M2 Y1 Y1 X2 X2 Y3
In backward scheduling, the schedule is calculated backwards from the due date of completion. As
this is nine hours, scheduling starts at the ninth hour and works backwards. Here the last sequence
BS
for jobs X and Y are placed at the ninth hour. X3 needs 2 hours and Y needs 1 hour. M1 is
occupied up to the eighth hour. In the seventh hour Y2 is processed on M1 and X2 on M2. Y2
requires 3 hours and X2 requires 2hours. Y2 would be on M1 until fifth hour and X2 would be
rI
completed in the sixth hour itself. In the fourth hour, X1 must be completed on M1 and Y1 on M2
in the third hour. Hence, X1 starts in the second hour and Y1 in the third hour.
379. (b) 8 hours
Fo
machine 1 (M1) and job Y on machine 2 (M2). X runs on M1 for 3hours and Y runs on M2 for
2hours. Y remains idle for the third hour as X is under process on M1. In the fourth hour Y goes to
processed on M1 as Y is still on M1. In the seventh hour, X goes to M1 for 2hours and Y goes to
M2 for 1hour. Hence, Job Y gets completed at the end of seventh hour and Job X gets completed at
the end of the eighth hour.
111
380. (c) 7 hours

machine 1 (M1) and job Y on machine 2 (M2). X runs on M1 for 3hours and Y runs on M2 for
2hours. Y remains idle for the third hour as X is under process on M1. In the fourth hour Y goes to
processed on M1 as Y is still on M1. In the seventh hour, X goes to M1 for 2hours and Y goes to
M2 for 1hour. Hence, Job Y gets completed at the end of the seventh hour and Job X gets
completed at the end of eighth hour.
09
381. (b) 2 hours
20
requires 3 hours and X2 requires 2 hours. Y2 would be on M1 until the fifth hour and X2 would be
of
completed in the sixth hour itself. In the fourth hour, X1 must be completed on M1 and Y1 on M2
in the third hour. Hence, X1 starts in the second hour and Y1 in the third hour.
382. (c) 3 hours
s
as
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requires 3 hours and X2 requires 2hours. Y2 would be on M1 until the fifth hour and X2 would be
completed in the sixth hour. In the fourth hour, X1 must be completed on M1 and Y1 on M2 in the
third hour. Hence, X1 starts in the second hour and Y1 in the third hour.
y
383. (a) Routing
nl
It explains the sequence of operations and processes to be followed to produce a particular product.
Routing determines what work is to be done and where and how it is to be done. Hence, routing
describes the ‘specification of workflow.’
O
384. (b) Loading

Loading is defined as assigning specific jobs to each work center for the planning period. Loading
se
of jobs is done upto the standard capacity of the workstation.

385. (b) Shortest processing time
U
Here, jobs are processed in the shortest time. Under this rule, jobs with shorter processing times
get completed earlier than jobs with longer processing times. This rule ensures that minimum
number of jobs are left for processing.
BS
386. (c) A – D – C – E – B
From the given data, the earliest due dates are given below:
A – 4 days, B – 8 days, C – 6 days, D – 5 days, and E – 7 days. Therefore, the order of jobs is A –
rI
D – C – E – B.
387. (a) 4.2 days
Fo
Job Sequence Processing Time Due Date Flow Time Delay

A 4 4 0+4=4 4-4=0
D 2 5 4+2=6 6–5=1
C 4 6 6 + 4 = 10 10 – 6 = 4
E 3 7 10 + 3 = 13 13 – 7 = 6
B 5 8 13 + 5 =18 18 – 8 = 10
Average time = (0+1+4+6+10)/5 = 21/5 = 4.2 days
112
Part A
388. (c) 13 days

B 5 7 0+5=5 5–5=0
A 4 4 5+4=9 9–5=5
C 4 6 9 + 4 = 13 13 – 6 = 7
09
E 3 7 13 + 3 = 16 16 – 7 = 9
D 2 5 16 + 2 = 18 18 – 5 = 13
20
Hence, the total delay for job D is 13 days.
389. (b) 6.8 days
of
B 5 7 0+5 = 5 5–5=0
s
A 4 4 5+4 = 9 9–5=5
as
C 4 6 9+4 = 13 13 – 6 = 7
E 3
Cl 7 13+3=16 16 – 7 = 9
D 2 5 16+2 = 18 18 – 5 = 13
y
Average delay = (0+5+7+9+13) /5 = 34/5 = 6.8 days
nl
390. (c) 11 days

Job Sequence Processing Time Due Date Time Flow Delay
O
A 4 4 0+4=4 4–4=0
B 5 8 4+5=9 9–8=1
se
C 4 6 9 + 4 = 13 13 – 6 = 7
U
D 2 5 13 + 2 = 15 15 – 5 = 10
E 3 7 15 + 3 =18 18 – 7 = 11
BS
The last job performed using this rule is E and the delay for job E is 11 days.
391. (d) 5.8 days
rI
A 4 4 0+4 = 4 4–4=0
Fo
B 5 8 4+5 = 9 9–8=1
C 4 6 9+4 = 13 13 – 6 = 7
D 2 5 13+2 =15 15 – 5 = 10
E 3 7 15+3=18 18 – 7 = 11
Average delay = (0+1+7+10+11)/5 = 29/5 = 5.8 days
113
392. (a) A
Job A has the shortest slack time as the difference between due date and processing time for job A
is (4 – 4) = 0 days.
393. (d) 11 days
A 4 4 0+4 = 4 4–4=0
09
C 4 6 4+4 = 8 8–6=2
D 2 5 8+2 =10 10 – 5 = 5
20
B 5 8 10+5 =15 15 – 8 = 7
E 3 7 15+3=18 18 – 7 = 11
Jobs D and B are having the same slack time of three (5 – 2) & (8 – 5) days respectively. But job D
has a processing time of 2 days, which is less than for job B (5 days). Here D is dispatched before
of
B. But the last job to be processed using this rule is E, which has a maximum slack time of 4 (7– 3)
days. The time delay for job E is 11 days.
s
394. (b) 5.0 days
as
A 4 4 0+4 = 4 4–4=0
Cl
C 4 6 4+4 = 8 8–6=2
D 2 5 8+2 =10 10 – 5 = 5
B 5 8 10+5 =15 15 – 8 = 7
y
E 3 7 15+3=18 18 – 7 = 11
nl
Average delay = (0+2+5+7+11)/5 = 25/5 = 5 days

O
395. (b) 4.4 days

se
D 2 5 0+2 =2 0
E 3 7 2+3=5 0
U
A 4 4 5+4 = 9 9–4=5
BS
C 4 6 9+4 = 13 13 – 6 = 7
B 5 8 13+5 =18 18 – 8 = 10
rI
Average time delay = (0+0+5+7+10)/5 = 22/5= 4.4 days

396. (a) Earliest due date
Fo
Average delay using each of these rules (calculated earlier) is as follows:

Earliest due date = 4.2 days, First in, first serve = 5.8 days, Shortest processing time = 4.4 days,
and Slack time remaining = 5.0 days. Hence, to reduce the average delay to a minimum, earliest
due date rule can be suggested for the job A, B, C. D, and E.
397. (b) Repetitive operations
Repetitive operations are also called continuous operations as they are performed continuously to
produce goods in bulk. Here, stock-outs can hinder the production process and lead to high costs
for the firm.
114
Part A
398. (d) 5 weeks

Job A was processed on machine X in the first two weeks and on machine Y in the 6th and 7th
weeks. Finally, it is processed on machine Z in week 8. The total time is 5 weeks.
399. (a) Machine X
Machine X was the most utilized. From the Gantt chart, it is clear it was used for 6 weeks.
Machines Y and Z were utilized for 4 weeks each.
09
Johnson’s job sequencing rules help the operations managers in minimizing processing time,
maximizing the operating efficiency, and reducing the operating costs.
20
401. (c) Gi = Ai1+Ai2+Ai3+…+Aim-1
Hi= Ai2+Ai3+Ai4+…+Aim
of
A problem of n jobs and m machines can be simplified to n jobs and two machines to use
Johnson’s sequencing rule. Two fictitious machines (Gi and Hi) are introduced where
Gi = Ai1+Ai2+Ai3+…+Aim-1 and Hi= Ai2+Ai3+Ai4+…+Aim
s
402. (c) Rate of arrival of customers is greater than the rate at which service is rendered
as
In a service organization, when the arrival rate of customers is greater than the rate at which
service is rendered to each customer a queue forms.
Cl
403. (d) To minimize processing time of jobs
Waiting time in a queue often proves costly to service firms and so they use queuing analysis to
minimize this as far as possible. Queuing also helps operations managers to determine the
y
optimum number of service stations required, which can lead them to striking a balance between
nl
waiting costs and cost of providing additional service stations. Johnson’s job sequencing rules is
useful for proper scheduling of jobs. It helps firms minimize the processing time of jobs
O
404. (b) Planned time remaining / work still remaining

Critical ratio is calculated by dividing the actual time remaining to complete work by work
remaining (in time units). If the critical ratio of an operation is less than one, the operation is
se
behind schedule. If the critical ratio is more than one the operation is being processed ahead of
schedule.
U
405. (d) E
Critical ratio is calculated by dividing the planned time remaining to complete the work by actual
BS
work remaining (in time units). Critical ratio for Project A = (150 -100)/60 = 0.833, Critical ratio
for Project B = (135 - 00)/30 = 1.167, Critical ratio for Project C = (180 -100)/70 = 1.143, Critical
ratio for Project D = (140 -100)/45 = 0.889, Critical ratio for Project E = (120 -100)/30 = 0.667.
Projects A, D and E have critical ratio less than one. Hence they are on priority as they are behind
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schedule. Among them Project E has the least critical ratio of 0.667 and therefore is of highest
priority.
Fo
406. (c) B and C

If the critical ratio of an operation is less than one, it can be said the operation is behind schedule.
If the critical ratio is more than one, the operation is being processed ahead of schedule. Of the five
projects, only B and C have a critical ratio more than one. Hence, B and C are ahead of schedule.
407. (c) E – A – D – C – B
The lower the critical ratio, the higher the priority for sequencing that job during further
production. Hence, by arranging the five projects in order from least critical ratio to highest critical
ratio, we get, E – A – D – C – B.
115
408. (d) To minimize inventory costs

Minimizing inventory costs is the objective of inventory management. Scheduling is concerned
with meeting customer requirements on time by carrying out the production process efficiently and
by reducing service delays.
409. (a) ERP uses multiple databases to store information
ERP uses a centralized database to integrate the diverse business functions like marketing,
production, finance, etc. This facilitates information flow between departments. The disadvantage
09
of ERP implementation is that it takes a long time and involves huge costs.
410. (c) Advances in software and hardware technologies
20
Since the 1970s, advancements in computer and communication hardware have changed the entire
ERP implementation process and have made it highly complex.
411. (d) Marketers can take speedy decisions in a dynamic market environment
of
Options (a), (b) and (c) are factors that have led to the need for business process reengineering.
Option (d) is a consequence of BPR implementation. Corporate restructuring can help marketers
take speedy decisions in a dynamic market environment.
s
412. (b) To provide an overview of operations without focusing on processes and systems
as
The purpose of business modeling is to provide a general overview of the operations of a business
without going into the technical details of processes and systems. It defines the activities
Cl
performed and workflow structure in a broad manner.
413. (d) Market structure
A good business model should be comprehensible, coherent and complete. It should define clearly
y
the different systems and subsystems of a business. A business model is developed on the basis of
nl
the organization's goals, objectives and strategic plans. The market structure is external to the
organization and is one of the many factors that helps decide on the organization's goals, objectives
and strategic plans.
O
414. (b) i, ii, iv

Integration of data across departments helps in better connectivity and smooth flow of information.
se
It reduces data redundancy and ensures availability of right information to the concerned
department or personnel.
U
415. (b) ii and iii

The technology used should be scalable and should support open and non-proprietary technology
BS
standards. These characteristics reduce risk and ensure the compatibility of the systems with other
IT solutions. The technology should be adaptable to any future changes in business processes
without excessively incurring large investment in up gradation.
rI
Cost of consulting, process redesign and training are incurred in various stages of ERP
implementation.
Fo
417. (b) i and ii

Information gathered from mapping and gap analysis is used for customization of the ERP
package. The other two options are not basic requirements for customizing an ERP package.
418. (d) Steering committee
The key activity of the steering committee is to monitor the ERP implementation process
continuously in order to identify deviations, cost overruns, resource requirements etc, during ERP
implementation.
116
Part A
419. (a) To assess the readiness of the organization to accept change

Defining corporate needs before ERP implementation helps the organization to assess its readiness
to change. Implementing an ERP system involves the redefinition of the roles of different
functional departments and the authority and responsibility of individuals throughout the
organization. Hence, organizations have to adapt to these changes as quickly as possible.
420. (b) To assess the implications of the changes
Even though an organization may be willing to adapt to changes, it may not be able to assess the
09
implications of the changes. Hence, it must undergo a brief business process redesign exercise
before actual implementation.
20
To carryout successful ERP implementation, the members of the steering committee should be
able to understand business redesign and integration. The steering team should be trained in
process mapping and reengineering methodology and it should be fully involved in the process
of
redesign so that it can guide the team members (implementation team) properly.
422. (d) Customized products produced at reasonable costs
s
“Customized products produced at reasonable costs” is an example of an ‘order winner.’
as
The remaining are examples of qualifiers that is a basic requirement for any ERP marketer.
423. (c) Set up tough quality targets
Cl
Tough quality targets can be set up if the organization uses quality as the order winner. Further,
when quality is given more importance, price of the product shoots up as quality never comes
cheap.
y
424. (c) Durability
nl
Durability of a product is defined as the measure of the product’s life in terms of both its technical
and economic dimensions.
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425. (b) Product range

Product range implies all the products that are offered by an organization. HDFC Bank offers a
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wide range of products like deposits, loans, bank accounts, NRI products, insurance products,
investment products like mutual funds, pension plans, etc.
U
426. (a) Modes of transportation, distribution and inventory management

Logistics is concerned with transportation of materials, distribution of finished products, inventory
of materials and finished products in warehouses, etc. Selection of suppliers for supply of raw
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materials is a function of inventory management. Layout of warehouses, administrative facilities

and plants is associated with facilities location and layout decisions. Effective management of
material flow in the organization is associated with materials management.
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427. (b) i, ii, iii, iv, v, vi, vii

To improve ESCM implementation, the following activities should be undertaken:
Fo
1) Understand and evaluate the level of integration within the organization, 2) Determine the
number of suppliers with direct influence over products or services delivered to customers across
the entire supply chain, 3) Divide suppliers into different categories: first tier, second tier and so
on, 4) Define customer base in term of sales, profitability, size, etc., 5) Improve information
infrastructure within the organization to accommodate ESCM requirements, 6) Constitute a team
with representation from various functions within the organization and representatives from
suppliers and customers to plan and carry out implementation, 7) Identify leaders capable of
guiding the implementation process competently.
117
428. (d) Customer

Supply chain members include manufacturers, suppliers, distributors, wholesalers, retailers,
logistic service providers, etc. Customers are the basis for all supply chain activities. Supply chain
members strive hard to meet customer demand for products they deal with.
429. (d) Improved customer satisfaction
Tangible benefits include revenue growth, improved facility utilization, optimized inventory
management, etc. Intangible benefits include improvement in quality, improvement in customer
09
satisfaction and enhanced customer and supplier relationships.
430. (a) Facilities close to the target market improve the performance of the supply chain
20
The capacity and location of a facility has a significant effect on the performance of the supply
chain. More facilities close to the customer may improve supply chain effectiveness although cost
of maintenance of so many facilities will be high.
of
431. (c) Firms never custom design a logistic network to meet the individual requirements of
customers
Companies usually design logistics systems either to meet average service requirements of all
s
customers or to satisfy the toughest requirements of a single customer. However, both these
as
approaches lead to poor resource utilization. Hence, a certain amount of customization is built into
the network to meet specific requirements of customers.
432. (a) Quality and performance management
Cl
Quality and performance management is a component of SCM and not considered a principle of
SCM. All other options mentioned are principles of supply chain management.
y
433. (b) Supplier
nl
The order-to-delivery process can be used to evaluate suppliers’ performance on the basis of
criteria like on-time delivery, cost, defects, lead time, flexibility in scheduled time, etc.
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434. (b) i, ii, iii

The quality and performance component is related to initiatives that organizations and suppliers
take towards improving and maintaining quality standards. It helps identify quality defects in
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supplier products and facilitates cooperation between suppliers and the manufacturer to improve
the quality of items supplied.
U
435. (c) Strive for heavy discounts to improve the organization’s short-term profitability
To improve supplier satisfaction, organizations should have clear and mutually understood rules of
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relationship. Organizations should show commitment for long-term profitability and success of
suppliers. This commitment would require suppliers’ involvement in new product development
and improvements in current products or services. But focus on discounts to increase short-term
profits will hamper development and maintenance of long-term relationships with suppliers.
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436. (d) i, ii, iii

Measurements provide information on inputs, outputs, performance of business processes,
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supplier’s performance, etc. The latter can be measured using metrics like on-time delivery
performance, quality, etc. Periodic evaluation of performance of processes, programs and systems
is associated with periodic review, another SCM enabler.
437. (a) Retailer
Traditionally, retailers have been the closest to consumers. Owing to this proximity, retailers
assume the role of monitoring consumer preferences. But the use of the Internet and direct sales
are changing all that. Consumers are now interacting with different entities in the purchasing
process.
118
Part A
438. (a) i, ii, iii

The most essential pre-requisite for a supply chain to become a demand chain is to share
information collected by various members. Information sharing allows all members to identify the
product and packaging requirements, marketing opportunities, etc. and can plan activities
accordingly. Every member of the demand chain, whether they design, manufacture, market, sell
or transport a specific product, needs to monitor consumer needs and wants. The members in
today’s emerging demand chains are the same as those in traditional chains, but their respective
09
roles and responsibilities have changed.
439. (d) Value analysis

Value analysis is not a method for collecting customer information. It deals with the process of
20
identifying components with the most value in the production process. Some methods used to
collect customer information include point-of-sale databases, focus groups, quantitative surveys,
“shadowing” of consumers, in-house research, etc.
of
440. (c) i and ii
There are two common misconceptions in the supply chain concept. One is that all consumers buy
from retailers. This can be true in most cases but many consumers are shifting to other channel
s
members who deliver products at the right time and at reasonable prices. The second
as
misconception is that industrial marketers should monitor only their customers and need not bother
about end-users. They should not ignore the fact that demand for their products is based on end-
users.
Cl
441. (c) By reducing communication costs
ESCM helps supply chain partners communicate through the Internet. Communication through
y
Internet is quicker and cost effective. As the supplier can access information regarding inventory
nl
and procurement automatically, the purchasing department can lessen its involvement in minor
transactions and focus on high value activities like vendor selection and sourcing. The other two
options are not related to procurement.
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442. (b) i, ii and iii

ESCM results in an extended organization with suppliers being electronically linked. Hence, it
se
provides instant information about the status of inventory levels to suppliers. As and when the
inventory is depleted, suppliers replenish with just adequate levels to carry out production. Thus,
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there is no need to maintain a large inventory in the organization.
443. (a) Information security

BS
Security of information is the most sensitive issue when information is shared or exchanged over
the Internet. An organization has to ensure that the rightful recipient views the information. All
other options are some types of information shared over the Internet between supply chain
partners.
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444. (d) i, ii, iii, iv

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Teamwork, discipline, employee performance, and supplier involvement are considered important
elements for successful implementation of the JIT system in an organization.

All options correctly depict the characteristics of a JIT production system.
446. (a) Produce in small lots

Traditionally, firms manufacture products in large lots, resulting in a lower number of machine set-
ups. But JIT manufacturing firms undergo a larger number of set-ups as they produce in small lots.
119
447. (c) It is a ‘push’ system

JIT system is a pull system rather than a push system.
448. (b) Varying workstation loads
Just-in-time manufacturing helps firms maintain uniform loads at workstations. Some of the
characteristics of a JIT system are uniform workstation loads, small lot sizes, closer supplier ties,
maintenance of high quality, quick and economic setups, flexible facilities and multi-skilled
workforce, preventive maintenance, and continuous improvement.
09
449. (d) Jikoda
Jikoda means autonomation. This approach enables machines to be autonomous and automatically
20
detect defects.
450. (c) Just-in-time manufacturing
The Just-in-time concept states that 'nothing is produced until it is required.' The practice of JIT
of
aims at assembling finished products just before they are sold, sub-assembling just before products
are assembled and fabricating components just before sub-assemblies are done.
451. (c) The relationship should be profitable to both the firm and the supplier
s
Under the JIT system, the relationship should be profitable to both the supplier and the JIT firm in
as
the long run. Hence, the JIT firm and the supplier should work towards the betterment of each
other by abiding to the terms of the contract.
Cl
452. (d) The JIT firm always maintains only one supplier for each type of material
JIT firms maintain fewer suppliers, but they are more than one. JIT firms normally share their
production plans and schedules with suppliers to enhance their understanding of the production
and supply the material at the right time. They also help suppliers with their expertise and suggest
y
ways to improve quality and productivity. This will help firms improve the quality of end products.
nl
When the firms plan to introduce new products, they also take suggestions from suppliers
regarding product design and types of materials that can be used to improve quality as well as
profitability.
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453. (b) Communication

Communications play an important role in establishing a good partnership. The JIT firms can
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establish a buyer - quality engineering team that stays in constant touch with suppliers. This
reduces potential miscommunication with suppliers. They should also inform the JIT firm about
new programs undertaken by them to improve quality and ensure timely delivery of supplies.
U
454. (d) Suppliers purchase new machinery, hire and train labor to meet requirements
BS
Option (d) talks about time to make changes to meet demand. Option (a) talks about linearity in
production, option (b) talks about communication, and option (c) talks about trust.
455. (c) Each worker in the firm considers the next worker in the production line as a
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customer
In a JIT firm each worker considers his/her next worker in a production line as his/her customer.
This is because the work done by him/her passes to the next worker for further processing.
Fo
456. (b) Large lot sizes

Firms that follow JIT type of manufacturing system maintain inventory in the smallest possible lot
sizes. This is required as small lot sizes reduce cycle inventory (the excess of inventory, above the
safety stock, that is carried between two orders), cut lead times and also help in achieving a
uniform workload. JIT manufacturing systems follow uniform workstation loads where material is
fed to the workstation uniformly and uniform output is produced across different workstations.
Besides, these firms have flexible facilities and quick and economic set-ups.
120
Part A
457. (a) i, ii and iii

Traditionally, firms manufacture products in large lots, resulting in a lower number of machine set-
ups. But JIT manufacturing firms undergo a larger number of set-ups as they produce in small lots.
Therefore, JIT manufacturing firms require quick and inexpensive setups to minimize the
disadvantages of having more number of set-ups and higher costs.
458. (c) i and ii
In a JIT production system, workers must be capable of performing more than one operation.
09
Hence, the entire workforce is trained continuously (at regular intervals) to develop a variety of
skills to perform any function the firm requires. A worker is trained to perform several operations
rather than being limited to a single assigned operation.
20
459. (a) i, ii, iii
The successful implementation of a JIT system is greatly dependent on its ability to reduce set-up
times. JIT firms engage specialists and consultants to train workers to reduce set-up times. Firms
of
adopt the following steps to reduce set-up times: 1) Analyze existing set-up procedures, 2)
Separation of internal and external set-up activities and 3) Convert internal set-up activities into
external set-up activities.
s
as
460. (a) Eliminating external demand variations
External demand variations cannot be eliminated by using the JIT system. By using JIT principles,
firms can reduce wastage that arises during the production process such as the waste of
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overproduction, of time spent in waiting, in transportation and movement, in processing, in
keeping excess inventory and in defective parts.
y
461. (d) Warranty
All the options are functions of quality except warranty, which is an external failure cost, due to
nl
poor quality of product.

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462. (a) Display the measurements of every item being produced

Control charts do not give the measurement of every item being produced. They only display the
upper and lower limits for process variables or attributes and signal when a process is no longer in
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control, when the variable is outside the upper or lower limit. Control charts for variables are used
to evaluate the mean and variability of the process distribution i.e. the average outgoing quality of
each lot. Control charts for attributes ensure that the items after inspection are identified either as
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defective or non-defective.
463. (a) The process is out of control and the cause should be established
BS
If the values fall outside the control limits then the process is considered out of control. Remedial
action has to be taken to rectify these discrepancies.
464. (c) 67.65
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Upper Control Limit =D4 R , Lower Control Limit = D3 R .

D3 and D4 are constants whose values are based on the sample size.
Fo
R = ∑R/n = 160/5 =32
UCL = D3 × R = 2.114 × 32 = 67.65
465. (c) Ambience

Ambience generally is associated with physical evidence, i.e., infrastructure, layout, furniture,
décor, etc.
121
466. (a) Procurement of raw material

Quality control begins as early as procurement of raw materials. Raw materials have to be
procured with the right specifications and in the right quantity. This is part of preventive control.
467. (c) Average length of the rods in a lot

Average length of the rods in a lot is an example of the quality of rods and not productivity.
468. (c) Proper scheduling
09
Layout, slow processing equipment and inventory shortages can reduce productivity. But, proper
scheduling helps the operations mangers increase productivity.
20
Through proper scheduling, one can decrease the idle time of the material spent in waiting,
increase the running time of machinery and also decrease extent of wastage in the plant.
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470. (d) Number of cars serviced in a period
Options - (a), (b), and (c) are inputs to calculate productivity in service organizations, while option
(d) is an output.
s
as
Training helps increase productivity through all these ways.
Cl
472. (a) Conformity
A products’ conformity to specifications can be identified by analyzing their defect rates during
production and the number of customer complaints after sale.
y
473. (b) Aesthetics

nl
The aesthetics value of a product or service is influenced by individual preferences. While one
group of customers may regard a product as aesthetic, another may feel it is not tastefully
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designed. So companies can use this quality dimension to cater to a niche market.
474. (c) The total cost of quality control is minimal

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An optimal trade-off between the cost of inspection and the cost of undetected faults exists when
the cost of total quality control is minimal.
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475. (b) Loss of goodwill

The cost of undetected faults includes customer complaints, loss of goodwill, product replacement
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cost, product liability suits, product recall programs and returned products.
476. (c) Appraisal costs

Detection or appraisal costs are costs associated with evaluating the quality and performance of
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products and machines. These include inward materials inspection, tests and inspection throughout
the transformation process, equipment maintenance, etc.
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477. (d) Cost of returned products

Cost of returned products is an example of external costs. Internal costs include scrap, repair,
retesting of repaired products, downtime, loss due to process variability and disposition of
defective items.
478. (a) i and ii

Quality control charts can be broadly classified into control charts for variables and control charts
for attributes. Control charts for variables include X-Chart and R-Chart.
122
Part A
479. (c) P-chart

P-chart and C-chart fall under control charts for attributes. P-chart determines the proportion of
defects in a given sample while C-chart is used to determine the total number of defects in a
product.
480. (a) Kaizen
Kaizen is a concept under Total Quality Management (TQM). It emphasizes continuous
improvement in process, skill sets, systems or operations. All the other terms are associated with
09
just-in-time approach.
481. (c) Every employee at every level in the organization is responsible for quality
Maintaining quality is not just a prerogative of top management or the quality inspection
20
department but every employee at every level. Quality responsibilities result in employees being
more committed, motivated and creative in performing assigned tasks.
482. (c) 30.375
of
Sample x R
1 25 8
2 36 9
s
3 31 7
as
4 33 6
5 27 6
6 34 7
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7 32 5
8 25 8
Total 243 56
y
Mean of means
∑x 243
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x= = = 30.375
n 8
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483. (b) 7.0

Sample x R
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1 25 8
2 36 9
3 31 7
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4 33 6
5 27 6
6 34 7
BS
7 32 5
8 25 8
Total 243 56
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∑ R 56
R= = =7
n 8
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484. (a) 32.986

Upper control limit is given by the formula UCL = x + A2 R
= 30.375 + (0.373 × 7) = 32.986
485. (a) 27.764
The formula to calculate lower control limit is LCL = x - A2 R
= 30.375 – (0.373 × 7) = 27.764
123
486. (b) 0.952

The formula for lower control limit in an R-chart is LCL = D3 × R
= 0.136 × 7 = 0.952
487. (c) 13.048
The formula for upper control limit in an R-chart is UCL = D4 × R
= 1.864 × 7 = 13.048
09
488. (a) 3.14
20
Sample Number of Defects
1 5
2 3
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3 4
4 2
s
5 3
as
6 1
7 4
Cl
Total 22
Average number of defects, c = 22/7 = 3.14

y
489. (c) 8.546 and 0
nl
Control limits for a c-chart is given by the equations

O
UCL = c + 3 c
LCL = c - 3 c
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where, c is the average number of defects produced by a process.

U
UCL = 3.14 + 3 3.14 = 8.456
LCL = 3.14 – 3 3.14 = -2.176

BS
As LCL is negative it can be taken as zero.
490. (c) Type II error

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The probability of accepting a lot with some percent of defective items is termed as consumer’s
risk or Type II error.
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491. (b) Customer

TQM believes that each department should treat other departments as its customers.
492. (b) OC curve

The operating characteristics (OC) curve is an important feature of acceptance plans. It shows how
well an acceptance plan differentiates between good and bad lots. The OC curve is used to
determine the limit of average outgoing quality.
124
Part A
493. (c) Quality training

Prevention costs include investments made in machinery, technology and education/training
programs to reduce defects. It also includes costs to administer the firm’s quality program, data
collection and analysis and vendor certification. Equipment maintenance is a detection or appraisal
cost. Disposition of defective items is an internal failure cost and warranty charges are an external
failure cost.
494. (d) Regular monitoring of vital parameters of a machine
09
Predictive maintenance is concerned with inspecting vital signs of the machine regularly to
identify the health of the system. Some objectives of remedial maintenance are to minimize
production losses by getting the equipment back into working condition as quickly as possible, to
20
minimize investments in spare parts and standby machines used when equipment is under repair,
and to perform appropriate maintenance based on the extent of problem.
495. (c) Reducing machine vibration
of
Reduction of machine vibrations does not come under irregular preventive maintenance. It is a
form of remedial maintenance.
s
496. (a) Improving efficiency of raw materials purchase
as
Improving the efficiency of raw materials purchase in an organization is not associated with
maintenance management. It is more related to materials management.
Cl
497. (a) Minimizing the availability of the firm’s assets for production purposes
One of the goals of maintenance management is to maximize (not minimize) the availability of the
firm’s assets for production.
y
498. (d) Marketing manager
nl
A facilities manager has to plan activities in facilities in consultation with top management,
production managers, architects, designers, etc., who are directly related to the management of
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facilities. Marketing managers are seldom consulted for planning a facility.

499. (b) Out-tasking
se
Out-tasking involves hiring outside workers or specialized vendors to carry out a particular task.
Out-tasking (i.e. hiring individuals, specialized vendors) is done more frequently than outsourcing
(i.e., hiring of full-service, single source vendors).
U
500. (b) i, ii, iv

If the client organization gives control of its facilities to an external agency, it is virtually like
BS
inviting the agency to gain monopoly over its facilities. This can lead to loss of control over crucial
decisions like alterations, expansion of facilities or cost savings. The client may also lose the
power to control any deviations in vendor performance. Loss of control can lead to strained
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relationships between client and vendors and become the cause for serious conflicts. The service
providers’ need to raise profits can lead to exploitation of client resources or reduction in quality of
work.
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501. (a) ii and iii

In a long term contract, vendors can easily cover initial costs and have scope to make more profits
by revising prices. Firms lose control over activities if they are in the hands of the vendor.
502. (c) i and iii

Usually vendors replace skilled workers with semi-skilled workers in a client’s organization either
to decrease direct operating costs or to use them for a new client.
125
503. (d) Increases operational costs

Advantages of outsourcing include increase in quality of work and flexibility of operations,
reduced operation costs and more focus on core competencies.
504. (a) Machine failures do not hinder productivity
Machine failures can actually reduce productivity halting the production process. Equipment
malfunction can reduce product quality and it may prove expensive to repair them
09
505. (c) i, ii, iii
Mr. Kumar can help improve productivity, increase the life of assets and machinery, preserve
equipment value and maximize the salvage value of machinery.
20
506. (b) Civil maintenance
Civil maintenance includes building construction and maintenance, maintenance of service
facilities like water filters, air conditioning, plumbing, etc. Other activities include maintaining
of
drainage systems, fire fighting equipment, security systems, waste disposal, etc.
507. (c) Electrician
As the 5hp motor is an electrical component, it has to be maintained and serviced by a qualified
s
electrician.
as
508. (c) i/r, ii/p, iii/s, iv/q
Cl
A plumber maintains water supply pipes, an electrician takes care of lighting equipment,
housekeepers are responsible for cleanliness of buildings and instrumentation personnel maintain
and service routers.
509. (c) Preventive maintenance involves regular servicing of equipment while predictive
y
maintenance involves monitoring of equipment continuously

nl
The objective of preventive maintenance is to service machines regularly so that equipment

functions satisfactorily under optimum load conditions without breakdown or reduction in
O
efficiency. Predictive maintenance involves identification of possible problems before they occur.
Options a & b are similar for both types of maintenance operations.
510. (a) i, iii, iv
se
Any abnormal vibration in equipment indicates that it is not functioning properly in terms of
precision cutting. Quality and productivity can come down drastically. The vibration also indicates
U
that the equipment needs maintenance.

511. (a) Preventive maintenance
BS
Periodic maintenance and irregular preventive maintenance fall under preventive maintenance.
Periodic maintenance activities are conducted at regular intervals, i.e. weekly, monthly etc.
512. (b) Predictive maintenance
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Predictive maintenance is taken up when problems or indications of problems are detected in

machinery and equipment. Problems do not mean that the equipment is not functioning properly.
But it indicates that such problems or indications can cause breakdown of machinery in future if
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they are neglected.

513. (b) Cost of replacing the entire machine
Cost of replacing the entire machine is associated with remedial maintenance where the entire
machine has to be replaced with a new machine due to breakdown or failure.
514. (a) Predictive maintenance
Condition Monitoring refers to monitoring the performance of machinery to spot indications that
may lead to failure or breakdown. It is associated with predictive maintenance.
126
Part A
515. (d) Richter scale

The first three options are examples of instruments used in condition monitoring. Option (d) is
used to measure earthquake intensity.
516. (a) Remedial maintenance is taken up when machinery breaks down
Remedial maintenance is performed only when there is breakdown or failure of machinery. So, it
is reactive in nature. Preventive and predictive maintenance are proactive in nature.
09
517. (d) To minimize failure or malfunction to the lowest possible extent
The objective of preventive maintenance is to minimize failure or malfunction to the lowest
possible extent. Remedial maintenance, on the other hand, is reactive in nature and is done after a
20
machine breaks down.
518. (c) 7.98 months
Mean time between failure = ∑ i.Pi
of
= (1x0.04) + (2x0.04) + (3x0.05) + (4x0.05) + (5x0.06) + (6x0.06) + (7x0.10) + (8x0.1) + (9x0.1)
+ (10x0.1) + (11x0.15) + (12x0.15)
= 0.04 + 0.08 + 0.15 + 0.20 + 0.30 + 0.36 + 0.7 + 0.8 + 0.9 + 1.0 + 1.65 + 1.80
s
= 7.98 months
as
519. (b) 1.50
Cl
Number of break-downs per year = Number of months / mean time between failures
= 12/7.98 = 1.50
520. (a) 37.50
y
There are 25 machines in the plant.

nl
Hence, the number of break-downs per year for 25 machines = 25 x 1.50 (number of break-downs
per year for a machine). This is equal to 37.50
O
521. (d) Rs.320

Average cost of repairs per machine per occasion = 12000/37.5 = Rs.320
se
522. (d) 4.65

Given
U
N=15, t=2, P1=0.1, P2=0.2

B1 = NP1 where B1= number of break downs during the first month after service
BS
= 15 x 0.1 = 1.5
B2 = N(P1 + P2) + B1P1 where B2 = the number of break-downs expected between servicing if the
service is performed every two periods
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= 15(0.1 + 0.2) + 1.5 x 0.1

= 4.5 + 0.15
Fo
= 4.65
Thus, the expected number of break-downs between servicing is 4.65
523. (c) 9.765
Given N=15, t=3, P1=0.1, P2=0.2, P3=0.3
From the previous question, we know that B1=1.5 and B2=4.65
B3 = N(P1 + P2 + P3) + B2P1 + B1P2
127
= 15(0.1 + 0.2 + 0.3) + (4.65 x 0.1) + (1.5 x 0.2)

= 9 + 0.465 + 0.3
= 9.765
Thus, the expected number of breakdowns between servicing is 9.765
524. (d) Rs.21152.50
Total cost of maintenance for every 3 months = CP x N + CR x Bt
09
Where CP is the cost of preventive maintenance and CR is the cost of remedial maintenance.
TC = (650 x 15) + (5500 x 9.765)
= 9750 + 53707.5
20
= 63457.5
Average total cost of maintenance per month = TC/3 = 63457.5/3 = Rs.21152.5
525. (c) Identify problem – estimate work to be done – develop plan – carry out sequence of
of
tasks
In maintenance planning, problems (if any) in machinery and equipment are identified first. Then,
an estimation of the amount and type of work to be performed is made. Based on the estimate,
s
plans are developed followed by implementing the sequence of tasks to be carried by different
as
personnel.
526. (b) Significance of tasks in maintaining production flow
Cl
Maintenance tasks are prioritized on the basis of their importance in maintaining a continuous
production process when maintenance resources are scarce.
527. (a) Ensuring sufficient inventory of frequently used tools and equipment within the plant
y
Maintenance managers often maintain inventories of equipment and materials required for
nl
maintenance activities within the plant to reduce lead-time before repair can begin. Organizations
with production facilities in more than one location reduce inventory costs by storing basic and
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frequently-used maintenance materials at each location, and occasionally-used materials at a

central location.
528. (c) ii, iii and iv
se
Breakdown in a manufacturing plant adopting JIT system can create a shortage of inputs for all
workstations and can hamper the productivity seriously. Hence, production workers are required to
U
do simple preventive maintenance at the beginning of every shift. And in case of major preventive
maintenance, they should assist maintenance specialists in the process.
529. (b) Facilities management
BS
The primary objective of facilities management is to provide a clean and conducive work
environment and enable efficient and effective progress of the core functions of an organization, be
it manufacturing, distribution or research. Maintenance management is a primary function
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associated with facilities management.

530. (b) Production of radiator caps
Fo
Production of radiator caps is a repetitive and regular process that cannot be classified as a project.
It is a process. A project is generally undertaken to solve a problem or take advantage of an
opportunity. It is short-term in nature. Examples of projects include new product development,
buying a new plant, or solving a production problem. Setting up a plant to manufacture radiator
caps is an example of a project.
531. (a) Slack time
Slack time refers to the amount of time that an activity can be delayed beyond its earliest start time
without extending the duration of a project.
128
Part A
532. (b) Earliest start time

The earliest start time is the minimum amount of time that must lapse before beginning an activity.

The benefits of a project plan are: it guides in project execution, help document project planning
assumptions and provides a baseline for progress measurement and project control.
534. (b) In linear programming dummy activities are added to paths to make them equal in
09
length
In linear programming, addition of dummy activities ensures that two activities do not have the
20
same beginning and end nodes. As a result the paths are not equal in length.
535. (a) Crashing is not effective when applied to tasks with zero slack
Crashing is also effective when applied to tasks with zero slack time. One of the steps in crashing
of
is to highlight the activities on the critical path with the smallest time-cost ratio and crash those
activities by ensuring that the reduced time is equal to the smallest slack value of the non-critical
activities.
s
536. (a)
as
B E Cl G
C D F
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From the table we can infer that activity A precedes B and C, activity B and D must precede E,
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activity C precedes D, activity D precedes F, and activities E & F precede G.
537. (b) Dummy activities are used to ensure that two activities have the same beginning and
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end nodes
Dummy activities ensure that two activities do not have the same beginning and end nodes. They
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are the activities that do not utilize any time or resource but are introduced to indicate the
precedence relationship.
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538. (d) It involves continuous flow of repetitive work

A project is a non-repetitive task that runs for a limited time to achieve the set objective.
BS
539. (b) Event

An event is the outcome of an activity or group of activities. It represents the completion of some
activities and the beginning of some others in the network.
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540. (d) It is the longest path of interrelated activities in a project with zero slack time
CPM is a networking methodology which is employed to compute the minimum time required to
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complete a project and at the same time identify the sequence of tasks to be performed. The critical
path depicts the longest path of interrelated activities in a project with zero slack time.
541. (a) PERT

PERT and CPM are two important tools that are used to identify the best possible schedules in
project management. The other three options are used to schedule routine tasks to different
machines in a production process.
129
542. (c) Critical activities are those activities, which if delayed, extend the project duration
Critical activities are those activities which if delayed can extend the project duration. Therefore,
identifying critical and non-critical activities helps project managers determine which activities can
be delayed without affecting the project duration.
543. (b) Event

09
544. (c) It is the maximum time an activity can take considering obstacles and unfavorable
circumstances
20
Pessimistic time for an activity is the maximum amount of time required to complete the activity
under unfavorable circumstances.
545. (d) Slack time
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Also called ‘float,’ slack time is a measure to determine the criticality of an activity. An activity
with more float is less critical and can be delayed in case of resource scarcity.
s
as
546. (b) B
A
Cl
C
Only option A is the appropriate network diagram for the given situation. In option b, c and d,
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there is an additional precedence relationship that activity B should precede activity C.
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547. (c) A D
O
C
B E
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Activity A and activity B precede activities C, D and E, and activities D and E follow activity C.
Only option ‘C’ fulfils this condition.
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548. (d) (Latest start time) - (earliest start time)

Float or slack time is the difference between the latest start time and the earliest start time. It is a
measure for determining the criticality of an activity. An activity with more float is less critical and
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can be delayed in case of resource scarcity.

549. (b) The project must have a large number of interrelated or overlapping activities
A project should not have too many interrelated or overlapping activities. Such activities make
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application of PERT difficult.

550. (b) 2.17 weeks
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Activities Optimistic Pessimistic Most likely te Variance

time to time tp time tm (t o + 4t m + t p ) tp − to 
2
6  
 6 
1-2 3 5 4 4 0.111
1-4 3 5 4 4 0.111
2-3 2 3 2 2.167 0.028
130
Part A
2-5 3 5 4 4 0.111
3-6 5 7 5 5.333 0.111
3-7 7 10 8 8.167 0.25
4-3 4 6 5 5 0.111
5-3 2 3 2 2.167 0.028
6-7 6 9 8 7.833 0.25
Total (Only 23.333 0.611
09
Critical Path
Activities)
[
Using the formula (t o + 4t m + t p ) the expected time for the activity 5-3 is 2.17 weeks (approx.).
20
6
551. (a) 23.33
of
Refer table above
The expected time for the activities on the critical path 1-2-5-3-6-7 is
4 + 4 + 5.333 + 2.167 + 7.833 = (23.33 weeks)
s
as
552. (c) 0.611
Refer table above
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The sum of the variances of the activities on the critical path 1-2-5-3-6-7 is
0.111 + 0.111 + 0.111 + 0.028 + 0.25 = 0.611
553. (b) 0.8023
y
D−E
Z=
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σ 2 cp
O
Where, D = desired project completion date = 24, E = earliest expected project completion time =
23.333, σ2cp = Sum of variance of critical path activities = 0.61.
From the formula, Z = (24 – 23.333) / √0.611= 0.85 ⇒ P(z ≤ 0.85)

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(From the standardized normal distribution function, F(z) table, the area under the normal curve
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corresponding to z = 0.85 is 0.3023.)

Probability of completing in 24 weeks = 0.5 + P(0 ≤ z ≤ 0.85) = 0.5 + 0.3023 = 0.8023.
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554. (a) 0.3336

D−E
Z=
σ 2 cp
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Where, D = desired project completion date = 23, E = earliest expected project completion time =
23.333, σ2cp = Sum of variance of critical path activities = 0.61.
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From the formula, Z = (23 – 23.333)/ √0.611 = -0.43 ⇒ P(z ≤ – 0.43) ⇒ P(z ≥ 0.43)
(From the standardized normal distribution function, F(z) table, the area under the normal curve
corresponding to z = 0.43 is 0.1664.)
Probability of completing in 23 weeks = 0.5 – P(0 ≤ z ≤ 0.43) = 0.5 – 0.1664 = 0.3336.
555. (d) Effectively handles situations in which two or more projects share available resources
PERT is effective in handling single project activities. But it is not useful in situations in which two
or more projects share available resources.
131
556. (c) 1250
Time-cost ratio
(Crash cost − Normal cost )
(Normal time − Crash time)
= (25000 – 20000) / (17 – 13)
= 5000/4 = 1250
(t o + 4t m + t p )
09
557. (d) t =
e 6
Expected time represents the mean of the optimistic, pessimistic and most likely times. Expected
20
time is calculated by using the equation t
(t o + 4t m + t p )
=
e 6
of
Option ‘a’ gives the formula for mean time between failures. Option ‘b’ gives the formula for the
probability of completing the project within the desired completion period. Option ‘c’ represents
activity time variances.
s
558. (b) A model with the basic product characteristics
as
The prototype of a product is a model with basic characteristics. However, it does not exhibit such
features like shape, final finishing, color, casing, etc.Cl
559. (b) i, ii, iii
Computer Aided Design (CAD) is a technique used for designing the product and the process on a
computer. Computer systems assist in the creation, modification, analysis and optimization of a
design, but they cannot develop a prototype.
y
560. (c) Marketing department

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Marketing department has direct contact with the customers and know their preferences. Hence
operations managers should communicate with the marketing department regarding the quantity
and quality of the products to be produced.
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561. (b) Symbols

Unlike conventional systems that manipulate numbers to solve problems, artificial intelligence
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systems manipulate symbols. Symbols are patterns and processes that can be combined into
expressions.
U
562. (c) Artificial intelligence

Computers, equipped with artificial intelligence (AI), have the capacity to perform tasks
commonly associated with the higher intellectual process characteristics of human beings such as
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the ability to reason, discover meaning, generalize or learn from past experience.
563. (a) Low level of maintenance
As automated systems are complex, they require higher levels of maintenance and the cost of
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maintenance can be substantial.

564. (a) Computer integrated manufacturing
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CIM refers to a computer application that integrates various computerized systems into a single
multi-functional system. For instance, budgeting, CAD/CAM, process controls, group technology
systems, MRP II, financial reporting systems, etc, are linked together. In many ways, CIM
represents the highest level of integration in manufacturing
565. (d) Flexible manufacturing system
FMS is a form of flexible automation in which several machine tools are linked to material-
handling system. A central computer controls all aspects of this, which is effective in producing
different items that have similar processing requirements.
132
Part A
566. (a) Automation

Automation is used to perform tasks without human intervention based on certain programmed
commands.
567. (d) Control

Automation is regularly used to control, monitor and execute manufacturing activities
568. (c) Consultancy activities
09
Automation can be conveniently implemented in jobs where repetitive and monotonous tasks are
done. It is also widely used for tasks that involve hazardous working conditions. Consultation is
20
more client-specific and varies across customers.
569. (c) Higher initial investment

Organizations have realized the potential of automating their operations in terms of lower wastage,
of
lower lead-times and higher productivity. However, the cost of automating can be very high.
570. (d) Higher product quality
s
Higher product quality is an advantage of automation. Besides, organizations have realized the
as
potential of automating their operations in terms of lower wastage, lower lead-times and higher
productivity. Cl
Some of the benefits of using CAM are reliable information inputs, consistent product quality,
reduction in labor costs, better control and management of equipment and materials, improvement
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in production rate, etc.
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572. (c) FMS

A flexible manufacturing system contains different machining centers where several kinds of jobs
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are processed. They are also enabled with automatic tools changing which allows them to change
the tools for the next job.
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573. (c) CIM

CIM refers to a computer application that unites various computerized systems into a single multi-
functional system. For instance, budgeting, CAD/CAM, process controls, group technology
U
systems, MRP II, financial reporting systems, etc, are linked together in CIM.
574. (b) Multi-functional system

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CIM integrates many functions into a single system and is capable of performing tasks associated
with all those integrated functions. Hence, it can be termed as a multi-functional system.
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575. (d) Ability to reason

Computers equipped with artificial intelligence have the capacity to perform tasks that involve
reasoning and decision making.
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576. (a) i and ii

CIM systems have so many advantages like reduced operating costs, improved quality, highly
reliable delivery performance, etc. However, the proliferation of CIM systems was extremely slow
due to huge implementation costs, lack of standardized interfaces between components of CIM and
slow acceptance of standardized communication protocols to support the integration.
133
577. (b) Professionals

Professionals or experts give information inputs to the expert systems. Their methods, logic and
analyses used in different situations are framed into rules that guide expert systems to provide
solutions to problems posed by the users.
578. (d) Facility location
Facility location is primarily concerned with deciding the location of a manufacturing plant.
Robots are rarely used in this process.
09
579. (c) Welding activities
In materials handling, the applications of robots include transfer of materials, material loading and
20
unloading. Spot welding is done under processing.
580. (b) Processing operations

Processing operations involve the manipulation of a tool by a robot to perform a particular action.
of
For instance, spray painting involves pre-programmed movements of the spray painting gun over
the area to be painted.
s
581. (d) Tasks where contingency decision making is needed
as
Robots must not be used in the areas where human presence is a must, especially in non-repetitive
or contingency situations.
Cl
Due to the increased coordination between the departments as well as with the suppliers, the
inventory can be reduced to a minimum. Customers can also track their own orders within the
y
vendors’ system to determine the status of their orders. EDI allows organizations to cut down their
inventory levels by planning for better production and shipment schedules.
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583. (c) Member countries do not lift existing quantitative restrictions

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Option (c) contradicts the spirit of globalization. Quantitative restrictions imply import tariffs,
quotas, duties, etc. against foreign countries from whom goods are imported. Under the WTO
agreement, by the year 2002, all member countries had to lift quantitative restrictions imposed on
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foreign countries.
584. (b) Labor
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India, like other Asian countries, has low-cost skilled manpower compared to the US and Western
Europe.
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585. (a) Comparative advantage

The comparative advantage of a country can be defined as its ability to produce goods and services
cheaper than other countries. Organizations generally globalize their operations to take advantage
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of such opportunities.
586. (b) Economies of scale

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Economies of scale implies producing in huge quantities. It is known that as the volume of
production increases, cost of operations comes down, lowering the per unit cost. When the cost of
production decreases, lower price can be charged in the market.
587. (b) GM’s strategy to outsource manufacture of $7.5 billion worth of auto components
Organizations operating globally can also obtain economies of scale in purchasing. Purchasing in
bulk can reduce costs. GM outsourced a huge volume worth $7.5 billion of components.
134
Part A
588. (c) Economies of scale in marketing

Organizations can also obtain economies of scale in their marketing function. They either use the
same salespeople or same promotion strategy or both for promoting their products in different
markets.
589. (c) ii and iii
Economies of scale can be achieved by making a product with minimum modifications. However,
09
modifications whether major or minor, are hurdles to achieve economies of scale.
590. (a) Economic impediment
When customer requirements in different national markets are vastly different, an organization’s
20
global activities become uneconomical due to the need for customization. Differing requirements
necessitate variations in cost, quality, performance, style and size of the product/service. Logistic
problems and difficulties such as availability of transportation and distribution channels may also
of
make global presence uneconomical.
591. (d) To protect local companies from the threat of foreign companies
s
These impediments are put in place to protect local organizations from global competition. They
are framed keeping in mind a particular nation’s interests with regard to employment, defense and
as
regional development. Cl
592. (b) Managerial impediment
It can be difficult for managers to apply the same strategies and tactics to market products in
different markets. This is termed as managerial impediment for companies that are interested in
y
becoming global players.
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Global organizations require competent managers because issues and operations in international
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markets are much more complex and demanding than those in the domestic market. They need to
look not only for market opportunities or resource availabilities, but also for talent to design future
products. In other words, global managers should strive to leverage local assets of their
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organizations for global advantage. Option ‘d’ is not a reason to scout for competent managers.
594. (b) Collective efforts from both headquarters and subsidiary

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Managers at headquarters should not dictate product development and technology choice to their
subsidiaries nor should they leave it entirely to the subsidiary. They should help the subsidiary in
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using the pool of knowledge and expertise gained by headquarters by operating in other markets,
to develop a new product. Thus, a collective and cooperative effort will yield a product that will be
in line with organizational goals as well as be successful in the local market.
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595. (d) Technologists and managers

In the case of global organizations, the concept of ‘resource allocation’ has a broad scope. The
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most scarce and precious resource in many global organizations are their technologists and
international managers who can coordinate work for continuous improvement.
596. (b) Decentralized in nature

The organizational structure adopted by most global organizations is characterized by the presence
of authority at the lower levels of the hierarchy. Presence of power in the lower levels of the
organizational hierarchy is a sign of decentralization.
135
597. (b) Local people can provide better insights into the local business environment
Organizations can select managers from the host country or from other parts of the world. But
local candidates bring significant knowledge about the local business environment, whereas global
managers provide considerable inputs due to their international experience.
598. (c) iii and iv

Though wholly-owned subsidiaries give organizations full control over the operations of their new
establishments, they have to start from scratch in every aspect of the business to set up such
09
subsidiaries. Unlike joint ventures, they cannot spread their risk as they have no partners. Further,
the time taken to understand the market is greater in subsidiaries than in joint venture or through an
alliance.
20
599. (a) i, ii, iii
Option ‘a’ covers most of the alternatives in comparison to other options. As Tornado wants to
of
establish a manufacturing base in India with the aim to cater to the Indian market, the export policy
is not a major requisite.
600. (d) Licensing
s
When a company licenses its product to a partner in a foreign market, it has limited control over
as
the way the partner markets the product. Cl
y
nl
O
se
U
BS
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136
Part B: Model Tests
09
20
s of
as
Cl
y
The model tests are intended to test the conceptual understanding of the students. Each
nl
model test contains multiple-choice questions for a total of 100 points. Students should
note that the format of the question paper may be change from time to time.
O
se
U
BS
Paper I
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Paper I - Model Test 1
Time: 3 Hours Total Points: 100
Answer all the questions.

Each question carries one point, unless specified otherwise.
09
1. Which of the following is not an p. Producing products at lower costs when
20
advantage of computerizing production compared to competitors
systems? q. Offering a variety of products under one
a. Increased productivity roof
b. Better quality r. Offering products of higher quality when
of
c. Lower initial investment compared to competitors
d. Improved worker safety s. Capability to produce different products
within a short span of time
2. Scientific rules govern worker productivity
s
and it is the prerogative of the a. i/p, ii/q, iii/r, iv/s
as
management to study and apply these rules b. i/p, ii/r, iii/q, iv/s
in their operations. Who introduced the c. i/s, ii/p, iii/r, iv/q
concept of scientific management in the
Cl
d. i/s, ii/p, iii/q, iv/r
field of operations management?
a. Adam Smith 6. In this stage of the product life cycle,
b. Frederick W. Taylor organizations focus on improving
y
efficiency of the processes, minimizing
c. Henry Ford
costs, etc. Identify the stage of the product
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d. Elton Mayo life cycle.

3. Identify the systematic approach to a. Introduction stage
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improve labor efficiency proposed by b. Growth stage

Frederick Taylor. c. Maturity stage
a. Shop system d. Decline stage
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b. Reward system
c. Workplace efficiency system 7. Asahi Glass has superior technical
expertise and production methodology that
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d. Assembly line system

allow it to produce high quality float glass
4. Name the production policy where products that other companies cannot
products are produced well in advance and produce. What is this distinct advantage
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stored in a warehouse from where they are called?

distributed in accordance with customer a. Core competence
orders. b. Unique selling proposition
a. Produce-to-stock policy
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c. Production flexibility
b. Produce-to-order policy d. Cost advantage
c. Assemble-to-order policy
8. The systems which are highly flexible and
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d. Custom-to-Order policy
can easily be modified to support other
5. Match the following competitive product designs are termed as
advantages with their correct explanations. _________________.
i. Production flexibility a. Product-focused systems
ii. Low cost process b. Process-focused systems
iii. Product variety c. Standardized systems
iv. Quality d. None of the above
9. A forecast made by using exponential calculated. Which of the following

smoothing was found to be over-optimistic statements about the various measures of
to the most recent trends in demand. forecasting error are not true?
Which of the following is the most suitable a. MAPE indicates relative error
corrective action possible to make the
forecast more realistic? b. MSE is used to identify and penalize larger
errors
a. Increase the value of α
c. Tracking signal value nearer to zero
b. Decrease the value of α
09
indicates low forecast accuracy
c. Shift to some other forecasting method d. MFE for an accurate forecast will be closer
d. Ensure that α remains constant to zero
20
10. In the first order exponential smoothing 15. Graphical method can be applied for
forecast method, demand forecast for the solving linear programming problems in
next period is given by the equation which _____________are involved.
_____________.
of
a. More than three decision variables
a. Ft= αDt-1+(1-α) Ft-1
b. A maximum of three decision variables
b. Ft = αDt + (1-α)Ft-1
c. A maximum of two decision variables
c. Ft = αDt-1+ αFt-1
s
d. A minimum of three constraints
d. Ft+1 = αDt-1 + (1-α) Ft-1
as
16. The concept of linear programming does
11. What is the value of exponential not consider any synergetic effects among
smoothing constant alpha (α)?
Cl decision variables while calculating their
a. It is always 0.2 total value for the objective function or the
b. It is always less than unity constraints they are associated with. This
c. It always lies between 0 and 1 is part of which assumption of linear
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programming?
d. It can take any positive value
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a. Proportionality
12. Which of the following helps measure the b. Additivity
accuracy with which forecasting methods
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are able to predict demand? c. Divisibility

i. Nominal group technique d. Certainty
ii. Mean forecast error
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17. In the graphical method of solving a linear

iii. Tracking signal programming problem, what is the right
iv. Least square method way of plotting constraints on the graph?
U
a. The constraints are plotted as curves

a. Only i
b. Constraints parallel to the axes are not
b. ii and iv
considered while plotting.
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c. iii and iv
c. The constraints are plotted and moved
d. ii and iii either to the right or left to achieve an
13. Which of the following forecasting optimal solution
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methods is not effective when there are d. Constraint inequalities are taken as
fluctuations in demand or when the equations and are plotted on the graph
demand is seasonal?
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18. In which method used to develop an initial

a. Simple moving average method
feasible solution in transportation
b. Weighted moving average method problems, is the difference between the
c. Regression analysis least cost and the next least cost calculated
d. Historical analogy in a row or column before assigning
quantities to any cell?
14. To determine how well forecasts from a
a. North-West corner method
forecasting model fit the actual demand
pattern, the average error of the model is b. Least cost method
140
Part B
c. Vogel’s approximation method a. Demand

d. Both a & b b. Resource availability
c. Allocation of resources
19. The transportation problem is a special
case of linear programming. In which of d. Facility layout
the following methods are allocations 24. Which of the following types of
made based on quantity, demand, and integration determines the extent to which
supply numbers, as part of determining an a product and its components are produced
09
initial feasible solution? internally?
a. North-West corner method a. Horizontal integration
b. Least cost method b. Vertical integration
20
c. Vogel’s approximation method c. Diagonal integration
d. Stepping stone method d. Lateral integration
20. The assumptions made in linear
25. Which of the following is not a synonym
of
programming models are proportionality,
additivity, divisibility and certainty. What for process-focused production?
does the assumption ‘certainty’ state? a. Intermittent production system
b. Stop-and-go production
s
a. An optimal solution is possible only when
coefficients of variables have certain or c. Job shops
as
definite problems d. Line flow production system
b. Integer programming is used to avoid
26. A certain product is made of parts which
fractional values for decision variables
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are produced under standardized
c. The total value of the objective function production. But, the product as a whole is
and each constraint is equal to the sum of produced in moderate numbers in batches.
the individual contributions from each What kind of production system would be
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decision variable appropriate to produce this product?
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d. Economy of scale does not play a role in a. Job shop production

linear programming problems
b. Group technology
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21. Which of the following provides an overall c. Product-focused production

macro view of the movement of d. Process focused production
components and sub-assemblies in the
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production process? 27. What is the overall objective of ‘facility

layout decision’ in a manufacturing unit?
a. Assembly chart
a. To provide smooth workflow of materials
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b. Process chart and ensure operational efficiency

c. Gantt chart b. To give workers a pleasant work
d. Flow chart environment
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c. To arrange various facilities at the plant to

22. In what way is a typical product focused improve aesthetics
system distinct when compared to a d. To utilize available space within the plant
process focused system?
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location to the fullest

a. Lower fixed costs and higher variable
28. A multinational company prefers to use
costs labor intensive production processes. The
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b. Higher fixed costs and lower variable costs company plans to expand its global
c. Higher fixed costs and higher variable presence by entering a new country.
costs Which of the following countries should it
prefer as a choice location?
d. Lower fixed costs and lower variable costs
a. Japan
23. Many inputs are required to develop a b. Germany
process plan. Which of the following is c. China
not an input used in process planning? d. Australia
141
29. Break-even analysis is a graphical and 34. Match the following terms associated with
algebraic representation of relationships the process of job design.
among volume of output, costs and i. Job identification
revenues. What is the other commonly ii. Job title
used term for break-even analysis?
iii. Job duties
a. Quality factor analysis iv. Job specification
b. Cost-volume - profit analysis
p. Describes the duties and responsibilities
09
c. ABC analysis
associated with the job in a summarized
b. Value analysis
form
30. Layouts are differentiated by the types of q. Reflects the number of workers needed
20
work flow they entail and the work flow in and the reporting authority in a job
turn is dictated by the nature of the r. Describes the required skills and
product. Which type of layout is also qualifications for a job
of
called flow-shop layout? s. Describes the purpose and responsibilities
a. Process layout of a job
b. Product layout
a. i/r, ii/q, iii/p, iv/s
s
c. Fixed position layout
as
d. Hybrid layout c. i/q, ii/s, iii/p, iv/r
31. Which of the following layout formats d. i/q, ii/s, iii/r, iv/p
Cl
involves grouping similar equipment or
functions in an area?
by Richard Hackman and Greg Oldham
a. Product layout includes five characteristics. They are skill
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b. Process layout variety, task identity, task significance,
c. Fixed position layout autonomy and feedback. Which of the
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d. Grouping technology layout following defines details of tasks needed to

complete/perform a job?
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32. Which of the following conditions would a. Task identity

arise if a steel manufacturer selects a b. Task significance
location close to the sea port?
c. Autonomy
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a. Higher transportation costs of raw d. Feedback

materials
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b. Better inventory management 36. The extent to which tasks can be defined
c. Greater possibility of just-in-time delivery differs from job to job. Defining tasks is
of finished goods most difficult for which of the following
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organizational levels?
d. Greater ability to respond to changes in
demand a. Assembly line workers
33. Managers have to balance job b. Supervisors
specialization and skill variety, while c. Middle managers
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designing jobs for employees. Which of d. Top management

the following is not an advantage of job
37. Job design refers to the process through
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specialization for workers in an

which tasks are structured to improve the
organization?
efficiency and productivity of workers.
a. Ease in recruiting new workers Which of the following is not an objective
b. Lower production time or higher of job design for a manager?
productivity due to the learning curve a. To enhance self-esteem and motivate
effect employees
c. Higher flexibility in job rotation b. To maximize worker inputs in terms of
d. Ease of supervision and training worker time and physical effort
142
Part B
c. To improve efficiency and productivity of c. Job identification – observation – pace

workers rating – computing normal time &
d. To keep workload at a convenient level allowances – computing standard time
d. Job identification – pace rating –
38. Job design includes skill varieties, task observation – computing normal time &
identity, task significance, autonomy and allowances – computing standard time
feedback. Which of the following is not
considered a part of skill varieties of 42. What is referred to as the time that is
09
workers? generally consumed by an average worker,
a. Range of skills working at an average speed, to perform a
specific task under normal operating
b. Extent of motivation needed
20
conditions?
c. Abilities and talent needed
a. Work rate
d. Level of skills
b. Work record
39. Name the work measurement technique c. Work standard
of
that analyzes work by taking a number of d. Observation time
random observations to see the relative
frequency with which various activities are 43. Zentech Engineering establishes work
s
carried out. standards as part of work measurement in
its plant. Which of the following cannot
as
a. Standard data technique
be a possible benefit of using work
b. Predetermined motion time study
standards?
c. Time study
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a. They help schedule operations
d. Work sampling
b. They help reduce machine utilization
40. Identify the correct definition of ‘time c. They provide benchmarks for evaluating
standard’.
y
workers’ performance
a. The time consumed by an average worker, d. They help compare efficiency of different
nl
working at average speed, to perform a work methods

specific task under normal operating 44. Which of the following is not an optimal
O
conditions model used to formulate the aggregate

b. The time consumed by the most productive plan?
worker, working at top speed, to perform a a. Linear programming
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specific task under special operating

conditions b. Linear Decision Rules
c. The time consumed by the most productive c. Pre-determined Motion Time Study
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worker, working at top speed, to perform a d. Heuristic models

specific task under normal operating 45. Operations planning activities can be long-
conditions
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range, medium-range, or short-range in

d. The time consumed by the most nature. Process planning typically falls
unproductive worker, working at the under which category?
lowest possible speed, to perform a a. Long-range planning
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specific task under normal operating b. Medium-range planning

conditions
c. Short-range planning
41. Identify the correct sequence of steps
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d. Both b & c
followed as part of time study technique.
46. As the Master Production Schedule (MPS)
a. Observation – job identification – pace is based on an estimation of overall
rating – computing normal time & demand for the end product, the actual
allowances – observation – computing production output is not always equal to
standard time the actual demand. Operations managers
b. Job identification – observation – pace can modify the MPS to adjust to these
rating – computing standard time – deviations. Which of the following is not
computing normal time & allowances the correct approach to adjust deviations?
143
a. Allowing inventory level to increase when 51. “Large shipments can result in reduced
demand is low and vice-versa incoming freight costs and material
b. Modifying the size or composition of the handling costs.” This statement, given by
product temporarily manufacturing firms, refers to which type
c. Sub-contracting additional capacity of inventory?
requirements a. Raw material inventory
d. Maintaining product prices to influence the b. Work-in-progress inventory
09
demand level c. Finished products inventory
47. When a firm achieves economies of scale,
production costs reduce considerably. This
20
results due to which of the following? correctly describe the P-System?
i. Decrease in per unit cost a. Orders are placed at equal intervals of time
ii. Decrease in fixed costs b. Inventory is monitored continuously
of
iii. Decrease in variable costs c. The order is placed so that total cost of
iv. Decrease in inventory costs maintaining inventory is less
d. Lead time for replenishment is zero
s
a. i and ii
as
b. i and iii 53. Which type of cost does a firm incur if the
rate of inventory replenishment is less than
b. ii and iii
demand rate?
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c. i, ii and iii
a. Stock-out costs
48. A master production schedule of make-to- b. Replenishment costs
order organizations contains information c. Production costs
y
about which of the following? d. Direct costs
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a. Quantities and required delivery dates of

the final product 54. Which inventory model is also referred to
as the reorder point system?
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b. Quantities and required delivery dates of

all sub-assemblies a. P system
c. Inventory on hand for each component b Q system
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d. Scheduled receipts for all components c. EOQ

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range, medium range or short range in 55. Before taking make-or-buy decisions,
nature. Under which category do order organizations take into account factors like
scheduling and workforce scheduling availability of raw materials in the long-
BS
typically fall? run, ability to monitor and control quality,

etc. Which of the following is not an
a. Long-range
argument in favor of ‘buy’ decisions
b. Medium-range
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(outsourcing production)?
c. Short-range
a. Take advantage of suppliers know-how
d. Both a & b and expertise
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50. Which of the following is the basic b. Quantity required is too low to justify in-
objective of economic order quantity house production
purchasing? c. Helps maintain multiple supply sources
a. Minimizing total inventory cost d. Maintain control over supply chain
b. Minimizing transport cost activities
c. Minimizing storage cost 56. What precedes a typical make-or-buy
d. Minimizing ordering costs decision?
144
Part B
a. Value analysis 61. Ingersoll Rand manufactures a limited

b. ABC analysis variety of horizontal compressors and the
c. Break-even analysis customer has to select from the available
models. What type of production policy is
d. Vendor analysis
the company following?
57. The purchase department acts on behalf of a. Varying workforce production
the user departments and interacts with the b. Standardized production
suppliers to purchase materials at
09
c. Employee focused production
economic prices. This is associated with
which activity of the purchase department? d. Customized production
a. Vendor analysis and development 62. A tires supplier to the Maruti assembly
20
b. Supplier selection line prides itself on providing the required
c. Value analysis quantity and types needed for every day
production. What type of competitive
d. Contract negotiation and communication
of
advantage strategy is described here?
interface
a. Differentiation strategy
58. Which of the following purchasing b. Straddling strategy
s
instruments authorizes suppliers to supply c. Response strategy
goods for a firm?
as
d. Level production strategy
a. Organizational document
b. Purchase quotation 63. Which of the following forecasting
Cl
methods is an example for causal models?
c. Purchase requisition
a. Simple moving average
d. Purchase order
b. Weighted moving average
y
59. Identify conditions that influence a firm c. Exponential smoothing
for a ‘buy’ decision.
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d. Regression analysis
i. The cost of purchasing the item is less than
for manufacturing it 64. What is the value of the mean forecast
O
error for an accurate forecast model that is

ii. The company does not have required unbiased?
manpower to make the item
a. Close to unity
se
iii. Expected returns on investment in b. Close to zero

manufacturing items are attractive
c. Negative
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iv. The demand for the item (to be d. Equal to one

manufactured) is seasonal and there is risk
in storing and maintaining it. 65. What happens to the demand of the
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commodity when the price of the

a. i, ii, iv commodity is reduced, keeping other
b. ii, iii, iv things constant?
c. i, ii, iii a. Increases continuously
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d. i, ii, iii, iv b. Decreases continuously

c. Increases to a certain point
60. Which of the following studies prompted
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d. Does not change

management thinkers and organizations to
take up in-depth research into human 66. Proportionality is an assumption made in
behavioral aspects at work? linear programming. It indicates that
a. Moving assembly lines contribution of individual decision
variables in the objective function is
b. Hawthorne studies
proportional to their numeric value. Which
c. Operations research of the following can be derived from this
d. Scientific management assumption?
145
a. Economies of scale play an important role a. Layouts are permanent and do not change
in linear programming over time
b. Economies of scale do not play any role in b. Layouts differ from plant to plant, location
linear programming to location, and industry to industry
c. Finished products are not proportional to c. Layout decisions have long-term
the amount of raw material consumed consequences for the firm
d. Does not consider any synergistic or anti- d. A good layout always attempts to reduce
synergistic effects among decision
09
material-handling costs
variables
72. Identify the layout using a product layout
67. The generalized objective function of a within a group of machines and a process
20
linear programming problem is ‘minimize layout between such groups of machines?
Z = C1x1 + C2x2 + … + Cnxn.’ If X2 is
decreased by one unit, what will the value a. Hybrid layout
of objective function be? b. Functional layout
of
a. The value will increase by C2 c. Fixed position layout
b. The value will decrease by C2 d. Grouping technology layout
c. The value will increase by one unit 73. Skills, knowledge, and abilities required to
s
d. The value will decrease by one unit satisfy the requirements of a job are
as
associated with which function of job
68. Which of the following systems is the
design?
most appropriate for a production
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organization producing large volumes with a. Job specification
very little scope for product variety? b. Job specialization
a. Process focused system c. Job content
y
b. Process focused batch production system d. Job specialization
c. Product-focused production system
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74. What does job identification describe?

d. Cellular manufacturing system
a. The number of workers and reporting
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69. A manufacturer decides to buy its authority in a job

marketing and distribution channels. What b. Purpose and responsibilities of a job
type of integration strategy is the c. Duties and responsibilities
se
manufacturer adopting? d. Skills and qualifications required

a. Product expansion
75. Which of the following is not a type of
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b. Forward integration
pre-determined motion time data system?
c. Backward integration
a. Methods time measurement
d. Diversification
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b. Work sampling
70. The cost incurred in transporting raw c. Work factors
materials and other components from d. Maynard Operations Sequence Technique
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different places must be considered while (MOST)

deciding on the location of a facility.
Which among the following methods helps 76. Some organizations may not be in a
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analyze these costs? position to fulfill customer orders. They

a. Break-even analysis may fulfill them in the future. What is the
practice of fulfilling current orders of
b. Point-rate method customers at a future date called?
c. Transportation method
a. Back-order strategy
d. All of the above
b. Sub-contracting
71. Identify the statement that does not c. Aggregate planning
correctly describe plant layouts. d. Capacity planning
146
Part B
77. The graphical method for aggregate output a. 10,100

planning is a technique used in developing b. 8,400
and evaluating various alternative plans or
c. 8,300
a combination of alternatives. This method
focuses on which of the following d. 9,400
relationships? 81. What is the annual ordering cost if the
a. Absolute demand and absolute output fixed cost per order is Rs.5000, yearly
capacity
09
demand is one million units and 200,000
b. Cumulative demand and cumulative output units are ordered per order? (2 points)
capacity a. Rs.15, 000
20
c. Absolute demand and cumulative output
b. Rs.20, 000
capacity
c. Rs.25, 000
d. Cumulative demand and absolute output
capacity d. Rs.30, 000
of
82. Using EOQ model, calculate the holding
78. Jumbo Auto Ltd achieved sales of 20,000
cost per order if the holding cost per unit is
units in 2006 when the sales forecast was Rs.10 and order quantity is 10000 units?
for 19,500 units. Estimate the sales for
s
(2 points)
2007 using a first order exponential
as
a. Rs.100,000
smoothing method. The smoothing
constant is 0.1. (1 point) b. Rs.75,000
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c. Rs.25,000
a. 17,550 units
d. Rs.50,000
b. 19,500 units
c. 19,550 units (Questions 83 to 85) Cutting Tools India Ltd.
y
d. 21,500 units (CTIL) produces different drilling tools
including pneumatic power tools. The company
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Questions (79 & 80) Answer the following two decides to launch a new product that requires a
questions from the given transportation new component. The price of this component is
O
problem. Rs.50 per unit and CTIL estimates the annual

demand at 2,000 units. If the component has to
Factory/ W1 W2 W3 Supply
be manufactured in-house, one-time fixed costs
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Warehouse
would be Rs.200,000 and variable cost per unit
14 20 11 250 would be Rs.25. Based on this information,
F1
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answer the following three questions.

17 11 16 350 83. What will be the total cost of producing
F2
the component in-house as well as the cost
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8 9 13 300 to buy it from vendors? (2 points)

F3
a. Rs.100,000 and Rs.250,000
Demand 200 250 450 b. Rs.250,000 and Rs.100,000
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c. Rs.150,000 and Rs.200,000

79. Which will be the first cell to which
d. Rs.200,000 and Rs.150,000
quantity should be allocated, if Vogel’s
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approximation method is used? (1 point) 84. If it is estimated that the demand for the
a. F1 W 1 component will double annually, what will
be the total cost to make and total cost to
b. F2 W3
buy for the next three years? (3 points)
c. F2 W 1
a. Rs.550,000 and Rs.700,000
d. F3 W 1
b. Rs.850,000 and Rs.800,000
80. What is the initial feasible solution using c. Rs.800,000 and Rs.850,000
the least cost method? (4 points) d. Rs.700,000 and Rs.550,000
147
85. If the variable cost of in-house production centers. Using the center of gravity
increases to Rs.30 per unit, what decision method, identify the X and Y coordinates
would you take if the firm requires 25,000 of the optimal location for Golden Exports
units in five years? (5 points) to set up its processing plant. (3 points)
a. Buy Distribution X Y Quantity
b. Make Center (in tons)
c. Buy for first two years and make for the A 5.5 7 60
09
remaining three years
B 8 12 90
d. Cannot decide
C 12 6 110
20
86. Golden Exports wants to set up its sea- D 15 11 100
food processing plant at a location that
would enable it to effectively ship the a. 7.56, 8.99
processed sea food to four distribution b. 10.75, 9.06
of
centers across the country. The following c. 9.06. 10.75
table gives the quantities to be shipped and
the coordinates for the four distribution d. 8.99, 7.56
s
as
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y
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O
se
U
BS
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148

09
1. A Kanban system uses different types of a. Playback robots
20
cards to initiate material transactions. b. Numerical control robots
Which of the following Kanban cards c. Variable-sequence robots
authorizes a materials handling agent to
d. Physically operated robots
move the tray to a specified destination?
of
a. Conveyance authorization card 5. Which of the following actions is not
b. Production authorization card associated with a conveyance authorization
card issued by a production worker from a
c. Vendor authorization card
s
workstation in a production facility?
as
a. A material tray is filled with required
2. The materials flow is divided into three material in the inventory
different overlapping functions - b. A vendor immediately fills up the
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production control, inventory control, and inventory with required quantity
the materials handling function. Which of c. A material with filled material is sent to
the following is not a task associated with the production worker
y
the inventory control function in materials d. All of the above
management?
nl
a. Checking the quantity and quality of the 6. Which of the following is not a
incoming material and generating characteristic of the Kanban system?
O
receiving reports a. The Kanban system follows the open loop

b. Checking the quantity and quality of the system
products in the production process b. The Kanban system requires initial
se
c. Storing and protecting finished goods inventory to begin an operation

d. Auditing finished goods inventory c. In the Kanban System, cards are used to
initiate transactions
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3. There are many factors that directly d. All inventory items are stored in single
influence the materials handling function. trays
Which of the following is not such a
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factor? 7. The Kanban system was developed by

Toyota Motor Company, Japan. Which of
a. Type of plant layout the following factors determine the
b. Type of production process used number of Kanbans?
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c. Nature of materials and material handling a. Time and cost of a set-up

equipment used
b. Demand rate of a product
d. Quality of material
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c. Number of units that can be stored

4. If an operator performs a sequence of tasks d. Number of workstations in a production
using a robot, it stores the sequence in its system
memory and performs the same tasks in
the same sequence to produce same/similar 8. Materials handling equipment is of two
products. Which category of robots, based types - fixed path equipment and variable
on the nature of their operations, is path equipment. Identify the correct
referred to here? combination from the following.
i. Mobile cranes : Fixed path equipment i. Cumulative lead-time requirements for

ii. Forklift : Variable path equipment activities such as procurement
iii. Industrial tractors : Fixed path equipment ii. Activity-wise time-phase requirements
iv. Conveyor : Fixed path equipment iii. The number of units of finished products
required
a. ii and iv
iv. List of materials along with the quantity
b. i and iii
required
c. ii, iii, iv
09
d. ii and iv a. i and ii
b. i, ii, iv
9. The components of an MRP system can be
20
divided as inputs, processing, and outputs. c. ii, iii, iv
Which of the following is not part of the d. i, ii, iii
outputs of an MRP system?
14. Besides inadequate employee training and
of
a. Purchase commitment report involvement, and use of inaccurate and
b. Performance reports obsolete data, the success of an MRP
c. Planned orders system usually depends on the product
s
d. Bill of materials environment. What does an appropriate
as
product environment require?
10. What basic information does a master
production schedule contain? i. An organization needs to purchase many
Cl items, a majority of which are components
a. Required quantities and delivery dates of
final products and parts
b. Required quantities and delivery dates of ii. The demand pattern of items should be
dependent in nature
y
all sub-assemblies
c. Inventory on hand for each final product iii. Demand for items should be irregular in
nl
d. Scheduled receipts for each final product timing

iv. The lead times for purchase of these items
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11. An MRP system takes some inputs, should be inconsistent

processes them, and gives certain outputs.
Which of the following is not considered a. i, ii, and iii
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an input? b. i, iii, and iv

a. Master production schedule c. ii, iii, and iv
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b. Planning report d. ii and iv

c. Bill of materials 15. Scheduling varies depending on the type of
operation. Which type of labor-intensive
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scheduling allows employees to choose
12. In which step of MRP information their work hours, but on condition that
processing, all the parts required to they put in a specified number of hours in
a period?
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produce a product are identified and the

production or purchase activity of the a. Flextime approach
respective parts is determined by working b. Flextour approach
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backwards? c. Staggered times approach

a. Explosion d. Part-time approach
b. Netting 16. One of the methods that service firms can
c. Offsetting adopt to meet customer demand under
d. Consolidation of material requirements situations of limited availability of service
facilities is through a reservation system.
13. What does the Master production schedule Which of the following statements is not
contain? true about a reservation system?
150
Part B
a. Helps manage demand by adjusting price i. The smallest processing time on machine
for services A should be greater than or equal to the
b. Helps meet customer demand successfully largest processing time on machine B
by scheduling multiple resources and ii. The smallest processing time on machine
facilities together C should be greater than or equal to the
c. Allows firms to discontinue unprofitable largest processing time on machine A
business operations iii. The smallest processing time on machine
09
d. Helps firms in situations where customer A should be less than or equal to the
demand exceeds service capacity largest processing time on machine B
iv. The smallest processing time on machine
17. Which of the following scheduling
20
C should be less than or equal to the
activities aims at reducing costs by largest processing time on machine B
minimizing the idle time of the machines
and reducing inventory? a. Only i
of
a. Routing b. i and iii
b. Loading c. ii and iv
c. Dispatching d. i and iv
s
d. Backward scheduling
21. Assigning specific jobs to each work
as
18. Service operations scheduling is quite center for the planning period is associated
different from product operations with _________.
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scheduling. Which of the following is not a. Loading
true about service operations scheduling? b. Routing
a. Appointment system is a scheduling c. Dispatching
y
method used in service operations d. Mapping
b. Service operations are scheduled according
nl
22. In which of the following personnel

to demand
scheduling approaches are employees
c. Service operations are scheduled according
O
given an option to select their work hours

to inventory requirements from a list of available shifts?
d. Service operations are scheduled according a. Flexitime approach
se
to the first in, first serve rule b. Flextour approach

19. Many tourist resorts reduce room tariffs c. Compressed work week
U
during the off-season to maintain the flow d. Staggered times approach

of visitors. Which of the following 23. Which scheduling activity is associated
methods is the service provider using to with the process of releasing job orders to
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reduce the gap between demand and production workers according to the
supply of services? planned schedule?
a. Appointment system a. Routing
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b. Reservation system b. Queuing

c. Strategic product pricing c. Dispatching
d. Routing d. Backward scheduling
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24. Expand SAP.

20. If there are 3 machines A, B & C, and n
jobs have to be processed on these a. Systems Analysis and Programming
machines, which of these conditions need b. Strategic Analysis and Programming
to be satisfied to use Johnson’s sequencing c. Systems, Application and Products
rules? d. Strategic Application Programming
151
25. Why is integration of data considered most a. Compensation and benefits

critical in ERP implementation? b. Measurement
i. It increases data redundancy c. Design
ii. It increases connectivity between d. Periodic review
departments
iii. It helps in smooth flow of information 30. Which of the following ‘components’ of
between departments SCM forms a blue print for supply chain
iv. It ensures availability of right information operations?
09
a. SCM leadership
a. i, ii, iii
b. Operational planning
b. i, ii, iv
20
c. SCM strategy
c. ii, iii, iv
d. Order-to-delivery process
d. i, ii, iii, iv
26. The key activity of _____________ is to 31. Alignment is an SCM ‘enabler’. What
of
monitor the implementation process should the management of an organization
continuously in order to identify do to ensure better ‘alignment’ in the
deviations, cost overruns, resource organization?
requirements, etc., during ERP a. Develop policies that reward low cost
s
implementation. purchases and intense negotiations
as
a. Project member b. Strive for cross-functional interaction
b. Project leader c. Set goals and objectives that support
Cl
c. Project team successful supplier relationships
d. Steering committee d. Set up organization-wide and continuous
communication systems
27. Which of the following concepts can be
y
linked to the development of ERP? 32. Which of the following is not true about
nl
i. MRP demand chains?

ii. Inventory Management a. A player in the demand chain can develop
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iii. Purchase Management products at any point of time

iv. MRP II b. Meeting consumer demand in time is given
a. i and ii paramount importance
se
b. ii and iii c. Alliances develop between channel

c. iii and iv partners who can best satisfy customer
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needs
d. i and iv
d. The players in a demand chain are
28. Process mapping helps in detailing the different from those in the traditional
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processes used in business transactions. supply chain

Process mapping is used in which of the
following stages of ERP implementation? 33. Electronic supply chain management
a. Identify the needs of the ERP package (ESCM) involves business-to-business
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b. Evaluate the ‘as–is’ situation of the integration through the Internet. Identify
business the advantages of implementing ESCM for
c. Evaluation of available ERP packages a firm.
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d. Implementation of ERP package i. Increase in inventory levels

29. SCM ‘enablers’ are a group of carefully ii. Cost savings
conceived and defined behaviors and iii. Reduction in cycle time
approaches that allow, encourage, and iv. Reduction in procurement costs
reinforce a firm’s commitment to high
performance SCM practices. Which of the a. i, ii, and iii
following is not an SCM ‘enabler’? b. i, ii, and iv
152
Part B
c. i, iii, and iv characteristic of a JIT system. Which of

d. ii, iii, and iv the following cannot be true in this
scenario?
34. Which of the following ‘components’ of a. JIT firms select suppliers located away
SCM include functions like commodity from the plant
planning, supplier capacity planning,
b. JIT firms need to maintain long-term
planning for supplier evaluation,
relationships with suppliers
certification processes, etc.?
09
c. Suppliers should be reliable in terms of
a. Operational planning delivery
b. Order-to-delivery process d. Suppliers should be paid their dues
20
c. Business relationship management (invoice amounts) regularly without delay
d. Human resources management
39. JIT does not focus on one of the
35. Which of the following characteristics is following. Identify.
of
not associated with JIT? a. Eliminating external demand variations
a. Reduction in paperwork b. Reducing unreliable delivery of raw
b. Purchase in small lots with frequent materials
s
deliveries c. Reduction of inventory
as
c. Many suppliers for a given part/component d. Reducing excessive set-up times
with short-term contracts
Cl
40. Identify the sequence used to implement
d. Standardized packaging for all part types
the suggestions of workers to improve
36. JIT manufacturing has an open quality in the organization.
management style. What does this mean? a. Collection – evaluation – selection –
y
a. Workers are free to implement whatever testing – approval – implementation

nl
methods they like b. Collection – selection – evaluation –

b. Suggestions of workers are not collected testing – approval – implementation
O
and implemented by the management c. Selection – collection – evaluation –

c. Suggestions of workers are collected, testing – approval – implementation
evaluated, tested, and implemented by d. Selection – collection – testing –
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management evaluation – approval – implementation

d. Top management provides suggestions that 41. The cost of quality can be divided into
U
are evaluated and implemented by workers three major categories - cost of prevention,
37. Which of the following elements help cost of detection/appraisal, and cost of
build long-term relationships between the failure. Which of the following is a
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firms practicing JIT and their suppliers? prevention cost?

i. Trust a. Disposition of defective items
ii. Communication b. Equipment maintenance
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iii. Product design c. Quality training

d. Warranty charges
iv. Linearity of production
Fo
42. Which of the following indicates labor

a. i and ii productivity?
b. i, ii, and iv
i. Goods produced /material consumed
c. ii, iii, and iv ii. Goods produced /man hours spent
d. i, iii, and iv iii. Goods produced /power consumed
38. The frequency of buying material is high iv. Customers handled /number of attendants
for JIT firms as they stock less inventory a. i and ii
This requires closer supplier ties, a b. ii and iii
153
c. iii and iv a. Sample 1 is outside the control limits.

d. ii and iv Further investigation is warranted
b. Sample 3 is outside the control limits.
43. Match the following functions of quality Further investigation is warranted
with the appropriate description. c. Samples 1 & 3 are outside the control
i. Durability limits. Further investigation is warranted
ii. Serviceability d. All samples are within limits and the
packaging process is in-control
09
iii. Performance
iv. Reliability 46. A company can compete on different
quality functions. Which function of
p. The probability of a product’s failure in a
20
quality is measured as the mean time
time period
between failures?
q. The operational life of a product
a. Features
r. Indicates the ability of a product’s primary
b. Reliability
of
operating characteristics
s. Concerned with how readily a product can c. Durability
be serviced back into operational mode d. Serviceability
s
47. To provide a clean and conducive work
a. i/q, ii/s, iii/r, iv/p
as
environment and enable efficient and
b. i/p, ii/q, iii/r, iv/s effective progress of the core functions of
c. i/p, ii/q, iii/s, iv/r an organization is an objective of
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d. i/p, ii/r, iii/q, iv/s ____________.
44. The cost of quality can be divided into a. Quality management
different categories. Investments in b. Facilities management
y
machinery and vendor certification are c. Maintenance management
nl
associated with which of the following d. Inventory management

costs?
48. Which of the following is a suitable
a. Prevention costs
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strategy a firm can adopt to avoid loss of

b. Detection costs control when outsourcing facilities
c. Failure costs management activities?
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d. Appraisal costs a. Outsource all activities to a singe vendor

45. ABC Company manufactures cheese and b. Outsource different tasks to different
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each packet should weigh 32 gm. The vendors

quality supervisor wants to develop a c. Prefer outsourcing rather than out-tasking
process control chart. He takes five d. Outsource core activities to a single vendor
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samples of six boxes each and weighs

them. The upper and lower control limits 49. An oil mill contains oil extractors with
for the x-bar chart are 34.34 and 33.86 many moving parts. The maintenance
respectively. The upper and lower control
inspector on a routine visit finds there is
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limits for the range are 1.00 and 0.00,

respectively. Based on the following data, leakage of lubricant in one machine. What
select the statement that best describes the type of maintenance will the maintenance
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situation. inspector take up?

Sample Mean Range a. Irregular preventive maintenance
1 33.9 1 b. Predictive maintenance
2 34.1 0.8 c. Periodic maintenance
3 34.0 1.2 d. Remedial maintenance
4 34.2 0.3
50. What do you understand by ‘opportunity
5 34.0 0.3 maintenance’?
154
Part B
a. Maintenance done when a machine is 55. Globalization provides many new

running opportunities for expansion of
b. Maintenance carried out when a machine organizations. The BPO industry is
has broken down flourishing in India due to availability of
c. Maintenance carried out when a machine low-cost English-speaking graduates.
is idle and waiting for the next job Which of the following types of global
d. Maintenance done at regular intervals of competitive advantage does India have?
time a. Comparative advantage
09
51. The activity of cleaning facilities to keep b. Economies of scale
them neat and tidy falls under which of the c. Proprietary product knowledge
20
following services of facilities d. All of the above
management?
56. Which of the following formulae correctly
a. Janitor’s services represents the ‘expected time’?
b. Reprographics
of
n
c. Landscaping
d. Waste management
a. ∑ iP
i =1
i
s
52. Identify the goals of maintenance D−E
b. Z=
as
management from the following. σ 2cp
i. Preserve the value of the firm’s machinery
2
 t p − t o 
ii. Use maintenance personnel and equipment
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efficiently c.  
 6 
iii. Minimize availability of machinery for
production process d. te =
(to + 4t m + t p )
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iv. Eliminate accidents by regular inspection 6
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a. i, ii, and iii 57. Which of the following is true about an

b. ii, iii, and iv FMS?
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c. iii, iv, and i a. An FMS requires very less capital to

d. i, ii, and iv install
b. Different products with similar
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53. Managers use many terms as part of

components and manufacturing processes
networks in project management. In this
context, what is the term used for an can be manufactured
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outcome of an activity or group of c. It has a greater response time

activities? d. It requires many part-time workers
a. Project
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58. Coca-Cola markets its products through

b. Event
mega advertising campaigns and event
c. Critical path
sponsorship in most of the countries it
d. Node operates. This is an example of which of
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54. Automated systems are less customizable the following?

in terms of the number of possible a. Economies of scale in production
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products that can be manufactured when b. Economies of scale in purchase

compared to manually operated systems.
Which of the following overcomes this c. Economies of scale in marketing
disadvantage? d. All of the above
a. CAD 59. Raw materials form a major part of costs
b. CAM incurred by an organization. They are
c. FMS classified under which of the following
d. JIT heads in the balance sheet of a firm?
155
a. Current assets 65. ERP packages are evaluated to identify the

b. Current liabilities package that will provide a comprehensive
solution to the given organization’s
c. Fixed assets
requirements. The type of industry it is
d. Fixed liabilities designed for is one of the factors to be
considered. Which of the following terms
60. Give the correct relationship between represents this factor?
material costs and its effect on profitability
a. Global presence
of a firm.
09
b. Modularity
a. Profitability increases with rising material
c. Price
costs
d. Target market
20
b. Profitability decreases with increase in
material costs 66. Small and medium sized organizations
c. Profitability decreases with drop in usually purchase individual modules of the
material costs ERP package due to high costs. Which
of
characteristic of evaluating ERP packages
d. Material costs do not affect profitability is discussed here?
61. The components of an MRP system can be a. Target market
s
divided into inputs, processing and b. Investment in R&D
as
outputs. Which of the following is not c. Modularity
associated with any of these components d. Ease and cost of implementation
of an MRP system?
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67. Which of the following SCM ‘enablers’
a. Bill of materials
discusses effective decision-making in the
b. Inventory records file organization?
c. Master production schedule a. Participation/involvement
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d. Layout planning b. Design
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62. _______________ contains the list of c. Measurement

materials along with the quantity required d. Periodic review
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to produce one unit of a product. 68. In which of the following, products don’t
a. Master production schedule necessarily originate from manufacturers
and any player in the supply chain can
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b. Demand forecast
develop them at any point?
c. Bill of materials
a. Supply chain management
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b. Demand chain management
63. Which of the following is not a standard c. Inventory management
measure of schedule performance to d. Production management
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evaluate priority rules?

69. In which approach do people working in
a. Meeting due dates of customers or
similar type of operations meet regularly to
downstream operations discuss work-related problems and ways to
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b. Minimizing flow time improve work quality?

c. Maximizing work-in-progress inventory a. Quality circles
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d. Minimizing idle time of machines b. Suggestion programs

c. Project teams
64. Which of the following is an aid to
monitor jobs in-process? d. JIT purchasing
a. First-in first-serve 70. Under the JIT manufacturing system, firms
b. Gantt chart strive to reduce inventory and wastage to
the minimum possible extent. What kind
c. Johnson's rule
of supplier relationships do firms adopting
d. Slack time remaining a JIT system maintain?
156
Part B
a. Short-term relationship with a large 75. Which of the following correctly defines a
number of suppliers critical path of a project?
b. Short-term relationship with a few a. It is a task which must be finished in order
suppliers to complete the project
c. Long-term relationship with a large b. It is the outcome of an activity or a group
number of suppliers of activities
d. Long-term relationship with few suppliers c. It is the longest path of interrelated
09
activities in a project with zero slack time
71. Which of the following is not a function of d. It is the minimum amount of time in which
quality of a product? an activity can be completed.
20
a. Features
76. The minimum amount of time required to
b. Reliability
complete a project is termed ___________.
c. Durability
a. Optimistic time
of
d. Productivity
b. Pessimistic time
72. The cost of quality can be divided into c. Expected time
different categories. Investments in d. Most likely time
s
machinery and vendor certification are
as
associated with which of the following 77. CNC machines can perform variety of
costs? tasks based on instructions embedded in
Cl them. This technology is part of which of
a. Prevention costs
the following?
b. Detection costs
a. Flexible manufacturing system
c. Failure costs
b. Computer aided manufacturing
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d. Appraisal costs
c. Computer aided design
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73. Which of the following is not a duty of the d. Computer integrated manufacturing
facilities manager carrying out tasks in-
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house? 78. There are certain impediments to

globalization that can block an
a. Acting as change managers in situations
organization from globalizing its activities.
where existing processes or infrastructure
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Which of the following examples fall

are modified
under institutional impediments?
b. Developing good relationships with
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service providers a. Government regulations to use locally

produced components
c. Measuring the work performance of
facilities management teams b. Utilizing extra capacity to make products
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that can be exported

d. Reviewing techniques used to reduce costs
& raising maintenance levels in facilities c. Necessity to produce customized products
in every market
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74. Which of the following is not an activity d. Dealing with different people with varying
under preventive maintenance? preferences, work styles, etc.
a. Checking for safety in the work
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(Questions 79 to 81) V S Rao (Rao) is the

environment
supervisor of Choudhary Iron Works, which
b. Carrying out periodical preventive
manufactures customized windows for
maintenance households. Five customers submitted orders at
c. Order replacement of broken down the beginning of the week. Using the specific
machines scheduling data given below, answer the
d. Allocating budgets to upgrade facilities following three questions.
157
Jobs Processing Due Date Processing Times (in minutes)

(In order of Time Job Machine Machine Machine
(Days hence)
arrival) (Days) A B C
A 3 5 1 23 10 25
B 4 6 2 54 23 65
C 2 7 3 45 18 24
09
D 6 9 4 41 22 33
E 1 2 5 35 20 46
20
a. 1, 5, 2, 4, 3
79. Rao decides to use Earliest Due Date to
sequence the jobs. Which of the following b. 3, 2, 4, 5, 1
sequence will be followed to process the c. 3, 2, 5, 4, 1
of
jobs? (1 point) d. 1, 2, 4, 5, 3
a. A-B-C-D-E
(Question 83 to 88) The network diagram of a
s
b. E-C-A-B-D
project to install an ERP system in an
as
c. E-A-B-C-D organization is given below. The time estimates
d. D-C-B-A-E for completing the project is also show in the
diagram. Use this information to answer the
80. The average completion time for the
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following six questions.
sequence, E-A-B-C-D is (3 points)
a. 2.4 days 83. What is the earliest start time for the
activity 5-6? (1 point)
b. 7.8 days
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4 2
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3 2
1 2 9
7
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6 8
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3
5
4 6
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c. 5.8 days a. 3 weeks

d. 7.2 days b. 9 weeks
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81. Calculate the critical ratio for Job A? c. 5 weeks

(1 point) d. 7 weeks
a. 0.60
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84. What is the earliest start time for the

b. 0.50 activity 6-7? (1 point)
c. 1.67 a. 7 weeks
d. 0.67 b. 9 weeks
82. For the given ‘three machine and five job c. 14 weeks
problem’, determine the optimum d. 15 weeks
sequencing for scheduling using Johnson’s
sequencing rule. (4 points)
158
Part B
85. For which of the following activities the 89. Determine the optimum sequence to
latest finish time is 15 weeks? (1 point) process these five jobs using Johnson’s
a. 2-5 sequencing rule. (1 point)
b. 4-5 a.
c. 5-7 D F C B G E A
d. 5-6
b.
86. For which of the following activities the
09
latest starting time is 14 weeks? (1 point) D E C B G F A
a. 5-7 c.
b. 2-5 D E C G B F A
20
c. 5-6
d. 4-5 d.
87. Which of the following activities has zero D F G B C E A
of
slack time? (1 point)
90. Calculate the total lapsed time for the
a. 1-4 seven jobs based on the optimum
b. 4-5 sequence. (3 points)
s
c. 5-7
a. 305 minutes
as
d. 5-6
b. 330 minutes
88. Identify the correct critical path from c. 325 minutes
among the given options. (1 point)
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d. 315 minutes
a. 1-2-5-7
b. 1-4-5-6-7 91. What is the idle time on Machine A?
c. 1-2-3-5-6-7
y
(1 point)
d. 1-2-3-5-7 a. 20 minutes
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(Questions 89 to 92) To manufacture a type of b. 25 minutes

bolt, a firm requires two machines A & B. c. 30 minutes
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There were seven jobs from seven different

customers who ordered seven different types of d. 15 minutes
bolts. The processing times (in minutes) of
92. What is the total idle time on Machine B?
se
these jobs on machines A & B are given in the

following table. Use this information to answer (2 point)
the following four questions. a. 75 minutes
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b. 80 minutes
Job A B C D E F G
c. 85 minutes
Mach 30 50 45 25 60 40 55
BS
ine A d. 90 minutes
Mach 25 60 35 20 30 30 40
ine B
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159
Part B: Answers and Explanations
09
20
s of
as
Cl
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This section contains answers and explanations for the model tests.
nl
O
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Paper I
U
BS
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Answers and Explanations
1. (c) Lower initial investment
The high cost of installation and level of maintenance for automated machines has been a major
09
deterrent in the use of technology in the production process.
2. (b) Frederick W. Taylor

Frederick W. Taylor in his book ‘Principles of Scientific Management’ introduced the concept of
20
scientific management in the field of operations management. Taylor proposed a systematic
approach called the ‘shop system’ and implemented it in Midvale Steel Works, where he worked,
to improve labor efficiency. Henry Ford later introduced scientific management concepts in the
of
moving assembly line for production of cars. Adam Smith recognised the importance of division of
labor in his book ‘The Wealth of Nations.’ Elton Mayo conducted Hawthorne stdies that
highlighted the importance of human dimensions and not just planning and control of materials
s
and machines.
as
3. (a) Shop system
Taylor introduced the concept of scientific management. According to this, scientific rules
Cl
governed worker productivity and it was the prerogative of the management to study and apply
these rules in operations. Taylor proposed a systematic approach called the ‘shop system’ and
implemented it in Midvale Steel Works to improve labor efficiency.
y
4. (a) Produce-to-stock policy
In the produce-to-stock policy, products are produced well in advance and are stored in
nl
warehouses, from where they are distributed in accordance with customer orders.
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5. (d) i/s, ii/p, iii/q, iv/r

Production flexibility is the ability of an organization to produce different products on short notice.
Low cost process involves producing products at lower costs when compared to competitors.
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Product variety refers to an organization’s ability to produce different products to cater to different
customer segments. Quality is where the company produces higher quality products when
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compared to its competitors.
6. (c) Maturity stage

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As the sales become stagnant in the maturity stage, organizations focus on eliminating unnecessary
costs and increasing efficiency in production processes. These strategies prevent the erosion of
profit margins.
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7. (a) Core competence

Having superior engineering personnel and producing high quality products is considered a core
competency. Unique selling proposition is a verbal or visual message communicated by a
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company, through advertising, about a specific attribute of its product absent in competitors.
Producing a product at cheaper costs than competitors, and flexibility in production processes are
examples of core competence.
8. (b) Process-focused systems
Process-focused systems are highly flexible systems which can be easily modified to support other
product designs. Therefore, by using these systems one can produce different products via different
processes.
9. (b) Decrease the value of α

Overreacting to the most recent demand implies that the demand forecasted is very optimistic.
Therefore to reduce the forecasted demand, the value of α should be reduced.
10. (a) Ft= αDt-1+(1-α) Ft-1

In first order exponential smoothing method, the demand forecast for next period is given by the
equation, Ft = α Dt-1 + (1−α) Ft-1
09
11. (c) It always lies between 0 and 1
The value of exponential smoothing constant alpha (α) always lies between 0 and 1, which can be
20
mathematically expressed as, 0 ≤ α ≤ 1.
12. (a) Only i

Tracking signal is a measure of accuracy that assesses the precision with which forecasting
of
methods are able to predict demand. Determination of forecasting errors helps operations managers
plan their functional activities in a way that minimizes the effect of forecasting errors. The least
square method is used to generate a regression model by assigning data to a single line. Nominal
s
group technique is a qualitative method of forecasting demand.
as
13. (a) Simple moving average method
The Simple Moving Average (SMA) technique forecasts demand on the basis of the average
Cl
demand calculated from actual demand in the past. The SMA method is effective only when a
product does not experience fluctuation in demand over a period of time and the past demand for
the product is not seasonal. Historical analogy is a qualitative method and is judgmental in nature.
The other two methods have in-built features to tackle the fluctuations in demand.
y
14. (c) Tracking signal value nearer to zero indicates low forecast accuracy
nl
All the statements are correct except for option ‘c’. A tracking signal nearer to zero indicates that
the forecast is more accurate.
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15. (c) A maximum of two decision variables

The graphical method is applicable only to problems in which a maximum of two decision
se
variables are involved. If it is more than two, the graph becomes difficult to represent and more
complex and it becomes harder to identify the feasible region.
U
16. (b) Additivity

The objective function and constraints include several decision variables. Here, it is assumed that
BS
the total value of the objective function and each constraint is equal to the sum of individual
contributions from each decision variable. It means that the model does not consider any
synergistic or anti-synergistic effects among decision variables while calculating the total value for
the objective function.
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17. (d) Constraint inequalities are taken as equations and are plotted on the graph
Constraints usually come with inequalities. To plot them on a graph, they should first be converted
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into equations. Two coordinates for each constraint are obtained to plot each constraint as a line on
the graph.
18. (c) Vogel’s approximation method

The first step in Vogel’s approximation method is to calculate the difference between least cost
and the next least cost in a row or column. This difference is called penalty. Then the row or
column with largest penalty value is identified and a quantity is assigned to the least cost in that
row. This process is continued until demand is met.
164
Part B
19. (a) North-West corner method

The North-West corner method assigns the maximum possible quantity of products to the top left
corner cell of the transportation problem. After the allocation, supply and demand numbers are
adjusted. The other two methods, excluding the stepping stone method, are used to test the solution
for optimality and focus on costs while allocating.
20. (a) An optimal solution is possible only when coefficients of variables have certain or
definite problems
09
It is assumed that all the constants have certain values. This is because the solution for a linear
programming problem can be assumed as optimal only when the coefficients of variables have
certain or definite values.
20
21. (a) Assembly chart
Assembly charts provide a comprehensive account of the entire production process. They provide
of
an overall view of the movement of components and sub-assemblies in the production system.
22. (b) Higher fixed costs and lower variable costs

Product focused systems need high initial costs (fixed costs); however operating variable costs
s
remain low due to limited scope for product variety.
as
23. (d) Facility layout
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While demand, resource availability, and allocation of resources are inputs to a process plan,
facility layout is an output of the process plan, i.e. facility layout is designed based on the process
plan.
y
24. (b) Vertical integration
Vertical integration refers to the extent to which the production and distribution functions are
nl
brought under the ownership of the organization. Hence, the degree of vertical integration
determines the extent to which a product and its components are produced internally.
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25. (d) Line flow production system

Product focused production is also called line-flow production system.
se
26. (b) Group technology

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Product-focused production produces standardized products with prime focus on product rather
than on processes. Process-focused production focuses on the process to produce the product. But,
both these concepts are used in group technology. The product mentioned in the question uses both
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the types and thus, comes under group technology. Job shop production, on the other hand,
involves producing customized products.
27. (a) To provide smooth workflow of materials and ensure operational efficiency
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The main objective of a facility layout is to ensure smooth work flow and maximize efficiency in
the production process.
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28. (c) China

As the company has opted for a labor intensive process requiring more manpower, it could prefer
developing nations like China where it can utilize the vast manpower available at low cost.
29. (b) Cost-profit-volume analysis

Break-even analysis is also called as cost-profit-volume analysis. While break-even analysis and
quality factor analysis are used in location decisions, ABC analysis is used in inventory
management. Value analysis is used in purchase management and product design.
165
30. (b) Product layout

Product layouts, also called flow-shop layouts or straight-line layouts, involve arrangement of
equipment or machines in the same sequence by which a product is made.
31. (b) Process layout
Process layouts, also known as functional layouts or job-shop layouts, involve grouping all similar
equipment or functions. Grouping technology layout is a variant of product layout. A fixed
position layout involves movement of all machines and men while the product remains stationary.
09
32. (a) Higher transportation costs of raw materials
When a steel manufacturing facility is located near the port, a compromise has to be made on the
20
transportation cost of raw materials. This is because iron ore mines (raw material for steel) are
generally located away from the seacoast.
33. (c) Higher flexibility in job rotation
of
Flexibility in shifting people from one job to other is not possible as workers specialize in certain
activities. In the absence of a worker, it is difficult to shift workload to other available workers as
they may not possess the required skills or expertise.
s
34. (c) i/q, ii/s, iii/p, iv/r
as
Job identification describes the department under which the job falls, the number of workers
needed, reporting authority, etc. A job title should reflect the purpose and responsibilities of a job.
Job duties include duties and responsibilities associated with the job in a summarized form. Job
Cl
specification describes the skills and qualifications required to perform it competently.
35. (a) Task identity
Task identity defines clearly the tasks that are needed to complete the main job.
y
36. (d) Top management

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The difficulty in defining jobs varies at different levels. While jobs of assembly line workers and
supervisors are easy to define, it is difficult to define the other two. Of middle managers and top
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management, it is most difficult to define the jobs for the latter as their duties and responsibilities
cannot be fixed. They need to be performed in different ways to meet the unanticipated and
dynamic business situations.
se
37. (b) To maximize worker inputs in terms of time and physical effort
Objectives of job design are to boost employee motivation, to achieve performance standards and
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to match skills and abilities of each worker with job requirements. Job design refers to the process
through which tasks are structured to improve efficiency and productivity of workers. It should
minimize worker inputs (time and physical effort) and maximize their output.
BS
38. (b) Extent of motivation needed

Skill varieties include range of skills, level of skills, abilities and talent of the individual for the
post, etc. Motivation levels are not considered a part of skill requirement. Though not included in
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the skill sets for a job, workers need to be motivated to work efficiently and effectively.
39. (d) Work sampling
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Work sampling is a technique to analyze work by making several observations, usually taken at
random, to see the relative frequency with which various activities are carried out.
40. (a) The time consumed by an average worker, working at average speed, to perform a
specific task under normal operating conditions
The time consumed by an average worker, working at average speed, to perform a specific task
under normal operating conditions is generally referred to as time standard, work standard, or
standard.
166
Part B
41. (c) Job identification – observation – pace rating – computing normal time & allowances
– computing standard time
Time study starts with job identification. Observations are then taken, workers are pace rated and
normal time is computed along with time for allowances, if any. Finally, the standard time is
computed.
42. (c) Work standard
The time consumed by an average worker, working at an average speed, to perform a specific task
09
under normal operating conditions is generally referred to as time standard, work standard, or just
standard.
20
43. (b) They help reduce machine utilization
Work standards help improve machine utilization rather than reducing it.
44. (c) Pre-determined Motion Time Study
of
Pre-determined Motion Time Study (PMTS) is the technique of setting work standards for work
measurement. All other options are optimal models used for formulating aggregate plans.
45. (a) Long-range planning
s
as
Long-range planning focuses on a period of over one year and is generally carried out annually.
Process planning and strategic capacity planning are examples of long-range planning. Medium-
range planning focuses on a period of six to 12 months. Examples of medium range planning are
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aggregate planning, master production scheduling, and materials requirement planning. Short-
range planning focuses on a period less than six months. Order and workforce scheduling are
examples of such planning.
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46. (d) Maintaining product prices to influence the demand level
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Master production scheduling is generally based on the results of demand forecasts. These results
are not always accurate and actual production output is not always the same as the real market
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demand. To accommodate imbalances, operations managers modify the master production

schedule. One way is to alter (not maintain) product prices to influence the demand level.
47. (a) i and ii

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When a firm achieves economies of scale, the firm’s per unit cost decreases due to reduction in
fixed costs. But variable costs remain more or less the same irrespective of increase in volume.
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Inventory costs are not directly dependent on whether the firm has achieved economies of scale or
not.
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48. (a) Quantities and required delivery dates of final products

The master production schedule of make-to-order organizations deals only with end-items or final
products and not components and sub-assemblies.
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49. (c) Short -range

Short-range planning focuses on a period of less than six months. Order and workforce scheduling
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are examples of such planning.
50. (a) Minimizing total inventory cost

EOQ method is used to identify the order quantity to minimize the total cost i.e. the sum of
ordering and carrying costs.
51. (a) Raw material inventory

Large shipments of raw materials reduce incoming freight costs and material handling costs of a
firm considerably.
167
52. (a) Orders are placed at equal intervals of time

In the fixed order period (P) system, the order period is fixed but order quantity varies with
requirement. The quantity ordered each time depends on the current inventory level or inventory in
hand and future requirements. The fixed order quantity (Q) system assumes that the demand for
inventories over a period of time (i.e., usage rate of materials) is constant and lead-time for
replenishment of inventories is zero (i.e., materials are received immediately after they are
ordered).
09
53. (a) Stock-out costs
Stock-out costs are penalty costs associated with delay in meeting demand or the firm's inability to
make the product due to shortage of stocks.
20
54. (b) Q system
In Q system, order quantity (Q) is always constant and the order is placed when the level of
inventory reaches the reorder point. This system is also referred to as the reorder point system.
of
55. (d) Maintain control over supply chain activities
Only the first three arguments favor ‘buy’ decisions. Extent of control over supply chain activities
s
reduces if production is outsourced rather than done in-house.
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56. (c) Break-even analysis
Make-or-buy decisions are based on break-even analysis. While making the decisions, costs of
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producing in-house as well as costs of purchasing from outside are analyzed. These costs are
dependent on the quantity demanded.
57. (d) Contract negotiation and communication interface
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Under contract negotiation and communication interface, the purchase department negotiates with
the suppliers on behalf of the indenting departments (who actually use the material) to purchase the
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requirements at the most economical prices.

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58. d) Purchase order

Purchase order is the legal document issued by a firm that authorizes suppliers to supply goods. It
represents the buyer’s obligation to buy materials against specified terms mutually agreed upon
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with the seller(s).

59. (a) i, ii, iv
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When returns on investment in manufacturing goods are attractive, the firm can go for
manufacturing instead of purchase. Thus, this is not a valid reason for the firm to purchase the
product.
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60. (b) Hawthorne studies

Hawthorne Studies were initially conducted to establish a relationship between the influence of the
work environment (say, lighting in the work area) and worker productivity. Later studies paved the
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way for in-depth research on behavioral aspects of workers in the work area.
61. (b) Standardized production
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Standardized production is undertaken when a company manufactures a limited variety of products

in large batches to reduce costs.
62. (c) Response strategy
The situation mentioned here is an example of responding to daily requirements of the customer.
The speed and flexibility of a supplier to respond to a customer’s requirements is a competitive
advantage.
168
Part B
63. (d) Regression analysis

Regression is a causal method where the relationship between different variables (influencing the
demand of a product) and their influence on each other is evaluated. It is based on the concept that
forecast is influenced by the occurrence of other events. Data is used to establish the functional
relationship between variables, which is then used to forecast dependent variable values.
64. (b) Close to Zero
The value of a mean forecast error for an unbiased forecast model will be close to zero.
09
65. (c) Increases to a certain point
When the price of a commodity is reduced, keeping other things constant, the demand for that
commodity increases up to certain level and then remains constant.
20
66. (b) Economies of scale do not play any role in linear programming
In linear programming problems, it is assumed that the contribution of individual decision
variables in the objective function is proportional to their numeric value. Suppose variable Xj
of
represents the number of units of product j produced and Cj is the quantity of raw material utilized
in producing a unit of the product, then producing 10 units of product j consumes 10 times the raw
material quantity Cj. In other words, the raw material consumption per unit product produced is
s
constant. This means economies of scale do not play a role in linear programming problems.
as
67. (b) The value will decrease by C2
Consider C2x2. If C2 = 10 and x2 = 3, then C2x2 = 30. It X2 is reduced by one unit (i.e. 3-1=2) then
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C2x2 = 20. Hence, when x2 is decreased by one unit, the objective function will decrease by C2.
68. (c) Product-focused production system
Product focused production systems are generally used for mass production where the scope for
y
product variety is limited.
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69. (b) Forward integration

Forward integration is the expansion of ownership of production to the distribution chain and the
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market. Backward integration expands the ownership of the production and distribution chain
backwards, i.e., towards the source of supplies.
70. (c) Transportation method
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The transportation method of linear programming analyses costs involved in transporting supplies
from different sources and compares such costs for two or more locations. This helps select the
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location that gives the least costs.

71. (a) Layouts are permanent and do not change over time
No layout is permanent as they are subject to modifications with changes in product design,
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process design, introduction of new products, etc.

72. (d) Grouping technology layout
In a grouping technology layout (also called cellular manufacturing layout), dissimilar machines
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are grouped into cells. Each cell functions like a product layout within a larger job shop or process
layout.
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73. (a) Job specification

Job description describes the tasks, duties and responsibilities of a job. It includes information
regarding job content, job requirements in terms of necessary and desirable qualifications, work
experience, mental and physical effort involved, scope of responsibilities, nature of reporting
relationships and so on. The qualification mentioned in the job description is called job
specification. Job content is the central aspect of job design. It defines the set of activities to be
performed on the job. Job specialization involves assigning employees to positions that require
specific skill sets.
169
74. (a) The number of workers and reporting authority in a job

Job identification describes the department under which the job comes, number of workers needed,
reporting authority, etc.
75. (b) Work sampling
Work sampling is another work measurement technique similar to pre-determined motion time
data system. The different techniques used in work measurement are time study, historical
analysis, standard data, work sampling and predetermined motion time data systems.
09
76. (a) Back-order strategy
To maintain smooth operations, organizations use the back-order strategy, in which current order
20
commitments are fulfilled in the future. Back-order strategy assumes that customers are willing to
wait for delivery at a later date.
77. (b) Cumulative demand and cumulative output capacity
Graphical method for aggregate output planning is a two-dimensional model used to relate
of
cumulative demand to cumulative output capacity.
78. (c) 19,550 units
s
We use the formula:
as
F2007 = αD2006 + (1−α) F2006
F2007 = 0.1 x 20,000 + (1-0.1) x 19,500
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= 2,000 + 17,550
= 19,550 units
79. (d) F3 W1
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The penalty for column W1 is 6, which is the highest. In this column 8 is the least cost (in cell F3
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W1). Hence F3 W1 would be first cell to which quantity should be allocated.

80. (a) 10,100
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Factory/Warehouse W1 W2 W3 Supply
14 20 11 250
F1 250
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17 11 16 350
F2
150 200
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8 9 13 300
F3
200 100
Demand 200 250 450
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Step 1: First, we consider the cell where the unit cost of transportation is the least; i.e. the cell (F3,
W1) with a cost of Rs. 8.
Step 2: The possible number of goods that can be assigned to the cell (F3, W1) is 200.
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Step 3: Next, we move to the cell where the next higher unit cost of transportation exists and
assign the possible number of goods.
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Step 4: The process is continued till the entire goods are assigned.
The number of occupied cells is 5, that is equal to the value of (m+n-1), i.e. (3+3-1). So, the
solution obtained is a feasible solution.
Therefore, the cost associated with the solution is
= (8x200) + (9x100) + (11x150) + (11x250) + (16x200)
= 1,600 + 900 + 1,650 + 2,750 + 3,200
= Rs.10,100
170
Part B
81. (c) Rs.25,000

Annual order cost = fixed cost per order (Co) x number of orders in the year
= Co x (annual demand/units ordered per order)
= 5,000 x (1,000,000 /200,000)
= 5,000 x 5
= Rs. 25,000.
09
82. (d) Rs.50,000
Holding cost per order is calculated as the product of holding cost per unit and average inventory.
20
Average inventory is the average of lowest inventory level and highest inventory level. Lowest
inventory level in EOQ model is zero and highest is quantity order (Q).
Holding cost per order = holding cost per unit x [(Q+0)/2]
of
= 10 x (10,000/2)
= 10 x 5,000
= Rs.50,000
s
as
83. (b) Rs.250,000 and Rs.100,000
Total cost of making the product is equal to the unit variable cost (V) times the number of units
demanded (Q) plus the fixed costs.
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Total Cost make = Variable cost + Fixed cost = VQ + F
= 25 x 2,000 + 200,000
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= Rs. 250,000
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Total cost of buying is the product of price per unit (P) and the number of units procured (Q), i.e.
Total Cost buy = P × Q = 50 x 2,000
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= Rs. 100,000
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84. (a) Rs.550,000 and Rs.700,000

Demand at the end of first year = 2,000 units
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Demand at the end of second year = 4,000 units

Demand at the end of third year = 8,000 units
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Total demand for the next three years = 2,000 + 4,000 + 8,000 = 14,000 units
Total cost of making the product is equal to the unit variable cost (V) times the number of units
demanded (Q) plus the fixed costs.
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Total Cost make = Variable cost + Fixed cost = VQ + F

Total cost to make 14000 units = (25 x 14,000) + 200,000
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= Rs.550,000
Total cost of buying is the product of price per unit (P) and the number of units procured (Q), i.e.
Total Cost buy = P × Q.
Total cost to buy 14000 units = 14,000 x 50
= Rs. 700,000
Hence, it is profitable to make this component in-house in the long run.
171
85. (b) Make

Option A: Buy the components for all the five years
The cost incurred for buying the components = 25,000 × 50 = Rs.1,250,000
Option B: Make the components in-house for all the five years
The cost incurred in making the components in-house = (25,000 × 30) + 200,000 = 750,000 +
200,000 = Rs.950,000.
09
Option C: Buy the components for the first two years and make for the remaining three years
The given situation can also be represented algebraically as follows:
Let n be the demand for the first two years during which the company has decided to buy the
20
components. Then, the number of units for the remaining 3 years would be (25,000-n) units.
The total cost would be = One-time Fixed Cost + Variable Cost of buying n units + Variable Cost
of producing (25,000-n) units
of
i.e., Total Cost = 200,000 + (n × 50) + [(25,000 – n) × 30]
= 200,000 + 50n + 750,000 – 30n
= Rs.950,000 + 20n
s
as
Therefore, the total cost of (Rs.950,000 + 20n) is more than the cost of making the components in-
house which is Rs.950,000. Cl
Option D (cannot decide) is irrelevant in the given context as one can calculate the costs under
different conditions and select the best one.
Conclusion:
y
In the given situation, the fixed cost is a one-time fixed cost, which would be incurred even if one
unit of the component is made in-house. Once this fixed cost is incurred, every unit that is bought
nl
with a variable cost of Rs.50 per unit adds (Rs.50 – Rs.30) = Rs.20 to the total cost, as compared to
the option of making that unit in-house. So, there is no benefit in switching to in-house production
O
at any interim point of time.

Over the five-year period, it is clear that Option B costs less than Option A or Option C. Hence,
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making the components in-house is the best decision.
86. (b) 10.75, 9.06

U
Distribution X Y Quantity QX QY
Center (in tons) (Q)
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A 5.5 7 60 330 420
B 8 12 90 720 1080
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C 12 6 110 1320 660
D 15 11 100 1500 1100

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Total 360 3870 3260
Xc = ∑QX/∑Q = 3870/360 = 10.75

Yc = ∑QY/∑Q = 3260/360 = 9.06
172
1. (a) Conveyance authorization card
09
authorization card, vendor authorization card, and conveyance authorization card. A conveyance
authorization card authorizes a materials handling agent to move the tray to a specified destination.
This specifies the product’s name, its identification number, and delivery destination.
20
2. (a) Checking the quantity and quality of the incoming material and generating receiving
reports
Checking the quantity and quality of the incoming material and generating receiving reports is a
of
function of the purchasing/receiving department which falls under the production control. The
other three options are associated with inventory control. Inventory control is used to minimize the
overall cost of production.
s
3. (d) Quality of material
as
Some factors that influence the materials handling function are - type of plant layout, type of
production process used, nature of materials and the material handling equipment used. Quality of
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material used can be a factor affecting the quality of finished product but it does not directly
influence the material handling function.
4. (a) Playback robots

y
Playback robots can store a sequence of operations in the memory. Initially, an operator performs
nl
operations using a robot. The robot stores all those activities (in the same sequence) in its memory
and repeats them to produce similar types of products on its own subsequently.
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5. (b) A vendor immediately fills up the inventory with the required quantity
A conveyance card only authorizes the material handling agents to fill material trays with required
material from the inventory and bring it back to the production worker. It does not authorize the
se
vendor to replenish inventory. A vendor authorization card is used to signal the vendor to replenish
inventory.
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6. (a) The Kanban system follows the open loop system

Kanbans operate in closed loops and they continue to operate until the materials manager
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withdraws them.
7. (b) Demand rate of a product

The number of Kanbans can be altered according to the estimated demand for a product. If the
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demand for the product increases, a larger number of Kanbans are used to meet the increased
demand. Similarly, the number of Kanbans can be reduced if the demand for the product
decreases.
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8. (a) ii and iv
Trucks, forklifts, mobile cranes, and industrial tractors are examples of variable-path materials-
handling equipment. A conveyor is an example of fixed path equipment.
9. (d) Bill of materials

Bill of materials is associated with the inputs of an MRP system.
10. (a) Required quantities and delivery dates of final products

The Master Production Schedule (MPS) file contains information about when and how many units
of finished products are required. It also gives the available cumulative lead-time for purchasing,
receiving, fabricating, and assembling.
11. (b) Planning report
While master production schedule, bill of materials, and inventory records file are inputs to a MRP
system, planning report is an output.
09
12. (a) Explosion
The first step in the MRP information processing is explosion where the end product is
20
disassembled into components. Explosion starts from the time a product is required and proceeds
backward to determine each production or purchasing activity that is necessary to make each
higher-level item in the product structure chart.
13. (d) i, ii, iii
of
The list of materials along with the quantity required to produce one unit of a product is part of the
Bill of Materials (BOM). The other three alternatives are part of the master production schedule.
s
14. (a) i, ii, and iii
as
The success of an MRP system usually depends on the product environment. The system is useful
only when an organization needs to purchase many items, a majority of which are components and
parts. The demand pattern of these items should be dependent in nature and irregular in timing.
Cl
Moreover, the lead times for purchase of these items should be consistent (not inconsistent).
15. (a) Flextime approach
Under the flextime approach, employees are given the option of choosing their work timings,
y
provided a specific number of hours are completed in a time period, say a week.
nl
16. (a) Helps manage demand by adjusting the price for services
Flexibility in setting price for services is not a characteristic of reservation systems. Strategic
O
product pricing is a scheduling approach that helps a firm respond to shifts in demand.
17. (b) Loading
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The activity of loading aims at minimizing costs by reducing machine idle time, the amount of
work-in-process inventory, etc. Loading includes the task of sequencing jobs so that the machine
idle times are minimized and jobs are completed within the least time possible.
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18. (c) Service operations are scheduled according to inventory requirements

Service operations are scheduled according to demand rather than inventory requirements. Hence,
BS
they follow the first in, first serve rule of scheduling. The appointment system is one such method
using this rule.
19. (c) Strategic product pricing
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Strategic product pricing is a method that helps firms adjust to shifts in demand. The reservation
system allows many customers to use the service at a time by dedicating multiple resources to
provide the service. Appointment systems are used to control customer flow at the individual level.
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Routing is a scheduling activity that explains the sequence of operations and processes to be
followed to produce a particular product.
20. (a) Only i
In an n-job and three-machine sequencing problem, three machines; A, B and C, are involved, and
each job is processed in the order ABC. In this procedure, we should ensure that -- the smallest
processing time on machine A should be greater than or equal to the largest processing time on
machine B or the smallest processing time on machine C should be greater than or equal to the
largest processing time on machine B.
174
Part B
21. (a) Loading

Loading is the process of assigning specific jobs to each work center depending on its capacities.
22. (d) Staggered times approach

Staggered times indicate that employees can choose their work hours from a list of available shifts.
23. (c) Dispatching

Dispatching is the process of releasing job orders to workers to go ahead with the production
09
process. In this activity, an operations manager releases job orders in accordance with the planned
sequence.
20
24. (c) Systems, Application and Products
The expansion of SAP is Systems, Application and Products in data processing.
25. (c) ii, iii, iv
of
Integration of data across departments helps in better connectivity and smooth flow of information.
It reduces data redundancy and ensures availability of right information to the concerned
department or personnel.
s
as
26. (d) Steering committee
The key activity of the steering committee is to monitor the implementation process continuously
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in order to identify deviations, cost overruns, resource requirements, etc, during ERP
implementation.
27. (d) i and iv

y
ERP extends the functionality of MRP and MRP II systems to provide complete business
nl
solutions. MRP systems are used in manufacturing to automate inventory management and
production processes. MRP II is an extension of MRP providing an interface with other functional
domains. As a result, it is able to achieve a high degree of integration with other automated
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processes.
28. (b) Evaluate the ‘as–is’ situation of the business

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The listing of processes in business transactions is done while evaluating the ‘as-is’ situation of the
business. Hence, process mapping is done in this stage of ERP implementation.
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29. (a) Compensation and benefits

The six enablers of SCM are: Customer-supplier focus, design, measurement,
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participation/involvement, periodic review, and alignment.
30. (c) SCM strategy

SCM strategy forms a blueprint for supply chain operations that support and are consistent with the
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manufacturing and marketing objectives of the organization.
31. (a) Develop policies that reward low cost purchases and intense negotiations
Fo
Good alignment is achieved through effective planning and execution in conjunction with cross-
functional interaction, effective information systems and organization-wide continuous
communication systems. Besides, the company leadership should strive to set goals, objectives and
strategies that support successful supplier relationships. For example, if the management rewards
the purchasing department for obtaining products at low prices from suppliers, it might hamper the
development of long-term relationships or partnerships with suppliers.
175
32. (d) The players in a demand chain are different from those in the traditional supply
chain
In a demand chain, meeting customer demand in time is given paramount importance. Alliances
are made between demand chain partners who can best meet customer requirements. The players
in today’s emerging demand chains are the same as those in traditional chains, but their respective
roles and responsibilities have changed.
33. (d) ii, iii, and iv
09
The advantages of ESCM are many, including timely order-processing, improved inventory
tracking and management, more accuracy in order fulfillment, support for JIT manufacturing, cost
savings, reduction in cycle time, reduction in procurement costs, etc. ESCM results in an
20
“extended organization” that encapsulates suppliers’ activities. The extended organization
structure provides instant information about the status of inventory levels to suppliers. Therefore,
there is no need to carry high inventory.
of
34. (a) Operational planning
The operational planning component defines the operational requirements for maintaining a supply
chain. These requirements are specified in terms of tasks, resource requirements and
s
measurements. The functions under operational planning include commodity planning, supplier
as
capacity planning, planning for supplier evaluation, certification processes, etc.
35. (c) Many suppliers for a given part/component with short-term contracts
Cl
JIT encourages a firm to maintain fewer suppliers with long-term relationships
36. (c) Suggestions of workers are collected, evaluated, tested, and implemented by the
management
y
The open management style should not imply that workers are free to implement whatever
nl
methods they like. Instead, existing procedures should be continued until a better way is suggested,
tested and approved. Suggestions by workers to improve processes are first collected and evaluated
O
by the management. The selected suggestions are tested practically to determine how much better
they are compared to the existing process. If the suggested process proves better than the existing
one, the management approves it for implementation.
se
37. (b) i, ii, and iv

Building effective partnerships in a JIT system depends on four elements - trust, communication,
U
linearity of production, and time to make changes. The design of a product has no direct bearing on
the extent of relationship with the suppliers.
BS
38. (a) JIT firms select suppliers located away from the plant
Firms practicing JIT systems should have suppliers at close proximity. This enables easy
transportation and consistent delivery in the face of frequent purchases of material.
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39. (a) Eliminating external demand variations

External demand variations cannot be eliminated by using the JIT system. By using JIT principles,
firms can reduce wastage that arises during the production process such as the waste of
Fo
overproduction, of time spent in waiting, in transportation and movement, in processing, in

keeping excess inventory and in defective parts.
40. (a) Collection – evaluation – selection – testing – approval – implementation
Suggestions made by workers for improving processes are first collected and evaluated by a firm’s
management. The suggestions selected are tested practically to determine how much better the new
process is, compared to the existing process. If the suggested process proves better than the
existing one, the management approves it for implementation.
176
Part B
41. (c) Quality training

Prevention costs include investments made in machinery, technology and education/training
programs to reduce defects. It also includes costs to administer the firm’s quality program, data
collection and analysis, and vendor certification. Equipment maintenance is a detection or
appraisal cost. Disposition of defective items is an internal failure cost and warranty charges are an
external failure cost.
42. (d) ii and iv
09
‘Goods produced /man hours spent’ indicate the number of goods produced by a worker in an
hour, which is a measure of labor productivity in manufacturing concerns. Similarly ‘customer’s
handled /number of attendants’ indicates average number of customers handled per attendant,
20
which is a measure of labor productivity in service industries.
43. (a) i/q, ii/s, iii/r, iv/p
Durability is the operational life of a product. Serviceability is concerned with how readily a
of
product can be serviced back into operational mode. Performance indicates the ability of a
product’s primary operating characteristics. Reliability is the probability of a product failing in a
time period.
s
44. (a) Prevention costs
as
Prevention costs are costs incurred by a company to prevent defective goods and services from
being produced and/or delivered to customers. This category includes investments made in
Cl
machinery, technology, and education/training programs to reduce defects. It also includes costs to
administer the firm’s quality program, data collection and analysis, and vendor certification.
45. (b) Sample 3 is outside the control limits. Further investigation is warranted
y
Range of Sample 3 is 1.2, which is more than the upper control limit of 1.00. Hence, sample 3 is
nl
outside the upper limit and requires further investigation.
46. (b) Reliability

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Reliability is usually measured as the mean time between failures (MTBF) or the failure rate per
unit of time or any other measure of use.
se
47. (b) Facilities management

The primary objective of facilities management is to provide a clean and conducive work
U
environment and enable efficient and effective progress of the core functions of an organization, be
it manufacturing, distribution, or research. Maintenance management is a primary function
associated with facilities management.
BS
48. (b) Outsource different tasks to different vendors

It is important to outsource as well as out-task activities to retain control over vendors. Total
dependence on a single vendor is not advised. The basic objective of outsourcing is to enable a
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company to focus on core competencies.

49. (a) Irregular preventive maintenance
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Irregular preventive maintenance includes tasks like repairs, overhauls, and cleaning of spills.
These activities are carried out when a casual inspection of a machine reveals the need for
servicing before the next periodic preventive maintenance.
50. (c) Maintenance carried out when a machine is idle and waiting for the next job
Opportunity maintenance is carried out when the equipment is idle or it has been stopped. These
maintenance activities are not scheduled beforehand. If the equipment is idle, it is inspected, and
requisite repair or maintenance tasks are carried out.
177
51. (a) Janitor’s services

Janitor’s services involve housekeeping in the interior and exterior of buildings and manufacturing
facilities.
52. (d) i, ii, and iv

The functions of maintenance management are: preserve the value of the firm’s machinery and
other assets, use maintenance personnel and equipment efficiently, maximize the availability of
machinery for production process, eliminate or reduce accidents by regular inspection and plan and
09
schedule maintenance work to reduce breakdowns.
53. (b) Event
20
54. (c) FMS
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FMS (flexible manufacturing system) is a form of flexible automation in which several machine
tools are linked to a material-handling system. A central computer controls all aspects of the
system which is effective in producing different items that have similar processing requirements.
s
as
55. (a) Comparative advantage
The comparative advantage of a country can be defined as its ability to produce goods and services
Cl
cheaper than other countries. Organizations generally globalize their operations to take advantage
of these opportunities.
(t o + 4t m + t p )
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56. (d) t =
e 6
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Expected time represents the mean activity time of the optimistic, pessimistic, and most likely
(t o + 4t m + t p )
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times. Expected time is calculated by using the equation, t =

e 6
Option ‘a’ gives the formula for mean time between failures. Option ‘b’ gives the formula for the
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probability of completing the project within the desired completion period. Option ‘c’ represents
activity time variances.
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57. (b) Different products with similar components and manufacturing processes can be
manufactured
BS
In comparison with traditional automated systems, the flexible manufacturing system (FMS) offers
many advantages such as reduced direct labor, shorter response time, consistent product and better
control over manufacturing processes. It also helps a firm manufacture different products having
similar components and manufacturing processes.
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58. (c) Economies of scale in marketing

Organizations can also obtain economy of scale in their marketing function. Here, the company
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either uses the same salespeople or same promotion strategy or both for promoting its products in
different markets.
59. (a) Current assets

Raw materials fall under current assets because they are converted into finished products within a
short span of time after their purchase. They do not remain in the same form for long periods of
time. Further, the raw materials can be liquidated quickly.
178
Part B
60. (b) Profitability decreases with increase in material costs

As material costs are variable costs, a small decrease in these costs will lead to an increase in
profitability and a small increase will lead to a decrease in profitability.
61. (d) Layout planning
Layout planning is not a component of MRP. It is associated with facility layout planning.
62. (c) Bill of materials
09
A bill of materials lists out all the materials used to manufacture a product. It also specifies the
number of different materials required to produce one unit of the end product.
63. (c) Maximizing work-in-progress inventory
20
Maximizing work-in-progress inventory falls under inventory control and cannot be taken as a
metric for evaluating job priority rules.
of
64. (b) Gantt chart
A Gantt schedule chart describes the progress of jobs in equal intervals of time. Johnson’s rule
helps firms sequence jobs so as to minimize processing time. The other two options are types of
dispatching rules associated with scheduling activities.
s
as
65. (d) Target market
When selecting an ERP package, the type of industry – process or discrete – it is designed for,
Cl
should also be considered. If the package is designed for a particular target market and the
organization falls under that market, it reduces the customization efforts as it is likely that the ERP
package will already have several industry-specific features.
y
66. (c) Modularity
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Many organizations, especially small and medium-sized ones, may not want to purchase a
complete package in one instance. They may prefer to implement the package in modules. In such
cases, the modularity of the package, i.e., the availability of the package in separate modules
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should be examined.
67. (a) Participation/involvement
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Participation/involvement is an SCM enabler, which discusses the participation of all stakeholders

of the organization in the decision-making process. The knowledge of employees and suppliers
U
should also be considered while arriving at decisions. This makes the decision-making process
more effective.
68. (b) Demand chain management

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In a demand chain, products don’t necessarily originate from manufacturers. Any player in the
supply chain can develop them at any point. The products developed are based on consumer
research and information gathered by any supply chain partner.
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69. (a) Quality circles

There are about 6 to 10 people in a quality circle who work in similar types of operations in a
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manufacturing facility. The members of quality circles are generally shop floor workers or
supervisors. They gather at regular intervals to discuss ways to improve quality of work and help
each other gain knowledge.
70. (d) Long-term relationship with few suppliers

Firms that practice JIT production systems require reliable suppliers who can supply high-quality
components and materials in the required quantities. Therefore, JIT firms maintain long-term
business relationships with a few select suppliers
179
71. (d) Productivity

Productivity is not a function of quality. It is a measure of operational or employee effectiveness.
A company can compete on eight different quality functions: (1) Performance, (2) Features, (3)
Reliability, (4) Conformity, (5) Durability, (6) Serviceability, (7) Aesthetics, and (8) Perceived
quality.
72. (a) Prevention costs
Prevention costs are costs incurred by a company to prevent defective goods and services from
09
being produced and/or delivered to customers. This category includes investments made in
machinery, technology and education/training programs to reduce defects. It also includes costs to
administer the firm’s quality program, data collection and analysis and vendor certification.
20
73. (b) Developing good relationships with service providers
When facilities management is done in-house, external vendors do not come into the picture and so
there is no need to manage contracts with vendors
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74. (c) Order replacement of broken down machines
Fixing up and/or replacement of broken down machines is part of break-down maintenance and
not of preventive maintenance.
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75. (c) It is the longest path of interrelated activities in a project with zero slack time
as
The critical path is the longest path of interrelated activities with zero slack time. The critical path
consists of all those activities, which if delayed will result in the delay of project completion.
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76. (a) Optimistic time
Optimistic time is the minimum amount of time required for an activity to be completed. It is
possible to complete a project within the optimistic time only when all the project conditions are
y
satisfactory.
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77. (b) Computer aided manufacturing

Computer Numeric Controlled (CNC) machines store operation instructions in their on-board
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computers which in turn control their operations. These machines can perform variety of tasks
based on instructions embedded in them.
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78. (a) Government regulations to use locally produced components

Some institutional impediments are: tariffs and duties, which may limit the benefits achieved by
economies of scale in production, quantitative quotas and other similar restrictions, preferential
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procurement from local organizations by government and quasi-government entities, government

pressure to use locally produced components or to engage in local R&D, preferential tax treatment
and labor policies and corporate laws, tax laws or other policies of the local government.
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79. c) E-A-B-C-D
E has the earliest due date of 2 days. A follows with 5 days, B with 6 days, C with 7 days, and D
with 9 days.
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80. (a) 2.4 days

Jobs Processing Due Date Flow Time Delay
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(In order of arrival) Time (Days) (Days hence)

E 1 2 0+1=1 1–2=0
A 3 5 1+3=4 4–5=0
B 4 6 4+4=8 8–6=2
C 2 7 8 + 2 = 10 10 – 7 = 3
D 6 9 10 + 6 = 16 16 – 9 = 7
Average completion time = (0+0+2+3+7) /5 = 12/5 = 2.4 days.
180
Part B
81. (c) 1.67

Critical ratio for Job A = Actual Time Remaining/Work Remaining = 5/3 = 1.67
82. (a) 1, 5, 2, 4, 3
As the least time on machine A is greater than or equal to greatest time on machine B, Johnson’s
sequencing rule can be applied to this problem.
Now, we simplify the machine problem into a two machine problem using two fictitious machines
G and H where Gi = Ai + Bi and Hi = Bi + Ci. (i represents job number).
09
Job Processing Times (in minutes)
20
Gi = Ai + Bi Hi = Bi + Ci
1 33 35
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2 77 88
3 63 42
s
4 63 55
as
5 55 Cl 66
Job 1 has the least processing time on machine G (33 minutes). It is placed at the beginning of the
sequence. The job with least processing time on machine H is placed at the end of the sequence.
Here too, job 1 has the least processing time of 35 minutes. As it is already placed at the
beginning, the next job with least processing on machine H is taken (job 3 with 42 minutes) and is
y
placed at the end of the sequence. Again, on machine G, the job with least processing time from
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the remaining available jobs (job 5 with 55 minutes) is selected and placed at the beginning as the
second job in the optimum sequence. Now only jobs 2 and 4 are remaining. Of these, on machine
H, job 4 has the least processing time (55 minutes) and it is placed just before job 3. Thus, the
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remaining job is job 2 and it is placed in the middle of the sequence.

Hence the optimum sequence is 1, 5, 2, 4, 3
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(working table)
Activities Duration Earliest Earliest Latest Finish Latest Float
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(weeks) Starting Finish Time Starting Time (L-D)-E

(D) Time (E) Time (E+D) (L) (L-D)
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1-2 3 0 3 3 0 0
1-4 3 0 3 4 1 1
2-3 4 3 7 7 3 0
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2-35 2 3 5 9 7 4
2-5 4 3 7 7 3 0
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3-5 2 7 9 9 7 0
4-5 5 3 8 9 4 1
53-6 6 9 15 15 9 0
53-7 9 9 18 23 14 5
4-3 5 3 8 9 4 1
5-3 2 7 9 9 7 0
6-7 8 15 23 23 15 0
181
The earliest time can be calculated by using forward pass computation. The earliest start time for
an event is given by the earliest starting time plus activity duration of the preceding activity. (The
earliest start time for an activity (a-b) is given by the earliest expected occurrence time of the event
a). For instance, earliest start time for the activity 1-2 would be earliest expected occurrence time
for event 1. The earliest event time for the starting event is taken as zero. Therefore, the earliest
start time for the first activity is 0 or E1 = 0.
(working diagram)
09
E4 = 7
L4 = 7
20
3
E1 = 0
4 2
L1 = 0 E5 = 9 E7 = 23
of
L5 = 9 L7 = 23
3 2
1 2 9
5 7
s
E3 =3
L3 = 3 6
as
3 8
5
4
Cl 6
E2 = 3 E6 = 15
L2 = 4 L6 =15
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Step 1: In the given network diagram, the first event is followed by two events – 2 and 4. Using
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forward pass computation: E2 = E1+D1-4 = 0+3 = 3, E3 = E1+D1-2 = 0+3 = 3. In this way, we can
compute the earliest start time for the remaining activities. The earliest finish times can be
calculated by adding the duration of each activity to the respective earliest start times. Therefore,
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earliest finish time of the activity 1-2 is 0 + 3 = 3 weeks. In this way we obtain earliest finish times
for all the activities. If two or more activities converge into the succeeding activity, the greatest
value among them is taken as the earliest start time for the activity. For example, in the network
se
diagram, three activities converge at event 5 and the possible values of earliest start time are 9
(from activity 3-5), 5 (from activity 2-5), and 8 (from activity 4-5). As 9 is the largest value, the
earliest start time for event 5 is taken as 9 (E5 = 9).
U
Step 2: Computation of latest finish times can be done by using backward pass computation.
Backward pass begins from the end node, and proceeds towards the first node. The latest finish
BS
time for the last activity is equal to the earliest finish time of the last activity. Therefore, L7 = E7 =
23, L6 = L7 – D6-7 = 23 - 8 = 15. If there are more than two activities originating from an event,
then the lowest value of the latest finishing times should be considered. In case of event 5 from the
diagram, the possible latest finishing times (L5) can be 14 and 9. As 9 is smaller than 14, we take
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L5 = 9. Similarly, for event 1, the possble L1 values are 0 and 1. 0 is taken as L1 as it is smaller
than 1. (If zero does not figure in the possible values, then there is a error in the problem).
Step 3: Critical paths can be identified by calculating the float or slack values, as shown in the
Fo
working table. The float value of each activity can be calculated by using either starting time or
finish time. In the working table the float values are the difference between latest start time (L-D)
and earliest start time (E). All the activities which have float as zero are part of the critical path.
Hence, in this problem, the critical path is 1-2-3-5-6-7.
83. (b) 9 weeks
The earliest start time for the activity 5-6 is 9 weeks. (Refer the working table and diagram
followed by the explanation).
182
Part B
84. (d) 15 weeks

The earliest start time for the activity 6-7 is 15 weeks. (Refer the working table and diagram
followed by the explanation).
85. (d) 5-6

The latest finish time is 15 weeks for activity 5-6. (Refer the working table and diagram followed
by the explanation).
09
86. (a) 5-7
The latest start time is 14 weeks for activity 3-7. (Refer the working table and diagram followed by
the explanation).
20
87. (d) 5-6
Activity 5-6 has zero slack time. Activities 1-4, 4-5, 5-7 have a slack time of 1, 1, and 5
respectively. (Refer the working table and diagram followed by the explanation).
of
88. (c) 1-2-3-5-6-7
The critical path is the longest path in the network with zero slack time. Here 1-2-3-5-6-7is the
s
critical path. (Refer the working table and diagram followed by the explanation).
as
89. (a)
D F C B G E A
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The least processing time on machine A is for job D (25 minutes). It is placed at the beginning of
the sequence. The job with least processing time on machine B is placed at the end of the
sequence. Here job A has the least processing time of 25 minutes and is placed at the end of the
y
sequence. (Though job D has a lower processing time of 20 minutes, it cannot be taken as it is
already placed at the beginning of the sequence). This process is continued to get the optimum
nl
sequence.
90. (b) 330 minutes
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Optimum Machine 1 Machine 2

Job- Time in Processing Time out Time in Processing Time out
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sequence Time Time
D 0 25 25 25 20 45
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F 25 40 65 65 30 95
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C 65 45 110 110 35 145
B 110 50 160 160 60 220

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G 160 55 215 220 40 260
E 215 60 275 275 30 305

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A 275 30 305 305 25 330
Total lapsed time at the end of seven jobs is 330 minutes.

91. (b) 25 minutes
Total idle time on machine A is the difference between the time when the last job in the optimum
sequence is completed on machine B and the time when the last job is completed on machine A. It
is 330 – 305 = 25 minutes
183
92. (d) 90 minutes

Total idle time on machine B = (Time taken by Machine A to complete the first job in the
optimum sequence) + Σ [(time when kth job starts on machine B) – (time when (k-1) th job finishes
on machine B)].
= 25 + [(65-45) + (110-95) + (160-145) + (220-220) + (275-260) + (305-305)]
= 25 + [20 + 15 +15 + 0 +15 + 0]
= 90 minutes
09
20
s of
as
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se
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BS
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184
Part B: Model Tests
09
20
s of
as
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Paper II
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BS
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Paper II - Model Test 1

09
1. Decisions on scheduling weekly 5. State Bank of India has the biggest
network of branches and ATMs across
20
production of products can be categorized
under which type of decisions of India. This can lead to which type of
operations managers? competitive advantage for SBI?
a. Strategic decisions a. Low cost production process
of
b. Product variety and facility size
b. Tactical decisions
c. Convenience and location
c. Operational decisions
d. All of the above
d. All of the above
s
6. Which of the following products are
2. _________ is a computer controlled
as
generally produced under the produce-to-
warehouse system that automates inflow order policy?
and outflow of materials from the a. Refrigerators
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warehouse and shop floor on the basis of b. Ballpoint pens
production requirements. c. Aircraft
a. AS/RS d. Television
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b. CAD 7. Identify the relationship between the net
c. FMS present value (NPV) and profitability of a
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d. CAM project.
a. The greater the NPV, the greater will be
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3. Many technologies have been developed to the profitability

support the production process and b. The greater the NPV, the lesser will be the
increase efficiencies. Identify the one that profitability
se
has minimized worker involvement in the c. Profitability cannot be judged with NPV
production process during manufacturing. d. The lesser the NPV, the greater will be the
a. Manufacturing information systems
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profitability
b. Computer-aided manufacturing 8. Time series data may help forecasters
c. Linear Programming identify various demand characteristics of
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d. Automated storage and retrieval systems a product except one of the following.
Identify it.
4. Availability of raw materials and nearness a. Random variations
to markets are some of the factors that are b. Seasonality
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considered while making decisions c. Trend

regarding plant location. Which
d. Maximization
component of operations strategy deals
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with decisions such as plant location? 9. Qualitative methods are subjective and
judgmental in nature. Which of the
a. Allocation of resources to strategic following is a qualitative method of
alternatives forecasting?
b. Technology selection and process a. Simple moving average
development b. Regression analysis
c. Product design and development c. Delphi method
d. Facility planning d. Exponential smoothing
10. The value of the tracking signal explains 15. Linear programming is used to arrive at
the nature of demand. Which of the decisions on product mix, transportation,
following statements correctly states this allocation of resources, etc. What are the
relationship? possible constraints for a transportation
a. A positive tracking signal indicates that decision in linear programming?
demand is overestimated i. Market
b. A positive tracking signal indicates that ii. Destination requirements
demand is underestimated
09
iii. Inventory space
c. A negative tracking signal indicates that iv. Capacity
estimated demand is equal to actual
demand a. only iii
20
d. A negative tracking signal indicates that b. only ii
demand is underestimated c. iii and iv
d. i and iv
11. A relationship exists between dependent
of
and independent variables of demand. 16. Which among the following is not a
Which of the following techniques is method used in developing an initial
appropriate when such relationships exist? feasible solution for a transportation
s
a. Qualitative methods problem?
as
b. Moving average method a. North-West corner method
c. Causal methods b. Least cost method
d. Least squares method
Cl
c. Vogel’s approximation method
d. Stepping stone method
12. For any product, there are six major
forecast components: base demand, 17. Which among the following is not a major
y
seasonal factors, trends, cyclical factors, component of a constrained optimization
promotions and the irregular component. model?
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Which component gives the long-term a. Decision variables

pattern of movement of demand over a b. Objective functions
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period of time?
c. Constraints
a. Trend component
d. Optimal solution
b. Seasonal component
se
c. Cyclical component 18. What should be the possible action if

d. Base demand production capacity is more than the
requirement (demand) in a transportation
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13. Time series methods are divided into static problem, to balance it?
and adaptive methods. Identify the odd one a. An existing warehouse is subtracted
out.
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b. A dummy warehouse is added

a. Simple moving average method c. An existing origin is subtracted
b. Weighted moving average method d. A dummy origin is added
c. Basic time series forecasting method
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d. Exponential smoothing method 19. Which among the following methods does
not consider either least cost or penalties
14. The simplex method can be applied to for assigning products to the cells in the
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problems where the number of decision table of a transportation problem?

variables is more than two. However, a. Least cost method
inequalities in the constraint equation are
converted to equalities. How is this done? b. North-West corner method
c. Vogel’s approximation method
a. Introduce objective functions
d. Both a & c
b. Introduce slack variables
c. Introduce decision variables 20. Which of the following is a disadvantage
d. Introduce constraints of process-focused production system?
188
Part B
a. Highly skilled employees 24. Product/service flexibility refers to the

b. Greater flexibility ability of the production system to shift
quickly from producing one product to
c. Lower initial investments another. Which of the following is not a
d. Use of general purpose equipment characteristic of a production system with
product/service flexibility?
21. Non-productive activities like storage,
delay, transport, input etc, are also a. It uses general purpose equipment
included in the process chart. Match the b. It requires a multi-skilled workforce
09
following activities with the appropriate c. Employees have to be trained to perform
symbols. different jobs
i. Storage d. Employ part-time workers to meet the
20
ii. Delay demand
iii. Transport 25. Product-focused systems are characterized
iv. Input by product design and batch size. Which of
the following statements correctly explains
of
p. (∆) these two aspects?
q. (D) a. High diversity in product design and large
r. (⇒) batch size
s
s. () b. High diversity in product design and small
as
batch size
a. i/p, ii/q, iii/r, iv/s c. Low diversity in product design and large
b. i/p, ii/q, iii/s, iv/r batch size
Cl
c. i/q, ii/p, iii/r, iv/s d. Low diversity in product design and small
d. i/p, ii/r, iii/s, iv/q batch size
26. Which of the following types of layout is
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22. There are various types of process designs used when the product manufactured is
that are generally used by organizations. In
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bulky, heavy, or fragile?

which type of process design, products or
a. Product layout
services tend to flow along linear paths
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without backtracking or side tracking? b. Process layout

a. Product-focused systems c. Fixed position layout
b. Process-focused systems d. Group technology layout
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c. Group technology 27. A majority of the companies

d. All the above manufacturing fire crackers are
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manufactured in and around Sivakasi in

23. Logan Rubber manufactures synthesized Tamil Nadu. Which factor would have
rubber caps that are used by many affected the selection of Sivakasi as an
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companies as a component in their ideal location for manufacturing fire

products. When Logan Rubber wanted to crackers?
add a new rubber-based product to their
a. Proximity of markets
product mix, they realized that the present
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machinery could not be used to produce it. b. Availability of transportation facilities

As a result, they decided to install new c. Arid and dry climate with minimal rainfall
machinery. What production system did d. Availability of services
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Logan have that prevented it from using

the existing machinery for the new 28. Highly skilled workers are required for
product? which of the following layouts?
a. Job shop production system a. Process layout
b. Cellular manufacturing system b. Product layout
c. Batch production system c. Fixed position layout
d. Product-focused system d. Hybrid layout
189
29. Center of Gravity method is used to a. Technical feasibility

evaluate and find the optimal location for a b. Economical feasibility
distribution center. What is the basic aim c. Behavioral feasibility
of this method?
d. Political feasibility
a. To reduce procurement costs
b. To reduce production costs 35. Identify the correct statement?
c. To reduce transportation costs a. Job description is part of job evaluation
09
d. To reduce inventory costs b. Job description is part of job identification
c. Job specification is part of job description
30. In which of the following methods used
for selection of a location, are different d. All of the above
20
factors assigned weightages?
36. Which of the following work measurement
a. Break-even analysis techniques use statistical tools to arrive at
b. Point-rate method the standard time to perform a task?
of
c. Transportation method a. Time study
d. None of the above b. Employee self timing
31. Two dimensional scaled down drawings of c. Historical analysis
s
equipment and machinery is used to d. Work sampling
as
determine the best layout for a facility.
This is a feature of which model used to 37. Which of the following work measurement
develop a layout? techniques uses a stop-watch to measure
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a. Graphic and schematic analysis time and establish a time standard?
b. CRAFT model a. Time study
c. Load distance model b. Pre-determined motion time study
y
d. Line balancing c. Work sampling
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d. Standard data
32. ___________ investigates job content, the
physical conditions in which the job is 38. Developing a good job design is not
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carried out, and the qualifications sufficient to achieve objectives. Certain

necessary to carry out job responsibilities. pre-requisites need to be satisfied for the
a. Job description job design to be successful. Which of the
se
b. Job analysis following is not such a pre-requisite?

c. Job profile a. Machinery and equipment to be in good
U
d. Job specification working condition

b. Sufficient buffer stock of material and
33. The Job Characteristics Model developed components
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c. Good working conditions
includes five characteristics. They are skill
variety, task identity, task significance, d. High motivation
autonomy, and feedback. Flexibility and
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discretion is related to which of the

correctly describes the relationship
following?
between tasks to be performed and skills
a. Task identity
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acquired by an employee in an
b. Task significance organization?
c. Autonomy a. Fewer the number of specific tasks
d. Feed back performed, higher the skill proficiency and
efficiency of the employee
34. The self-esteem of an employee is
enhanced when an important responsibility b. Greater the number of tasks performed,
is delegated. This is associated with which higher the skill proficiency and efficiency
type of feasibility? of the employee
190
Part B
c. Fewer the number of tasks performed, a. Capacity planning

lower the skill proficiency and efficiency b. Aggregate planning
of the employee c. Scheduling
d. There is no relationship between the d. Demand forecasting
number of tasks performed and the skill
proficiency and efficiency of the employee 45. Which of the following is a type of
heuristic model used for aggregate
40. Which of the following work measurement planning?
09
techniques are extensively used to measure
worker performance in ‘indirect labor a. Management coefficient model
jobs’ (jobs involving machine or b. Linear programming
automation)?
20
c. Computer simulation model
a. Historical analysis d. Linear decision rules
b. Work sampling
46. The term ‘rolling through time’ is
c. Pre-determined Motion Time Study associated with which of the following
of
d. Standard data activities in operations management?
41. One of the primary applications of work a. Location decisions
sampling is to find the percentage of time b. Master production schedule
s
an employee or equipment was occupied, c. Inventory management
as
or left idle. What is the name given to this
application of work sampling? d. Job design
a. Ratio delay
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47. Which of the following does not directly
b. Performance measurement signify the service capacity of an
c. Time standards organization?
d. Employee self-timing a. Total beds in a hospital
y
b. Total seats in an aircraft
42. Which of the following is an assumption
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taken for back-order strategy used in c. Total rooms in a hotel

aggregate planning? d. Total drafts issued by a bank in a day
O
a. Customers are willing to pay more for 48. Inventories can be direct or indirect.
product delivery Identify indirect inventory from the
b. Customers are willing to wait for product following.
se
delivery i. Raw material

c. Customers are not willing to pay in case of ii. Stationery
delay in product delivery
U
iii. Work-in-progress
iv. Lubricants
43. Which of the following is not associated
a. i and ii
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with aggregate planning?

a. Making best use of resources to meet b. iii and iv
market demand c. i and iii
b. Minimizing production costs d. ii and iv
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c. Making appropriate changes in production 49. In the EOQ model, reorder level is set to
rates and workforce levels to improve the number of units used in the lead time.
profits
Fo
What is the formula for reorder point?

d. Expanding plant capacity to meet future
demand a. Reorder point = Annual demand x Lead
time
44. It is important to determine adequate
b. Reorder point = Lead time x Total costs
production capacity to meet forecast
demand levels and to determine whether or c. Reorder point = Lead time x Average daily
not sub-contracting and/or overtime has to demand
be used. This activity is associated with d. Reorder point = Lead time x Ordering
which of the following? costs
191
50. FSND is a type of classification of c. All purchasing activities should be

inventory. On what basis are items conducted honestly and truthfully
classified under FSND? d. All purchasing commitments (payments of
a. Turnover bills, etc) should be completed on time
b. Consumption value 55. Which of the following activities are
c. Importance in usage performed by people involved in making
d. All of the above purchase decisions?
09
i. Price negotiation
51. In which of the following types of
ii. Giving feedback to sales personnel of
inventory classification are items classified suppliers
20
based on their importance in the
iii Building long-term relationships
production process?
iv. Giving indents to concerned departments
a. ABC
b. VED a. i, ii, and iii
of
c. FSND b. ii, iii, and iv
d. Both a & c c. i, iii, and iv
d. i, ii, iii, iv
s
52. Purchase indents for raw materials usually
56. Operations management involves the
as
originate in which department of a
manufacturing organization? functions of planning, organizing,
controlling, directing, and coordinating in
a. Purchase
Cl production systems, which help in
b. Finance converting the resource inputs into
c. Production products or services. Activities that
d. Marketing compare work progress to schedule, and
y
inventory level to targets fall under which
function of operations management?
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53. Identify the correct sequence of steps in

the supplier selection process. a. Planning
a. Request for quotations – Evaluation of b. Directing
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suppliers – Develop a list of suppliers – c. Coordinating

Supplier selection d. Controlling
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b. Develop a list of suppliers – Evaluation of

57. What does the ratio between the quantity
suppliers – Request for quotations –
of output produced and the quantity of
Supplier selection
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input used in an organization indicate?

c. Develop a list of suppliers – Request for a. Product quality
quotations – Evaluation of suppliers –
b. Productivity
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Supplier selection
c. Product variety
d. Develop a list of suppliers – Request for
d. Profitability
quotations – Supplier selection –
Evaluation of suppliers 58. What do you understand by the term
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production flexibility?
54. Most organizations develop a set of rules
a. Ability to produce large quantities of
and guidelines to ensure that purchasing
products
Fo
personnel conduct business ethically.

Which of the following statements is not b. Ability to produce different varieties of
products
to be considered a purchasing rule by a
firm? c. Ability to produce a single product
a. The organization’s interest should be kept
in mind while purchasing 59. Identify the qualitative forecasting method
b. Selection of suppliers should be based on in which the member experts are allowed
individual discretion to discuss and arrive at a consensus.
192
Part B
a. Delphi method i. Employ additional workforce on part-time

b. Nominal group technique basis
c. Brainstorming ii. Make existing employees work overtime
d. Executive committee consensus iii. Recall the workforce laid-off previously
iv. Employ multi-skilled employees
60. What is the relationship between the time
frame and accuracy of demand forecast in a. i and ii
09
simple moving average technique? b. ii and iv
a. The greater the time period, the greater the c. i, ii, and iv
accuracy d. i, ii, and iii
20
b. The lesser the time period, greater the
65. What is the ‘Line flow production system’
accuracy
also referred to as?
c. Accuracy of demand is independent of
a. Product-focused systems
of
time period
d. The greater the time period, the lesser the b. Process-focused systems
accuracy c. Group technology
s
61. The demand of Product A for six
as
consecutive months is given as 50, 53, 54, 66. If in an assembly line more than a single
55, 53, and 52. Calculate the demand for product is to be made, which model can be
Cl used to study workflow in terms of
Product A for the seventh month using the
simple moving averages method. Assume different workstation sizes, task variations,
the time period to be a three month moving etc?
average.
y
a. Line balancing
a. 52.33 b. Mixed-model line balancing
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b. 54.00 c. Load distance model

c. 53.33 d. CRAFT model
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d. 55.00
67. Which of the following location-evaluation
62. Which of the following can be an objective methods uses expert panels, namely
se
of a transportation problem? strategic panel, forecasting panel and

a. Allocating resources to the production coordinating panel, while deciding on
U
process optimal plant location?

b. Minimizing production costs a. Point rate method
b. Center of gravity method
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c. Minimizing transportation costs

d. Maximizing capacity c. Analytic Delphi method
d. Break-even analysis
63. Under what condition can one say that a
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transportation problem is balanced? 68. Break-even analysis is a graphical and

a. Supply should be greater than demand algebraic representation of relationships
among volume of output, costs and
Fo
b. Supply should be equal to demand

revenues. What is the other commonly
c. Supply should be less than demand
used term for break-even analysis?
d. There is no condition
a. Quality factor analysis
64. If an ice cream factory plans to meet the b. Cost-volume-profit analysis
peak demand during summer season,
c. ABC analysis
which of the following steps could it
possibly take? d. Value analysis
193
69. Many factors have to be considered as part a. Inventory plan

of job design. The basic question ‘Where b. Aggregate plan
is the job performed?’ describes one of the c. Capacity plan
following. Identify.
d. Material requirement plan
a. The tasks to be performed
b. The geographic location of the job 74. What is the optimum criterion for selecting
c. Method of performing the job the best economic order quantity?
a. Annual ordering costs are minimum
09
d. Qualities of workers who perform the job
b. Annual carrying costs are minimum
c. Total annual costs are minimum
20
includes five characteristics. They are skill d. Annual inventory costs are minimum
variety, task identity, task significance,
75. Stock-out costs are assumed to be absent
autonomy, and feedback. Which of the
in which of the following inventory
following defines details of tasks needed to
of
complete/perform a job? systems?
a. Task identity a. Q system
b. Task significance b. P system
s
c. Autonomy c. EOQ
as
d. Feed back d. Fixed Order Quantity system
76. Who generally issues a purchase indent?
71. Rajdhani Enterprises Ltd. asks its
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employees to fill up a time sheet for a. User department
different tasks undertaken and respective b. Purchase department
time spent on each task in a given period.
c. Vendor
y
Which of the following methods of work
measurement has the company d. Top management
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implemented?
77. Which of the following is not mentioned
a. Work sampling
O
in a quotation?
b. Time study
a. Price per unit
c. Employee self-timing
b. Delivery schedule
se
d. Pre-determined Motion Time Study

c. Terms and conditions
72. What term is used to signify maximum d. Name of the user department
U
output that can be produced in a given

production system in a given time period? 78. What precedes a typical make-or-buy
a. Productivity decision?
BS
b. Capacity a. Value analysis

c. Quality b. ABC analysis
d. Inventory c. Break-even analysis
rI
73. Which of the following types of plans d. Vendor analysis

helps define how resources can be used in
(Questions 79 to 81) The desired daily output
the best way to meet the market demand
Fo
for a product, minimize the production for an assembly line is 1000 units. The
costs, make appropriate changes in assembly line operates for a period of 480
production rates and workforce levels to minutes a day. The process involves the tasks
improve profits, improved customer as shown in the figure. Answer the following
service, and utilization of resources? three questions.
194
Part B
11 sec 9 sec
B F
45 sec
A C
09
6 sec
20
I
G H
D E
9 sec 9 sec
15 sec
of
50 sec 16 sec
79. Calculate the cycle time. (1 point) Answer the following five questions from the
s
a. 4.8 seconds above information.
as
b. 28.8 seconds 82. For which of the given months, the
c. 0.48 seconds production capacity exceeds demand?
(1 point)
d. 2.88 seconds
Cl
a. June
80. Calculate the number of workstations that b. July
are theoretically required? (2 points)
c. August
y
a. 7 d. September
b. 6
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c. 4 83. How many extra workers are required to

meet the demand for the month of June
d. 5
O
(1 point)
81. If the actual number of work stations a. 1
required is 6 in number, then what is the b. 2
se
efficiency of the assembly line? (1 point)

c. 3
a. 0.93 d. 4
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b. 0.95
c. 0.98 84. What is the total cost incurred by the
organisation for hiring/laying off workers
d. 0.94
in the month of June? (1 point)
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(Question 82 to 86) In a production facility, a a. 2000

worker is capable of producing 4 metal frames b. 4000
per day. Assume the time taken for producing c. 6000
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each metal frame is the same.

d. 8000
Given: Hiring costs = Rs. 2000, Layoff costs =
Rs. 2500, Current employee strength = 50 85. Calculate the total cost incurred by the
Fo
organisation for hiring/laying off workers

Aggregate demand for next four months is in August to meet the demand during the
given in the following table. month without any shortage. (2 points)
Jun Jul Aug Sep a. 2,000
Demand 5150 5000 4800 4660 b. 6,000
Working 24 25 23 24 c. 4,000
Days d. 8,000
195
86. What is the layoff cost incurred by the (Questions 88 & 89) Alpha Stabilizers Ltd
organisation in the month of September purchases electrical switches at Rs.20 per unit.
assuming number of workers available to Annual demand for this component is 10000
be 52? (2 points) units. The ordering costs and carrying costs per
a. 6000 unit are Rs.250 and Rs.5 respectively and lead
b. 8000 time for inventory replenishment is 4 days.
Assume the number of working days in a year
c. 7500
as 300. Answer the following two questions.
09
d. 8500
88. Using this data calculate the EOQ
87. The extent of sales of a product depends (1 point)
20
on many variables. Assume that sales of a a. 1000
bulldozer increases with increase in the b. 2236
sales promotion expenditure. Given below
c. 5000
are the sales figures over a period of six
of
d. 2000
months along with the sales promotion
expenditure incurred by a distributor of 89. What is the reorder point for Alpha
heavy equipment. Stabilizers? (2 points)
s
Sales 33 35 40 30 32 30 a. 100 units
as
(in units) b. 133 units
Sales 7 5 14 8 9 6 c. 33 units
promotion
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d. 150 units
expenses
(in Rs. 90. The profit before tax of SP Chemicals was
lakhs) Rs.25 million for 2006, which is 10% of
y
the overall sales. Cost of materials
Calculate the sales promotion expenditure
accounted for 40% of the sales. What
nl
needed to achieve sales of 40 units using the

would be the change in profit if the cost of
least square method. (5 points)
materials decreased by 5%.? (3 points)
O
a. 10.83 a. 20% increase

b. 33.33 b. 25% increase
c. 11.97
se
c. 20% decrease
d. 15.67
d. 25% decrease
U
BS
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Fo
196

09
1. Which of the following is not true about a a. i and ii
single card Kanban system?
20
b. i, ii, and iii
a. Only the conveyance card is used c. i, ii, and iv
b. Some initial inventory is available d. i, ii, iii, iv
c. The number of trays used are dependant on 6. Materials managers use several techniques
of
the lot size of production to carry out their tasks. Which among the
d. The system is useful in execution of following is not a technique used by
repetitive operations materials managers in the movement of
s
materials?
2. Which of the following is not a task
as
performed by the purchase department? a. Kanban Systems
b. JIT System
a. Processing requisitions for materials
Cl
c. Value Analysis
b. Identifying and selecting suppliers
d. ABC Analysis
c. Negotiating with suppliers
d. Maintain inventory of the purchased 7. What is the relationship between the
y
material till usage number of Kanban cards used and the
demand for a product?
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3. Which of the following applications a. Number of cards decrease with increase in

performed by robots are more relevant in demand for a product
O
materials management?
b. Number of cards increase with rise in
a. Processing demand for a product
b. Pick-and-place c. Number of cards increase with decrease in
se
c. Inventory stocking and picking demand for a product

b. Both b & c d. There is no relationship between the
U
number of cards and demand for a product

4. Which of the following Kanban cards
specifies quantity of material ordered? 8. Which of the following is not true about
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a. Vendor authorization card the MRP system?

b. Product authorization card a. Planning and implementation time for
MRP systems can take years
c. Conveyance card
b. Data entry requirements and file
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d. Both b & c
maintenance are time consuming
5. Which of the following statements c. The set up time is low
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describes the limitations of a Kanban d. Over dependence on forecasts and

system? estimated lead time
i. Excessive dependence on people involved 9. An MRP system works based on the
in the process demand for the end product. Which of the
ii. The failure of a vendor to supply the following is not true about MRP?
required amount of materials a. It is a backward scheduling process
iii. Reduction of work-in-process b. It helps coordinate orders from external
iv. A missing Kanban card and internal sources
c. It is responsible for the purchase of c. Jobs are assigned according to the latest
required material available time slot at a work center
d. It generates a schedule of all items d. Mostly used in operations in which
required for production customized products are manufactured
10. In which of the following each type of 15. Which of the following is not true about
material held by the firm is recorded with backward scheduling?
detailed specifications of the availability at
a. Backward scheduling is calculated from
09
the beginning of a time period along with
expected arrivals during the time period? earliest start time forward
a. Bill of materials b. Jobs are assigned the latest time slots
20
b. Primary report c. Backward scheduling is done when
demand can be anticipated beforehand
c. Inventory records file
d. Secondary report d. Work-in-process inventory is low as they
are used within a short time
of
11. An output of MRP system that specifies
the quantity of inventory that is required in 16. Which of the following dispatching rules
a specific time bracket is called do firm use when they want to maximize
s
__________. the number of completed jobs and reduce
the number of jobs in waiting?
as
a. Planned orders
b. Order releases a. Longest processing time
b. Shortest processing time
c. Exception reports
Cl
d. Performance reports c. First in, first serve
d. Slack time remaining
12. Identify the input to the MRP system that
y
contains information about whether a 17. Service firms can adopt various methods to
particular item is produced internally or meet customer demand under situations of
nl
purchased from external sources. limited availability of service facilities.

a. Master production schedule Which system is used by an operations
O
b. Demand forecast manager to control customer arrival

c. Bill of materials timings so that the firm’s resources can be
d. Inventory records file utilized to the fullest extent?
se
a. Appointment system
13. Netting in MRP information processing is
b. Reservation system
U
used to calculate net product requirement.

Identify the correct formula to calculate c. Strategic product pricing
this. d. Routing
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a. Net Requirement = Gross Requirement + 18. Identify the statements that correctly
On hand inventory − Quantity on order describe the characteristics of Gantt
b. Net Requirement = Gross Requirement + charts?
On hand inventory + Quantity on order
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i. They are useful only when work centers

c. Net Requirement = Gross Requirement − are less in number
On hand inventory − Quantity on order
ii. It considers break-down in production
Fo
d. Net Requirement = Gross Requirement −

On hand inventory + Quantity on order iii. It does not consider human performance
iv. It does not provide clarity in
14. Which of the following is not true about communicating job information
the forward scheduling method?
a. Actual production activities start after a. i and ii
receiving a job order b. ii and iii
b. Work-in-process inventory level is high in c. iii and iv
this method d. i and iii
198
Part B
19. Several methods are used for scheduling a. 2, 3, 5, 4, 1

operations in an organization. Based on b. 3, 2, 5, 4, 1
which factors are scheduling methods c. 3, 2, 4, 5, 1
selected?
d. Cannot be determined
i. Volume of production
ii. Nature of operations 23. Identify the correct definition of a
iii. Inventory in store ‘business process.’
iv. All of the above a. A set of unrelated tasks performed to
09
achieve a defined business outcome
a. Only i b. A set of logically related tasks performed
b. i and ii to achieve an unknown outcome
20
c. i and iii c. A set of logically related tasks performed
d. Only iv to achieve a defined business outcome
d. A set of unrelated tasks performed to
20. Scheduling of operations is different for
of
different types of operation. Which of the achieve an unknown business outcome
following operations is used to produce 24. Gap analysis helps identify the areas that
goods and services in low volumes? are not handled by the standard system.
s
a. Job operations Which of the following gaps can be dealt
as
b. Repetitive operations with by a project team?
c. Labor-intensive operations a. Gaps that can be eliminated with minimal
programming
d. Service operations
Cl
b. Gaps that require extensive rework and
21. Gantt charts are simple bar charts that can additional resources
be used to schedule any type of operation.
Identify the different types of Gantt charts c. Gaps that cannot be handled by the system
y
from the following. d. All of the above
nl
i. Workload charts 25. Which dimension of quality talks about a

ii. Scheduling charts product’s primary operating
O
iii. X-chart characteristics?

iv. R-chart a. Performance
b. Reliability
a. i and ii
se
b. i and iii c. Durability

c. ii and iv d. Conformance
U
d. iv and i 26. Proper communication optimizes the

22. A firm is involved in five types of jobs. implementation process, but overstating or
understating the functionalities of the ERP
BS
Each must be processed on three

machines, A, B and C in the order ABC. package do not fetch desired results.
The processing time of each job (in hours) Which of the following can be a
on the three machines is given below. consequence of overstating functionalities?
rI
Identify the optimum sequence using a. Unrealistic expectations from employees

Johnson’s rule. about the benefits of ERP
Processing Times b. Employees would be unprepared for the
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Job changes required for ERP implementation

A B C
c. Employees will be aware of the effects of
1 23 10 25 ERP implementation on their jobs
2 54 25 65 d. All of the above
3 45 18 24 27. Four key ‘drivers’ help determine not only
4 41 22 33 responsiveness and effectiveness, but also
the strategic fit of the supply chain. Which
5 35 20 46 of the following is not one among them?
199
a. Inventory c. Wholesaler
b. Decision-making d. All of the above
c. Facilities
33. JIT manufacturing focuses on which of the
d. Information following conditions?
28. ‘Enablers’ are responsible for overall i. Continuous improvement
performance of the SCM. Which of the ii. High performance levels in all operational
following enablers emphasize that the
areas
09
goals of various business units of an
organization should match corporate iii. Maintaining consistent quality
goals? iv. High volumes of output
20
a. Customer-supplier focus
a. Only i
b. Design
b. i and ii
c. Alignment
c. i, ii, and iii
of
d. Measurement
d. i, ii, iii, and iv
29. What does the SCM enabler ‘period
review’ focus on? 34. Which of the following is not an
advantage gained by a firm implementing
s
a. Evaluation of performance of processes,
JIT?
as
programs, and systems
a. Minimal inventory storage and
b. Involvement of suppliers in decision-
maintenance costs
making
Cl
c. To understand and react to customer b. Reduction in production cycle time
requirements fast c. Reduction in formal paper work
d. Develop products, services, and business d. Steady and continuous demand for
y
processes that satisfy the requirements of material
both customers and suppliers
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35. Sheetal Plastic Company adopts the JIT

30. ESCM or electronic supply chain manufacturing system and maintains
O
management involves business-to-business smaller lot sizes of inventory. Identify the

integration through the Internet. Which of advantages of maintaining smaller lots
the following is not an advantage of over larger lots.
ESCM?
se
i. Increases set-up frequency

a. Increase in cost savings ii. Reduces lead times
b. Increase in cycle time iii. Achieves uniform loads
U
c. Reduction in inventory levels iv. Reduces cycle inventory

d. Reduction in procurement costs
a. i and ii
BS
31. Which of the following SCM ‘enablers’

b. i, ii, and iii
discusses effective decision-making in the
organization? c. ii, iii, and iv
d. iv, i, and ii
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a. Participation/involvement
b. Design 36. Many JIT firms follow group technology
c. Measurement layouts where several types of machines
Fo
d. Periodic review are placed in distinct cells with each

machine in a cell performing a single
32. According to the demand chain concept, operation repeatedly. Which of the
which member(s) assume the role of following is not a benefit of group
monitoring changes in consumer technology layouts?
preferences?
a. Movement of material is minimized
a. Retailer
b. Reduced need for material handling
b. Manufacturer equipment
200
Part B
c. Reduced total materials handling costs c. After the commencement of irreversible

d. Reduced speed of production processes
d. After finished products are ready for
37. Which of the following is not a delivery
characteristic of the JIT system?
a. Uniform workstation loads 42. Match the following control charts with
b. Large lot sizes their respective utilities.
c. Quick and economic set-ups i. X-chart
09
d. Flexible facilities ii. R-chart
iii. P-chart
38. The break-down of one machine in a JIT iv. C-chart
20
manufacturing system can lead to stoppage
of the entire production line, which proves p. Illustrates the central tendency of
to be very costly for the firm. To avoid inspected samples
such situations, the firm has to regularly q. Shows variability in terms of precision and
of
take up preventive maintenance. Which of accuracy of a process in manufacturing
following does not assist in easy r. Helps find the proportion of defective
preventive maintenance measures in a JIT items in a selected sample
production unit?
s
s. Illustrates the total number of defects in an
a. Complex equipment design and non-
as
item
standardized replacement parts
b. Collection of information about frequency a. i/p, ii/q, iii/r, iv/s
Cl
and causes of machine failure b. i/p, ii/r, iii/q, iv/s
c. Replacement of worn-out parts regularly c. i/q, ii/p, iii/r, iv/s
during frequent checks d. i/q, ii/r, iii/p, iv/s
d. Purchase of spare parts required for
y
maintenance beforehand 43. A firm has to incur costs as part of quality

nl
control. The costs include cost of

39. Which of the following is not a measure of inspection and the cost of an undetected
an input to produce an output? fault. Which of the following is not a cost
O
a. Tons of coal consumed arising due to undetected faults?

b. Kilowatt of power consumed a. Customer complaints
b. Product replacement costs
se
c. Number of personnel worked

d. Meters of cloth produced c. Cost of product recall programs
d. Inspection labor costs
U
40. Identify the function of quality directly

related to the reputation of the firm. 44. Each type of control chart is used for a
a. Conformity different purpose. Which type of control
BS
b. Aesthetics chart details the central tendency of

inspected samples?
c. Serviceability
a. X-chart
d. Perceived quality
b. R-chart
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41. For most products and services, it is not c. P-chart

possible to test final outputs. In this d. C-c hart
scenario, to improve efficiency of
Fo
inspections, they should be carried out at 45. Companies outsource the facilities
different stages of production. Which management function due to many
among the following is not an ideal time to reasons. Which among the following is not
carry out such an inspection? a valid reason for this?
a. Before commencement of operations that a. To reduce costs
can cover up defects b. To improve the control of tasks
b. After commencement of operations that c. To focus on core competency
are likely to provide outputs with defects d. To improve quality of tasks performed
201
46. Compressors in a certain manufacturing c. Wear out stage

plant have to be serviced after every 200 d. Useful life stage
hours of operation. This is an example of
___________. 51. _________________ is the amount of time
that an activity can be delayed beyond its
a. Irregular preventive maintenance
earliest start time without extending the
b. Predictive maintenance project duration.
c. Periodic maintenance a. Latest start time
09
d. Remedial maintenance b. Expected start time
47. What are the other names for remedial c. Slack time
maintenance? d. Most likely time
20
i. Breakdown maintenance 52. Match the following systems used in
ii Irregular maintenance production with their respective features.
iii Corrective maintenance i. CNC machines
of
iv. Condition monitoring ii. CIM
iii. FMS
a. i and ii iv. AI
s
b. ii and iii
as
c. i and iii p. A flexible system capable of producing
different types of products
d. ii and iv
q. Performs a variety of tasks based on the
Cl
48. In which of the following stages of a instructions fed to the onboard computer
bathtub curve is the failure rate constant r. Computer systems capable of reasoning
and to some extent predictable? and decision making
y
a. Early failure stage s. Integrates designing, manufacturing, and
controlling functions
nl
b. Adult stage
c. Wear out stage a. i/q, ii/r, iii/p, iv/s
O
d. Both a & c
c. i/q, ii/s, iii/p, iv/r
49. Bharti Engineering Ltd takes up preventive
d. i/q, ii/p, iii/s, iv/r
maintenance for its machinery every 2
se
months though the service manual advices 53. There are certain impediments to
maintenance once in 3 months for effective globalization that can block an
U
performance. What can be the possible organization from globalizing its activities.
negative consequences of such a practice Restrictions through tariffs and duties to
for Bharti? control MNCs operating in a country come
BS
under which type of impediments?

i. Preventive maintenance costs increase
a. Economic impediment
ii. Down time of machinery can decrease
b. Managerial impediment
iii. Frequent stalling of work
c. Institutional impediment
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iv. Productivity can increase

a. i and iii 54. Which category of robots, based on the
Fo
b. ii, iii, and iv nature of their operations, is capable of

c. iii, iv, and i perceiving the environmental conditions of
d. i and iv the workplace and making suitable
decisions using onboard computers?
50. Which stage in a “Bathtub Curve” is also a. Playback robots
known as burn-in stage?
b. Numerical control robots
a. Early failure stage c. Variable-sequence robots
b. Adult stage d. Intelligent robots
202
Part B
55. Which of the following combinations of iii. X-chart

cards are used in a dual Kanban system? iv. R-chart
a. Vendor authorization card and conveyance
authorization card a. i and ii
b. Product authorization card and conveyance b. i and iii
authorization card c. ii and iv
c. Vendor authorization card and product d. iv and i
authorization card
09
60. Identify problems encountered during a
d. Product authorization card, vendor typical ERP implementation process?
authorization card and conveyance
i. Executing complex tasks
authorization card
20
56. What should a manufacturing firm ii. Setting several milestones
producing three different products that iii. Communication breakdown
require the same raw materials for two of iv. Rushed deadlines
of
them do while planning?
a. i, ii and iii
a. Develop a materials requirement plan for
each product b. i, iii and iv
c. ii, iii and iv
s
b. Develop a consolidated materials
requirement plan for products using same d. i, ii, iii, iv
as
type of materials
61. Which of the following statements are true
c. Avoid developing any materials
Cl about Business Process Reengineering
requirement plan for products using same
(BPR)?
type of materials
d. Develop a materials requirement plan only i. It advocates the complete overhaul of
for the product using raw materials that are business processes in an organization
y
not common ii. It advocates the complete overhaul of
nl
57. Which of the following outputs of MRP processes in the manufacturing department
system authorizes the purchase department of an organization
to go ahead with the purchase of material iii. It reduces costs and improves business
O
as planned? practices
a. Planned orders iv. It helps increase productivity
se
b. Order releases
a. i and iv
c. Exception reports
b. iii and iv
U
d. Planning reports
c. ii, iii, iv
d. i, iii, iv
58. Forward scheduling is a scheduling
BS
method. Which of the following is not a 62. What dimension of quality measures the
feature of forward scheduling? degree to which a product is manufactured
a. Production activities start when the job to the pre-specified specifications?
order is received a. Reliability
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b. Scheduling is done from the date of b. Serviceability

production c. Aesthetics
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c. Start & finish times are determined by d. Conformance

using earliest time slots
d. Work-in-process inventory is very low 63. Which of the following is not a benefit of
JIT purchasing?
59. Gantt charts are simple bar charts that can
be used to schedule any type of operation. a. Increased responsiveness and flexibility
Identify the different types of Gantt charts. b. Reduction in product design time
i. Workload charts c. Reduction in cost of scrapped inventory
ii. Scheduling charts d. Administrative efficiency
203
64. Which of the following statements best 69. Which of the following is not a
describes total quality control? consequence of poor maintenance of
machinery?
a. Quality of the product is a concern of the
quality control department a. Productivity of the firm would be affected
b. Only the quality control department is b. Production costs would decrease
responsible for improving product quality c. Safety would be adversely affected,
c. Quality can be increased by changing leading to more accidents
09
product design rather than meeting d. Quality of output would come down
customer requirements
70. Maintenance of material handling
d. Quality can be enhanced through
equipment falls under which of the
20
collective efforts of all departments
following?
65. The maximum average outgoing quality a. Mechanical maintenance
for any acceptance plan is the average b. Civil maintenance
outgoing quality limit (AOQL), which
of
indicates the point at which the AOQ c. Electrical maintenance
reaches the critical level. Identify the true d. Preventive maintenance
statement pertaining to the AOQ.
s
71. What are the other names for remedial
a. Products above the AOQL are shipped to
as
maintenance?
suppliers
i. Breakdown maintenance
b. Products above the AOQL are not shipped
ii Irregular maintenance
to customers
Cl
c. The entire lot of products is accepted when iii Corrective maintenance
defects exceed the critical point iv. Condition monitoring
d. Extent of inspection decreases when AOQ
y
a. i and ii
crosses the AOQL
nl
b. ii and iii
66. What action does a firm take when average c. i and iii
outgoing quality (AOQ) of a product
O
d. ii and iv
crosses average outgoing quality level
(AOQL)? 72. Which of the following reasons has led to
a. Products are shipped to customers the initial stage of the bathtub curve
se
b. Products are retained and inspected gradually losing importance?

c. Products are sent to production department a. Firms use new equipment
U
for changes b. Failure rates in the first stage are

d. Products are shipped to suppliers accurately measured
c. Zero failures in the first stage have become
BS
67. What is a Type I error in quality control?

common
a. Probability of rejecting the lot at AQL
d. Equipment manufacturers dispatch
b. Customers face the risk of receiving a lot equipment only after the burn-in period is
rI
with minor defects over

c. A risk that a bad lot will be rejected
d. Probability of accepting the lot at AQL 73. The process of reducing the time of the
Fo
project by reducing the scheduled time of

68. Identify the service under facilities some of the activities is called project
management that involves duplication of crashing. Which among the following is
printed material. not a crash strategy?
a. Housekeeping a. Reducing the workforce
b. Plumbing b. Additional capacity installation
c. Reprographics c. Subcontracting
d. Horticulture d. Overtime
204
Part B
74. Identify the correct formula to calculate i. Numeric control

the time-cost ratio in project crashing. ii. Computer Aided Manufacturing
a.
(Normal cost − Crash cost ) iii. Computer Integrated Manufacturing
(Normal time − Crash time) iv. Teleoperator
b.
a. i and ii
b. ii and iii
(Crash time − Normal time )
09
c. c. iii and iv
d. i and iv
d.
(Normal cost − Crash cost )
20
(Crash time − Normal time ) 78. The difference in approaches between
national and global goals and management
75. Which one of the following is a necessitates changes in several key
networking method? strategic operational decisions. Which of
of
a. Center of gravity method the following strategic decisions basically
b. Critical path method involves scanning of macro-economic
c. Graphical method of linear programming factors, information on market size, and
s
capability of the subsidiary?
d. Economic order quantity method
as
a. Selection of markets
76. Automated systems are less customizable b. Product development
in terms of the number of possible
Cl
c. Allocation of resources
products that can be manufactured when
compared to manually operated systems. d. Choice of technology
Which of the following overcomes this 79. Preferential procurement from local
y
disadvantage? organizations by government and quasi-
government entities comes under which of
nl
a. CAD
the following impediments to
b. CAM globalization?
O
c. FMS a. Economic impediment

d. JIT b. Managerial impediment
c. Institutional impediment
se
77. Robotics is an automation technology

d. Both a & c
based on two related technologies. What
U
are they?
(Question 80 to 82) Bill of materials for product A is given below showing the lead times and
required quantities. Use this information to answer the following three questions.
BS
A
LT = 2
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Fo
B (4) C (1) D (4)

LT = 1 LT = 2 LT = 4
E (3)
LT = 2
205
80. How many units of D are required to 84. Determine the optimum sequence to
produce 5 units of Product A? (1 point) process these five jobs using Johnson’s
sequencing rules. (2 point)
a. 5 units
a.
b. 10 units
D E C B A
c. 20 units
d. 30 units b.
D C E B A
09
81. How many units of E are required to
produce 5 units of Product A? (1 point) c.
D C B E A
a. 15 units
20
b. 60 units d.
c. 70 units D B E C A
d. 120 units 85. Calculate the total elapsed time for the
of
jobs using the optimum sequence D-C-E-
82. If a time-phased product structure is B-A. (5 points)
drawn, how many weeks will be required a. 300 minutes
to produce the product A? (2 points)
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b. 330 minutes
a. 3 weeks
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c. 355 minutes
b. 4 weeks d. 335 minutes
c. 5 weeks
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d. 6 weeks 86. What is the total time idle time on
photocopying machine? (1 point)
83. The unit price of a product is Rs 150, the a. 40 minutes
unit variable cost Rs 125, and the fixed
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b. 25 minutes
cost Rs 50,000. What should be the c. 50 minutes
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demand for the product so that the

d. 55 minutes
manufacturer can reach break-even point?
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(1 point) 87. What is the total idle time on binding

a. 2000 units machine? (2 points)
b. 1500 units a. 135 minutes
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c. 4000 units b. 155 minutes

d. 2750 units c. 100 minutes
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d. 125 minutes
(Question 84 to 87) Standard Binders is a
(Questions 88 to 90) P-Chart is used to control
photocopying and binding firm. It undertakes the proportion of defective items being made
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photocopying and binding works in large by a production process. Use the data to answer
quantities. The firm got five orders on a certain the following three questions. The table gives
day and their processing times in the the number of defects in 5 samples where each
photocopying and binding machines sample contains 20 items.
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respectively (in minutes) are as given below.

Sample 1 2 3 4 5
Use this information to answer the following
four questions. Number of defects 4 3 6 5 4
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88. What is the average proportion of

Job A B C D E defective items for the given data?
Photocopying (2 points)
40 100 50 30 90
machine a. 0.154
Binding b. 0.144
25 60 45 30 40
machine c. 0.220
d. 0.166
Part B
89. What is the upper control limit for the P- 90. Calculate the lower limit for the same
chart to be developed using this data? P-chart. (2 points)
(2 points)
a. 0.22
a. 0.642
b. 0.334
b. 0.4978
c. 0
c. 0.625
d. 0.565
d. 0.674
09
20
s of
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Part B: Answers and Explanations
09
20
s of
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Paper II
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1. (c) Operational decisions
Operational decisions are short-term decisions and have a time-frame of a few days or a week.
09
They address problems and requirements at the operational level, which include scheduling weekly
production and assigning jobs/responsibilities to workers, etc.
2. (a) AS/RS
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AS/RS is a computer controlled warehouse system that automates inflow and outflow of materials
from the warehouse and shop floor on the basis of production requirements. CAD is a specialized
software used for designing products and processes. FMS relates to flexible manufacturing where
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large quantities of products with similar processing requirements can be produced. Computer-
aided manufacturing (CAM) is a specialized computer system, which translates CAD information
into instructions for numerically controlled automated machines.
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3. (b) Computer Aided Manufacturing
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Computer-aided manufacturing (CAM) is a specialized computer system, which translates CAD
(Computer Aided Design) information into instruction for numerically controlled automated
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machines. The use of CAM in manufacturing has minimized worker involvement in production.
Manufacturing information systems were used for planning and controlling operations. These
provided comprehensive information regarding production (such as demand forecasts, purchasing,
inventories, etc.) to operations managers. Automated storage and retrieval system (AS/RS) is a
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computer-controlled warehouse system that automates inflow and outflow of materials from the
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warehouse and shop floor on the basis of production requirements. Linear programming is an
operations research technique.
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4. (d) Facility planning

Facility planning deals with location of the facility and its layout. Decisions regarding facility
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location are based on the accessibility to raw materials and nearness to markets. Allocation of
resources deals with the allotment of existing resources like men, machines, material, etc, to
different strategic alternatives. Technology selection and process development deals with selection
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of the most suitable technology for producing products and product design and development is
used to develop new products.
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5. (c) Convenience and location

If SBI offers the facility of easy accessibility for customers (especially in services industry), this is
a competitive advantage and offers convenient service delivery. Low cost production process
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involves lowering costs of production to values smaller than those incurred by competitors.
Product variety and facility size implies a wide product mix covering customer needs in all market
segments.
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6. (c) Aircraft
Aircraft are manufactured after taking orders from customers. This is because different airline
customers require different type of interior and exterior finish.
7. (a) The greater the NPV, the greater will be the profitability
The greater the NPV value of the project, the better is its profitability. In cases where multiple
projects are compared, the project with the largest NPV is selected.
8. (d) Maximization
Time series data can reveal random variations, seasonality changes, and trends in demand for a
product. However, since time series analysis depends on past data, it can only extrapolate that data
to the future. Hence, the data cannot tell when there is maximum demand.
9. (c) Delphi method
Delphi method is an interactive learning process that involves a group of experts responding to a
questionnaire. The results obtained are compiled to formulate a new questionnaire, which is again
09
submitted to the group. The other three options are types of quantitative methods. (Simple moving
average and exponential smoothing are part of time series methods while regression analysis is a
causal method).
20
10. (b) A positive tracking signal indicates that demand is underestimated
A positive tracking signal indicates that demand is underestimated while a negative tracking signal
indicates that demand is overestimated.
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11. (c) Causal methods
If a relationship exists between the different variables under review, causal methods (such as
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regression analysis) are used.
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12. (a) Trend component
The trend component gives long-term pattern of movement of demand over a period of time.
The trend may be positive, negative, or neutral.
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13. (c) Basic time series forecasting method
While simple moving average, weighted moving average and exponential smoothing are adaptive
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forecasting techniques. Static forecasting methods are also called as basic time series forecasting
techniques.
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14. (b) Introduce slack variables

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Slack variables are introduced in each constraint equation as an idle source to convert inequalities
to equalities.
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15. (b) ii only

Market, capacity, and inventory space are constraints associated with production plan decisions.
Destination requirements are a constraint for transportation decisions.
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16. (d) Stepping stone method

While methods mentioned in options (a), (b), and (c) can be used to develop the initial feasible
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solution, the stepping stone method is used to test the solution for optimality.
17. (d) Optimal solution
A constrained optimization model consists of three major components – decision variables,
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objective function, and constraints. All these are used to find an optimal solution for the model.
18. (b) A dummy warehouse is added
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In an unbalanced problem, a dummy warehouse is added if production capacity is more than the
requirement. A dummy origin is added if production capacity is less than the requirement, with
desired quantity to make it a balanced problem.
19. (b) North-West corner method
In the North-West Corner Method, allocation of products starts at the north-west corner (or the top
left corner) of the transportation table. Here, least cost or penalties are not considered while
allocating products.
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Part B
20. (a) Highly skilled employees

Unlike product-focused production systems, process-focused production systems need highly
skilled employees.
21. (a) i/p, ii/q, iii/r, iv/s

The symbols for non-productive activities in the process chart are storage (∆), delay (D), transport
(⇒), and input () respectively.
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In this type of process design, products or services tend to flow along linear paths without
20
backtracking or side tracking. Items follow a similar production sequence, which can be anything
from a pipeline (for oil) to an assembly line (for televisions or radios).
23. (d) Product-focused system
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A product-focused production system is appropriate for a non-differentiated product. However, it
is inflexible and impractical to alter the equipment to make it possible to produce other products.
Thus, Logan was using a product-focused system.
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24. d) Employ part-time workers to meet the demand
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The characteristics of a production system with product/service flexibility include use of general-
purpose equipment and multi-skilled employees. The employees have to be trained so that they can
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perform different types of jobs. Employing part-time workers to meet the additional demand
requirements is characteristic of a production system having volume flexibility.
25. (c) Low diversity in product design and large batch size
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Product focused systems are more assembly line and continuous production systems, which
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produce products in bulk quantities. Hence, they have large batch sizes. Also, such systems have
very narrow scope for modifying the product design.
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26. (c) Fixed position layout

This layout involves movement of men, machines, and equipment to the product, which remains
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stationary. The product here may be bulky, large, heavy, or fragile. This type of layout is generally
used in ship manufacturing.
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27. (c) Arid and dry climate with minimal rainfall

Sivakasi has an arid and dry climate. Therefore the material used to manufacture fire crackers does
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not absorb moisture and become damp. Besides, a dry climate helps easy storage of finished
products as production is carried out round the year and maximum consumption is during the
festival season.
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28. (a) Process layout

Workers in process layouts must be highly skilled as they need to handle a variety of jobs to
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produce a variety of products.
29. (c) To reduce transportation costs

The center of gravity method is used to find optimal location for a distribution center that
minimizes total transportation costs. This method takes into account factors like markets, cost of
goods, and cost of transportation. The center of gravity method aims at minimizing total shipping
cost, i.e., cost incurred for shipping from distribution centers to different shipping points.
213
30. (b) Point-rate method

Under the point-rate method, weightages are allotted to different factors under consideration.
Companies have several objectives of various importance levels while selecting a site or location.
Companies assign weightage to these objectives in the form of points. Potential sites are evaluated
with respect to every factor a company is seeking and points are allotted accordingly to each
factor. The superior site is the one that finishes with more points.
31. (a) Graphic and schematic analysis
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In graphic and schematic analysis, templates and two-dimensional cutouts of equipment drawn to
scale are used as layout-planning tools. Templates are moved about within a scaled model of the
walls and columns of a facility to identify the best layout through trial and error.
20
32. (b) Job analysis
Job analysis investigates job content, physical conditions in which the job is done, and
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qualifications necessary to carry out the job responsibilities.
33. (c) Autonomy

The autonomy in a job indicates flexibility, independence, and discretion available to employees
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performing the job.
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34. (c) Behavioral feasibility
Behavioral feasibility considers employees’ perceptions about themselves and about others in the
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work environment. Hence, when an employee is delegated an important responsibility, it has a
positive effect on self esteem.
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35. (c) Job specification is part of job description
Job identification, job specification, and job evaluation are components of job description.
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36. (c) Historical analysis

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Historical analysis uses statistical tools like arithmetic mean and others to find the standard time
from the given historical data.
37. (a) Time study
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Time study is used to identify time standards for a particular job performed by a competent worker
under standard conditions. To record time taken by each worker to finish the job, a stop-watch is
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used.
38. (d) High motivation

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Machinery and equipment in good running condition, sufficient stock of material for production,
good working conditions for employees are some pre-requisites for the success of any job design.
Improved productivity and motivation are a consequence of job design.
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39. (a) Fewer the number of specific tasks performed, higher the skill proficiency and
efficiency of the employee
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The lower the number of tasks an employee performs, the greater will be the skill proficiency and
efficiency of the employee. This is because the individual becomes a specialist in performing these
tasks.
40. (b) Work sampling

Work sampling technique is used extensively to measure the performance of workers involved in
indirect labor jobs (like driving a pay loader to feed raw materials). It can also be adopted in
service organizations like schools and hospitals.
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Part B
41. a) Ratio delay

Ratio delay, performance measurement, and time standards are primary applications of work
sampling. Ratio delay refers to the activity time percentage for an employee or equipment. Ratio
delay shows the percentage of time an employee or equipment was occupied or idle.
42. (b) Customers are willing to wait for product delivery
Back-order strategy assumes that customers are willing to wait for product delivery.
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43. (d) Expanding plant capacity to meet future demand
Aggregate plans define how resources can be best employed to meet market demand for the given
products. The objective of an aggregate plan is to minimize production costs, make appropriate
20
changes in production rates and workforce levels, and to improve profits, customer service, and
resource utilization. Expansion of plant capacity is a separate long-term operations plan, which
does not come under aggregate planning, a medium-term plan.
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44. (a) Capacity planning
Capacity planning is important to determine adequate production capacity to meet the forecasted
demand levels. Capacity planning is also used by organizations when deciding on issues like
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whether or not to use sub-contracting or overtime to achieve production goals.
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45. (a) Management coefficient model
The management coefficient model is a heuristic model which uses the regression method to
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identify capacity requirements based on the management’s past decisions. The other three are
types of optimal models used for aggregate planning are similar to the heuristic model.
46. (b) Master production schedule
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Forecasted demand and actual demand for a product may differ significantly due to unexpected
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events. Transactions, records and reports developed as part of MPS are updated and reviewed
continuously to accommodate differences. This process of continuous reviewing and updating is
called ‘rolling through time’.
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47. (d) Total drafts issued by a bank in a day

Service capacity can be measured in terms of number of beds in hospital, number of seats an
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aircraft has, or number of clients an executive can service in a day. But, the number of total drafts
issued by a bank in a day does not directly signify service capacity. It is rather dependant on the
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number of customers demanding that particular service.

48. (d) ii and iv
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Inventories can be direct or indirect. Direct inventories include goods that play an important role in
manufacturing of a product and become part of the finished product. Direct inventories include raw
material, work-in-progress goods, etc. Indirect inventories include goods necessary to run the
production process but do not become part of the end product. For example, lubricants, grease,
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oils, stationery, etc.
49. (c) Reorder point = Lead time x average daily demand

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Lead time is defined as the product of demand per unit time and lead-time. Unit time and lead-time
are expressed in the same units. Reorder Point = d × LT, where d = Average daily demand, and LT
= Lead time.
50. (a) Turnover

Under FSND classification, goods are classified on the basis of turnover. F items are fast moving,
S items are slow moving items, N items are non-moving items and D items are dead items or the
items that have not been issued for a few years.
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51. (b) VED

VED classification is based on the importance of a particular item in the production process. Under
VED, items critical for production are classified as V (vital). Items important in the production
process but not critical are classified as E (essential) and items, not essential and not influencing
the production process are classified as D (desirable).
52. (c) Production
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The production department primarily issues purchase indents as and when the need for more raw
material arises.
53. (c) Develop a list of suppliers – Request for quotations – Evaluation of suppliers –
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Supplier selection
In the supplier selection process, the first step is to prepare a list of probable suppliers and then ask
them to submit quotations for products that the firm intends to purchase. When quotations are
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submitted, they are evaluated and analyzed in detail. Finally, the actual supplier(s) is/are selected.
54. (b) Selection of suppliers should be based on individual discretion
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No undue favor should be taken from or given to suppliers. Selection of suppliers should be based
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solely on merit and not on individual discretion.
55. (a) i, ii, and iii

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The duties of purchase department members involved in making purchase decisions include
negotiating with suppliers, building long term relationships with them and providing feedback to
sales representatives. Accepting indents from user departments (not issuing indents) is also an
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activity handled by the purchase department.
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56. (d) Controlling

Controlling refers to comparing actual results with set standards or benchmarks. Activities part of
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controlling include comparing work progress to schedule, actual labor hours to standards, costs to
budget, inventory level to targets, and inspection of quality levels.
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57. (b) Productivity

Productivity is the ratio of output produced to input consumed.
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58. (b) Ability to produce different varieties of products

Production flexibility refers to the production of different varieties of products. A production
system which is flexible can utilize its machinery and equipment to produce another product at
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short notice (usually a day or two or a week) and is referred to as flexible production system.
59. (b) Nominal group technique

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Under nominal group technique, experts are allowed to meet, give their opinions and/or ideas, and
discuss and debate on the issue to come to a consensus. In Delphi method, experts do not meet
with each other while giving opinions/ideas. In executive committee consensus method, line
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managers use the information and suggestions given by the staff to arrive at a consensus regarding
the forecast. Brainstorming generally involves employee participation at all levels without
invitation only for experts.
60. (a) The greater the time period, the greater the accuracy
The greater the moving average period the forecast value is less vulnerable to random variations. A
larger moving average period is taken when fluctuations in demand are minimal. This is done to
erase the random variations in demand to the maximum extent possible.
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Part B
61. (c) 53.33

In the three-month simple moving average technique, the forecast for the fourth month will be the
average of the preceding three months. Thus, the forecast for month 4 is the average demand for
the product A during month 1, 2 & 3. Similarly, the forecast for month 5, 6 and 7 can be
calculated. Thus, by using moving averages for three months, we obtain the demand for the month
7 as 53.33 as given in the table.
Month 1 50
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Month 2 53
Month 3 54
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Month 4 55 52.33
Month 5 53 54.00
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Month 6 52 54.00
Month 7 53.33
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62. (c) Minimizing transportation costs
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In its most general form, the transportation problem has a number of origins and a number of
destinations. A certain quantity of a commodity is produced or manufactured at each origin and
transported to destinations, each with specific requirements. The objective of a transportation
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problem is to meet the requirements of customers at the destination with supply from the origin,
while ensuring that transportation costs are minimal.
63. (b) Supply should be equal to demand
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A transportation problem can be either balanced or unbalanced. It is said to be balanced if the
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quantity of goods produced (supply) is equal to total requirement (demand) of all warehouses.
Otherwise, the problem is said to be unbalanced.
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The ice cream factory needs to have volume flexibility in the production system. The extra
workforce that is required to increase production can be obtained from outside subcontractors, by
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paying overtime allowance to the existing workforce, by temporary recruitment of part-time

workers, or by recalling the workforce previously laid off. Employing multi-skilled employees is
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necessary to gain product/service flexibility in the production system. .

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Product-focused systems are also called as ‘Line flow production systems.’ They are used mostly
in production departments that are organized according to the type of product or service being
produced.
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66. b) Mixed-model line balancing

Line balancing and mixed-model line balancing are used in developing a product layout. Load
distance and CRAFT model are used to develop a process layout. Line balancing is considered for
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only a single product in an assembly line. For multiple products, manufacturers consider mixed-
model line balancing. Mixed model lines involve multiple lot sizes, lot sequencing, different set up
times for each lot, differing workstation sizes along the line and task variations that make it very
difficult to design.
67. (c) Analytical Delphi method

Analytic Delphi Method helps managers take complex multi-location decisions. This method
requires participation of a coordinating panel, forecasting panel, and strategic panel.
217
68. (b) Cost-volume-profit analysis

Break-even analysis is also called as cost-profit-volume analysis. While break-even analysis and
quality factor analysis are used in location decisions, ABC analysis is used in inventory
management. Value analysis is used in purchase management and product design.
69. (b) The geographic location of the job

The question ‘Where the job has to be performed?’ helps clarify the location of a particular job i.e.,
whether it is in a particular department, division or geographic location.
09
70. (a) Task identity
Task identity defines clearly the identifiable tasks needed to complete the main task.
20
71. (c) Employee self-timing
Employee self-timing is a technique used by managements where employees are asked to record
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the time taken to perform different activities or tasks. This is a simple and cost effective way of
work measurement.
72. (b) Capacity
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Capacity indicates the maximum output that can be produced in a given production system. If a
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factory is said to have production capacity of 100 units per hour, it means that under optimal
conditions, the factory will be able to produce a maximum of 100 units per hour.
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73. (b) Aggregate plan
Aggregate plans define how resources can be best employed to meet market demand for the given
products. The objective of an aggregate plan is to minimize production costs, make appropriate
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changes in production rates and workforce levels and to improve profits, customer service, and
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utilization of resources.
74. (c) Total annual costs are minimum

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Operations managers compute total annual costs for various order quantities and then select the
economic order quantity where total annual cost is minimum. Ordering and carrying costs are
components of total costs.
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75. (c) EOQ

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Under the EOQ model, inventory is assumed to be replenished about the time it becomes zero.
Hence, there would be no shortage of materials on a continuing basis. Costs will be minimal. As
shortage of materials is not allowed, stock-out costs of inventory have a role to play in the
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computation of EOQ.
76. (a) User department

The user department that utilizes material or goods issues purchase indents. They are issued to the
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purchase department, which requests for quotations from vendors for the materials.
77. (d) Name of the user department

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The name of the user department is present in the purchase indent or requisition and not in the
supplier’s quotation. The latter usually contains price per unit, delivery schedule, mode of
transportation, special terms and conditions, etc.
78. (c) Break-even analysis

Make-or-buy decisions are based on break-even analysis, where costs of producing in-house as
well as costs of purchasing from outside are analyzed. These costs are dependent on the quantity
demanded.
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Part B
79. (b) 28.8 seconds

Operation time per day
Cycle time = =(480 x 60)/1000= 28.8 seconds
Output per day
80. (b) 6
Total time required for all the tasks (T) = 45 + 11 + 6 + 9 + 50 + 15 + 16 + 9 + 9 = 170 seconds
Nt = T / Cycle time
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= 170/28.8
= 5.9
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Theoretically, 6 workstations are required at the minimum.
81. (c) 0.98
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Efficiency of the assembly line = Sum of the tasks of the processes / (Actual number of
workstations x cycle time)
= 170 / (6 x 28.8)
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= 0.98
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82. (d) September
Production capacity from the given details are:
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June - 50 x 4 x 24 = 4800, July - 50 x 4 x 25 = 5000, August = 50 x 4 x 23 = 4600, September - 50
x 4 x 24 = 4800. Hence, the production capacity for September of 4800 is more than the estimated
demand at 4660 units.
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83. (d) 4
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If 50 workers can produce 4800 units in 24 days, then to produce 5150 units in the same period the
number of workers required are (5150 x 50)/4800 = 53.65 = 54
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Extra workers required = 54 – 50 = 4
84. (d) 8000

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If 50 workers can produce 4800 units in 24 days, then to produce 5150 units in the same period,
the number of workers required are (5150 x 50)/4800 = 53.65 = 54. Extra workers required are
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54 – 50 = 4. As 4 extra workers were hired to meet the demand and hiring costs for each worker is
Rs.2000, total cost incurred by the organization is, 4 x 2000 = Rs.8,000.
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85. (b) 6,000

50 workers in 23 days can produce 4600 units (50x4x23). But the demand is 4800 units which
means that additional workers are required to produce the extra 200 units. The number of
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additional workers required are (50 x 200) / 4600 = 2.17
To meet the demand completely (without any shortage), 3 workers are required.
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Hence, hiring costs = 3 x 2000 = Rs.6,000
86. (c) 7500

52 workers in 24 days can produce 4992 units which implies a surplus of 332 units. Hence number
of workers to be laid-off is (52 x 332)/4992 = 3.45 (3 workers approx)
Hence, cost of lay-off = 3 x 2,500 = Rs.7500
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87. (c) 11.97

Bulldozer sales in Sales promotion XY X2
units (X) expenses (Y)
33 7 231 1089
35 5 175 1225
40 14 560 1600
30 8 240 900
09
32 9 288 1024
30 6 180 900
200 49 1674 6738
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The linear equation is Y = a + bX.
n( ∑ XY) − ( ∑ X)( ∑ Y)
b= = 6(1674) – (200)(49)) / 6(6738) – 40000)
n ( ∑ X 2 ) - ( ∑ X) 2
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= (10044 – 9800) / (40428 – 40000)
= 244 / 428
s
as
= 0.57
Y − bX
To calculate ‘a’, the formula is =
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Where Y =
∑Y and X =
∑X
n n
y
Y = 49/6 = 8.17
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X = 200/6 = 33.33
Hence, a = 8.17 – (0.57 x 33.33)
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= 8.17 – 19
= -10.83
Substituting ‘a’ and ‘b’ in Y = a + bX
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Y = -10.83 + 0.57(40)
= 22.8 – 10.83
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= 11.97
Hence to achieve sales of 40 bulldozers the distributor has to spend Rs.11.97 lakhs on sales
promotion.
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88. (a) 1000

2C o D
EOQ =
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Ch
Where, Co is the ordering cost
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D is the demand
Ch is the carrying cost
By substituting the respective values,
2(250 )(10000 )
EOQ =
5
we get EOQ as 1000 units.
220
Part B
89. (b) 133 units

Reorder point = daily demand x lead time
Daily demand = yearly demand / number of working days
= 10000/300
= 33.33
Reorder point = 33.33 x 4
09
= 133 units (approx)
90. (a) 20% increase
20
Sales = Rs.250 million (10% of sales is the profit of Rs.25 million)
Material cost = 40% of sales (250 million) = Rs.100 million
5% of Rs.100 crores = Rs.5 million.
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If the material costs decreases by Rs.5million, the same amount would add to the profit before tax
i.e. the profit would be Rs.30 million. The change in profit before tax would be (5/25) x 100 = 20
%. Thus, a 5% reduction in material costs would increase the profit before tax by 20%.
s
as
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y
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O
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1. (c) The number of trays used is dependant on the lot size of production
The single card Kanban system is more useful in executing repetitive operations. Also, trays used
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in this system should be standardized to the lot size in production. For example, if a firm produces
one television at a time, a tray should contain only the parts required to manufacture one
television. If it produces ten televisions at a time, the tray should contain materials required to
20
produce ten televisions.
2. (d) Maintain inventory of the purchased material till usage

Maintain inventory of the purchased material is the task of raw material inventory department and
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not that of the purchase department.
3. (b) Pick-and-place
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The two basic types of applications where robots are used are ‘processing’ and ‘pick-and-place’. In
a processing application, the robot works as a tool by performing a job on a product (cutting,
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screwing, etc.) that moves to the robot. In a pick-and-place application, the robot moves the
product (e.g. loading and unloading of materials). The pick-and-place application is more relevant
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in materials management.
4. (a) Vendor authorization card

A vendor authorization card specifies the product name, vendor name and quantity of material
y
ordered. When this card is issued, it authorizes a vendor to supply the required materials in the
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specified quantity.

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The limitation of the Kanban system is that it depends excessively on the people involved. The
failure of a vendor to supply the required amount of materials and missing a Kanban are serious
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threats to the success of the system. Reduction of work-in-process and raw materials stores is a
benefit derived through the effective use of Kanban system.
U
6. (c) Value analysis

Value analysis is a technique used by purchase managers to identify and rank components based
on the level of importance in operations during the purchase of materials and components.
BS
7. (b) Number of cards increase with increase in demand for a product

The number of cards can be altered according to the estimated demand for a product. If the
demand for the product increases, a larger number of Kanban cards are used to meet it. Similarly,
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the number of Kanbans can be decreased with less demand for the product.
8. (c) The set up time is low
Fo
MRP Systems require longer set up times.

9. (c) It is responsible for the purchase of required material
An MRP is a backward scheduling process which generates a schedule of all the items required for
production of the end product. It helps in coordinating orders from external and internal sources.
External sources are purchase orders and internal sources are jobs. However, it is not in the scope
of MRP to oversee the purchase process of these materials.
Part B
10. (c) Inventory records file

The inventory records file is computerized with a complete record of each material held in the
inventory. It contains information about inventory levels i.e., levels at the beginning of the
planning horizon and the details of the expected arrivals of inventory during that period.
11. (a) Planned orders
Planned orders specify the quantity of inventory required in a time bracket. It includes information
about all inventory requirements during the planning period. Planned orders and order releases are
09
part of primary report outputs. Exception and performance reports come under secondary report
outputs.
20
12. (c) Bill of materials
Bill of materials contains information about whether a particular item is produced internally or
purchased from external sources. The purchase or production lead-time to acquire the item is also
mentioned in the bill of materials.
of
13. (c) Net Requirement = Gross Requirement - On hand inventory - Quantity on order
In netting, the net product requirements are calculated by subtracting the available units of item
s
and the quantity on order from gross product requirement. Net Requirement = Gross Requirement
as
- On hand inventory - Quantity on order.
14. (c) Jobs are assigned according to the latest available time slot at a work center
Cl
Using forward scheduling, the operations manager determines the start and finish times for jobs to
be done by assigning them to the earliest available time slots at the work center.
y
15. (a) Backward scheduling is calculated from earliest start time forward
Backward scheduling starts from due date of the order and works backwards. Jobs are assigned the
nl
latest time slots and as a job is finished, the material is immediately sent to the next workstation for
process. Thus, work-in-process inventory is reduced. Backward scheduling is done for goods and
O
services whose demand can be forecast or anticipated beforehand.
16. (b) Shortest processing time

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Here, jobs are processed in the shortest time. Under this rule, jobs with shorter processing times
get completed earlier than jobs with longer processing time. This rule ensures that minimum
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number of jobs are left for processing.
17. (a) Appointment system

BS
Appointment systems are used to control customer flow at the individual level. The system works
only when the service is provided to a single individual or few individuals at a time. Reservation
system is used to provide service to a large number of individuals at a time. Routing explains the
sequence of operations and processes to be followed to produce a particular product.
rI
18. (d) i and iii

Gantt charts provide ease and clarity in communicating important job information, but they do not
Fo
take into account hurdles like production breakdown and human performance. They are useful
only when the number of work centers is limited, job times are long, and job routings are short.
19. (b) i and ii

Selection of the scheduling method depends mainly on production volume and the nature of the
operation. While scheduling is done, it is assumed that required inventory is already present in
store so that a stock-out situation does not arise and hinder the production process.
223
20. (a) Job operations

Job operations are used to produce goods and services on the basis of customer orders while
repetitive operations, also known as continuous operations, are used to mass produce goods and
services. Labor intensive operations involve using a large number of workers to produce high
volumes. In general, service operations are done on the first in-first serve principle.
21. (a) i and ii
Gantt charts are simple bar charts used to schedule any kind of operation. Workload charts and
09
scheduling charts are two types of Gantt charts. X-chart and R-chart are used in quality control.
22. (d) Cannot be determined
20
For a 3 machine and n job problem, Johnson’s sequencing rule is applicable only when one of the
following two conditions are satisfied: (i) Smallest time on Machine A should be greater than or
equal to greatest time on Machine B or (ii) Smallest time on Machine C should be greater than or
equal to greatest time on Machine B. In this problem, both conditions are not satisfied. Hence,
of
Johnson’s sequencing rule cannot be applied for determining the optimum sequence.
23. (c) A set of logically related tasks performed to achieve a defined business outcome
s
According to Davenport and Short, a business process is a set of logically related tasks performed
as
to achieve a defined business outcome
24. (a) Gaps that can be eliminated with minimal programming
Cl
Gaps that can be eliminated with minimal programming fall under the purview of project teams
and they can take corrective action to fill those gaps. However, gaps that require extensive rework
and gaps that cannot be handled by the system are dealt with by the steering committee.
y
25. (a) Performance
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A product’s primary operating characteristics relates to its basic performance.

26. (a) Unrealistic expectations from employees about the benefits of ERP
O
Communication should not overstate or understate the functionalities of the system. Overstating
functionalities would raise employees’ expectations unrealistically, while understating them might
leave employees unprepared for the changes required for ERP implementation.
se
27. (b) Decision-making

Four key drivers of supply chain performance are inventory, transportation, facilities and
U
information. They help in overall decision making in the supply chain management.
28. (c) Alignment
BS
Alignment here refers to the matching of corporate and business unit goals. It also includes
consistency in processes, actions, and decisions across business units to support the supply chain
management processes.
rI
29. (a) Evaluation of performance of processes, programs, and systems

Periodic review involves measurement of performance at periodic intervals. It focuses on
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evaluation of performance of processes, programs, and systems periodically and contributes to

continuous improvement. The basic objective of the customer-supplier focus is to prepare an
organization’s processes to understand and react to customer requirements fast. Decision-making
is covered by the participation/involvement enabler and process design is covered by the design
enabler.
30. (b) Increase in cycle time
Under ESCM, cycle time is actually reduced. Other advantages of ESCM include increase in cost
savings, reduction in inventory levels, and reduction in procurement costs.
224
Part B
31. (a) Participation/involvement

Participation/involvement is an SCM enabler, which discusses the participation of all stakeholders
of the organization in the decision-making process. The knowledge of employees and suppliers
should also be considered while arriving at decisions. This makes the decision- making process
more effective.
In a demand chain, every member should monitor consumer preferences. Due to growth in
09
technologies like the Internet, consumers have begun to use multiple channels to procure goods
and services. Due to marketing practices like direct marketing, tele-marketing, etc, consumers are
now interacting with different entities in the purchasing process. So, every member of the demand
20
chain, whether they design, manufacture, market, sell, or transport a specific product, needs to
monitor consumer needs and wants.
of
Just-in-time manufacturing focuses on continuous improvement in all processes, and maintains
consistent performance (in terms of quality) in operations. JIT manufacturing does not focus on
producing large volumes of output, but on reducing inventory levels as well as wastage in
production facilities while making products.
s
as
34. (d) Steady and continuous demand for material
Firms practicing JIT enjoy certain advantages. The inventory is reduced to almost zero, reducing
Cl
the maintenance costs of inventory. Long-term relationship with suppliers enables firms to get the
required materials just-in-time for production. The cycle time also comes down. The long-term
relationship also reduces the otherwise considerable amount of paperwork and provides steady
supply of materials. Steady and continuous demand for the material is an advantage for suppliers
y
of the firm but not for the firm implementing JIT.
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35. (c) ii, iii, and iv

While reduced lead times, achieving uniform loads and reduced cycle inventory are advantages,
O
increased set-up frequency is a disadvantage. Due to maintenance of small lot sizes, purchase
orders should be placed frequently and inventory should be regularly replenished.
se
36. (d) Reduced speed of production

Grouping of machinery into cells reduces material movement and the need for material handling
U
equipment, which in turn cuts overall the materials handling costs. This will lead to speedy
production and quicker deliveries.
BS
37. (b) Large lot sizes

Firms that follow JIT type of manufacturing system maintain inventory in the smallest possible lot
sizes. This is required as small lot sizes reduce cycle inventory (the excess of inventory, above the
safety stock, that is carried between two orders), cut lead times and also help in achieving a
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uniform workload. JIT manufacturing systems follow uniform workstation loads where material is
fed to the workstation uniformly and uniform output is produced across different workstations.
Besides, these firms have flexible facilities and quick and economic set-ups.
Fo
38. (a) Complex equipment design and non-standardized replacement parts

Simple design equipment and standardized replacement parts make the work of preventive
maintenance easier, while complex designs delay maintenance. Non-standardized parts can
increase delays in terms of procurement and usage.
39. (d) Meters of cloth produced
While options (a), (b), and (c) are examples of inputs, option (d) is an example of output.
225
40. (d) Perceived quality

Perceived quality is directly related to the reputation of the firm that manufactures the product.
Total information about the various quality aspects of a product is usually not available, especially
when it is a new product. So, customers rely heavily on the firm’s reputation and past performance
of its products when attaching a value to its new products.
41. (c) After the commencement of irreversible processes

It is not possible to inspect products that are in the middle of an irreversible process. To improve
09
the efficiency of inspections they should be carried out: after operations most likely to produce
faulty items, before costly operations commence, before operations that can mask defects, when
the finished product is ready for delivery, and before undertaking assembly operations that cannot
20
be undone.
42. (a) i/p, ii/q, iii/r, iv/s
of
X-Chart illustrates the central tendency of inspected samples. R-Charts show the variability of the
process. A process is said to be in control when both accuracy (mean) and precision are in control.
P-Chart is employed to find proportion of defective items in a selected sample. C-Chart is used to
illustrate the total number of defects in an item when it may have more than one defect.
s
as
43. (d) Inspection labor costs
The first three options are costs of undetected faults while the last is an inspection cost.
Cl
44. (a) X-chart
X-chart and R-chart come under control charts for variables. X-chart illustrates the central
tendency of inspected samples while R-chart (range chart) shows process variability.
y
45. (b) To improve the control of tasks

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The facilities management function is outsourced to focus on core competencies, reduce costs,
improve the efficiency and quality of tasks. Loss of control is one of the costs associated with
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outsourcing.
46. (c) Periodic maintenance

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Periodic maintenance implies servicing equipment at regular intervals of time or at regular usage
intervals. The given case falls under the latter.
U
47. (c) i and iii

Remedial maintenance is also called corrective or breakdown maintenance.
BS
48. (b) Adult stage

In the adult or useful life stage, failure rate is constant, and to some extent, predictable. Proper
maintenance of equipment can ensure longevity of this stage. Most causes of failure during this
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stage are attributed to external causes or accidents, for example, a mistake by an operator or usage
of improper materials.
Fo
49. (a) i and iii

Taking up preventive maintenance activities over and above the required number of times can
cause delays in production and increase maintenance costs. Down time of machines will rise,
leading to stalling of work, and decrease in productivity.
50. (a) Early failure stage

The early failure stage is characterized by more equipment failure. This can be due to faulty design
or improper installation. This stage is also called as burn-in stage.
226
Part B
51. (c) Slack time

Slack time refers to the amount of time by which an activity can be delayed beyond its earliest start
time without extending the project duration, provided that the activity and other activities take their
estimated durations. It is a measure for determining the criticality of an activity.
52. (c) i/q, ii/s, iii/p, iv/r

Computer Numeric Controlled (CNC) machines can perform a variety of tasks based on the
09
instructions fed to the onboard computer. Computer Integrated Manufacturing (CIM) systems
integrate design, manufacture and control functions. Flexible Manufacturing System (FMS) is a
flexible production system capable of producing different types of products. Artificial intelligence
20
(AI) allows computer systems with capabilities of reasoning and decision making.
53. (c) Institutional impediment

Impediments to globalization can be economic, managerial, or institutional. Some institutional
of
impediments are: tariffs and duties which may limit benefits achieved by economy of scale in
production, quantitative quotas and other similar restrictions, preferential procurement from local
organizations by government and quasi-government entities, governmental pressure to use locally
s
produced components or insistence on local R&D, preferential tax treatment and labor policies and
corporate laws, tax laws or other policies of the local government.
54. (d) Intelligent robots
as
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Intelligent robots are capable of perceiving environmental conditions of the workplace through
tactile or visual perception (or both) and can make necessary and suitable decisions by using the
on-board computers they are equipped with.
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55. (a) Vendor authorization card and conveyance authorization card
nl
A dual Kanban system uses two Kanbans and they include Vendor authorization card and
Conveyance authorization card.
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56. (b) Develop a consolidated materials requirement plan for products using same type of
materials
Manufacturing firms that produce multiple products and have common material requirements for
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two or more products must consolidate the individual material requirements and form a single
master material requirements plan for the two products.
U
57. (b) Order releases

Order release documents empower the purchase department to procure a specific quantity of
inventory items required within a specified period.
BS
58. (d) Work-in-process inventory is very low

In forward scheduling, production activities start when job orders are received and scheduling is
done from the date of production. Start and finish times of each job is determined by assigning the
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earliest possible time slots for the jobs. As a result, jobs get finished before the requirement at their
respective work stations. They get accumulated as work-in-process inventory. Hence, work-in-
process inventory is high in forward scheduling.
Fo
59. (a) i and ii

Gantt charts are simple bar charts used to schedule any kind of operation. Workload charts and
scheduling charts are two types of Gantt charts. X-chart and R-chart are used in quality control.
60. (d) i, ii, iii, iv
As typical implementation of a ERP project exceeds one year, experts suggest having several
‘deliverables’ or milestones. A single milestone leads to problems in ERP implementation.
227
61. (d) i, iii, iv

Business Process Reengineering (BPR) advocates the complete overhaul of the existing systems
and processes in the entire organization (irrespective of departments) in order to increase
productivity, reduce costs and improve business practices.
62. (d) Conformance

Conformance is defined as that dimension of quality which is measured as the degree to which a
product is manufactured to the pre-specified specifications.
09
63. (b) Reduction in product design time
Reduction in product design time is not a benefit of JIT purchasing. This mainly focuses on
20
inventory management-related issues leading to increase responsiveness and supply flexibility. It
also improves administrative efficiency.
64. (d) Quality can be enhanced through collective efforts of all departments
of
It is not just the firm’s quality control department that is responsible for ensuring product quality.
High quality can be attained only through the collective and coordinated efforts of all departments
of the firm.
s
as
65. (b) Products above the AOQL are not shipped to customers
Products are rejected if the AOQ crosses the AOQL. They are retained and not sent to customers.
Cl
Such rejected lots of products would be inspected completely and defects removed.
66. (b) Products are retained and inspected

Products are rejected if the AOQ crosses the AOQL. They are retained and not sent to the
y
customers. Such rejected lots of products would be inspected 100% and the defects removed
nl
completely.
67. (a) Probability of rejecting the lot at AQL

O
In any sampling plan, there is always a risk that a good lot will be rejected - this is the producer’s
risk. This is termed as Type I error.
se
68. (c) Reprographics

Reprographics refers to reproducing or duplicating printed material using various kinds of printing
U
presses and high speed copiers.
69. (b) Production costs would decrease

BS
The probable consequences of poor maintenance of facilities are: productivity of the firm would be
affected and reduced, production costs would rise, safety would be hit, leading to more accidents,
and output quality would come down.
rI
70. (a) Mechanical maintenance

Mechanical maintenance includes maintenance of the firm's machines and equipment such as
furnaces, boilers, compressors, material handling equipment, transport vehicles, etc. Civil
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maintenance includes building construction and maintenance; maintenance of service facilities like
water filters, air conditioning, plumbing, etc. Electrical maintenance covers electrical and
electronic equipment such as generators, motors, electrical installations, lighting, telephone
systems, etc. Preventive maintenance is a type of maintenance operation.
71. (c) i and iii

Remedial maintenance is also called corrective or breakdown maintenance.
228
Part B
72. (d) Equipment manufacturers dispatch equipment only after the burn-in period is over
The bathtub curve may not always be an effective indicator of the failure rate of equipment. For
example, present day manufacturers dispatch equipment only after the ‘burn in’ period is over, so
that they can identify and rectify problems before it reaches end-users. So, the initial stage of the
bathtub curve will not be applicable to such machines.
73. (a) Reducing the workforce

To crash a project, one needs to utilize the services of additional resources and/or maximize the
09
services of existing resources. Hence instead of reducing the workforce, it can be increased to
reduce the expected time of project completion.
20
74. (b)
Time-cost ratio helps in identifying those activities which are to be crashed in a project. The
of
activities with smallest time-cost ratio on the critical path have to be identified and crashed.
75. (b) Critical path method
s
Networking methods/techniques are used in project management in scheduling operations such
as
that wastage in terms of time and material is minimized. Popular networking methods include
Critical Path Method (CPM) and Project Evaluation and Review Technique (PERT).
Cl
76. (c) FMS
FMS (flexible manufacturing system) is a form of flexible automation in which several machine
tools are linked to a material-handling system. A central computer controls all aspects of the
system which is effective in producing different items that have similar processing requirements.
y
nl
77. (d) i and iv

Robotics is an automation technology that has received considerable attention since 1960s. It is
O
based on two related technologies: numerical control and teleoperators. Numerical control (NC) is
a method of controlling machines by means of numbers coded on punched paper, tape or other
media. Teleoperator is a mechanical manipulator that is controlled by an individual from a remote
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location.
78. (a) Selection of markets

U
When a global organization decides to select a new market (which can be a new country or a new
area in an existing country), it has to analyze the macro-economic factors, market information,
capabilities of the subsidiary with which it is tying up, etc.
BS
79. (c) Institutional impediment

Rules and regulations framed by different national governments hinder the process of
rI
globalization. They come under institutional impediments. Preferential procurement from local
organizations by government and quasi-government entities is one type of rules and regulations
that might be framed by governments to hinder the expansion of global corporations.
Fo
80. (c) 20 units

4 units of D are required to produce 1 unit of A. It implies that 20 units (5 x 4) of D will be
required to produce 5 units of A.
81. (b) 60 units

3 units of E are required to produce 1unit of B and 4 units of B are required to produce 1 unit of A.
Hence to produce 5units of A, 60 units (3 x 4 x 5) of E are required.
229
82. (d) 6 weeks

Lead time of E is 2 weeks, but lead time of D is 4 weeks. Hence, at the end of 4 weeks, products B
( 3 weeks), and product C & D ( 4 weeks) will be ready to produce A. It takes 2 weeks to produce
A using B, C and D. Therefore the total time to produce A will be 6 weeks (4 + 2).
83. (a) 2000 units
BEP (in number of units) = fixed cost / (unit price – variable cost per unit)
09
= 50000 / (150-125)
= 2000 units
20
84. (c)
D C B E A
From the given data, least processing time on the photocopying machine is for job D and on the
of
binding machine for job A. Using Johnson’s sequencing rules, place job D at the beginning and job
A at the end of the sequence. Repeat the process with the remaining jobs. The optimum sequence
is D-C-B-E-A.
s
85. (d) 335 minutes
as
Job Photocopying Machine Binding Machine
Sequence Time in Processing Time out
Cl Time in Processing Time out
Time Time
D 0 30 30 30 30 60
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C 30 50 80 80 45 125
B 80 100 180 180 60 240
nl
E 180 90 270 270 40 310

O
A 270 40 310 310 25 335
The total elapsed time is 335 minutes.

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86. (b) 25 minutes

Total idle time on photocopying machine is the difference between the time when the last job in
U
the optimum sequence is completed on binding machine and the time when the last job is
completed on photocopying machine.
BS
= 335 – 310 = 25 minutes

87. (a) 135 minutes
Total idle time on binding machine = (Time taken by photocopying machine to complete the first
rI
job in the optimum sequence) + Σ [(time when kth job starts on binding machine) – (time when
(k-1)th job finishes on binding machine)].
= 30 + [(80-60) + (180-125) + (270-240) + (310-310)]
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= 30 + [20 + 55 + 30]
= 135 minutes
88. (c) 0.220
Fraction defective for each sample is given by
p = c /n (number of defectives /sample size)
230
Part B
Fraction defective for Sample 1 = 4/20 = 0.2

Fraction defective for Sample 2 = 3/20 = 0.15
Similarly, calculate the fraction defective for all five samples as given in the following table.
Sample Fraction Defective

1 0.20
09
2 0.15
3 0.30
4 0.25
20
5 0.20
Total 1.10
Average = 1.10/5 = 0.220
of
89. (b) 0.4978
P (1 − P )
s
UCL= P +3
as
n
where P is the average proportion of defects, and n the number of samples.
Cl
0.22(1 − 0.22)
UCL = 0.22 + 3
20
y
UCL = 0.22 + 3(0.0926)

nl
UCL = 0.4978
O
90. (c) 0
P (1 − P )
se
LCL= P - 3
n
U
where P is the average proportion of defects and n the number of samples.

0.22(1 − 0.22)
BS
LCL = 0.22 - 3
20
LCL = 0.22 - 3 (0.0926)
LCL = - 0.0578
rI
As negative value cannot be considered while counting defects, LCL is assumed to be zero.
Fo
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Operation Management Workbook For Students

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Operations Management

Icfai Center for Management Research

Ref. No. OM WB – 03 2K7 35

Multiple Choice Questions 3-67

Multiple Choice – Answers and Explanations 71-136

Paper I – Model Test 1 139-148

Paper II – Model Test 2 197-207

Paper II – Model Test 1 – Answers and Explanations 211-221

Paper II – Model Test 2 – Answers and Explanations 222-231

Part One: Introduction to Operations Management

Selecting a Forecasting Method

Monitoring and Controlling Forecasts

Part Two: Design of Facilities and Jobs

4. ALLOCATING RESOURCES TO STRATEGIC ALTERNATIVES

Allocation Decisions in Operations Strategy

Formulation of Linear Programming Problems

5. DESIGN OF PRODUCTION PROCESSES

Major Factors Affecting Process Design Decisions

Uses of Setting Work Standards

Part Three: Operations Planning and Control

Overview of Planning Activities

Strategies for Developing Aggregate Plans

Implementing Aggregate Plans and Master Schedules

10. FUNDAMENTALS OF INVENTORY CONTROL

12. MATERIALS MANAGEMENT

15. ENTERPRISE RESOURCE PLANNING

Business Modeling for ERP

16. SUPPLY CHAIN MANAGEMENT

Principles of Supply Chain Management

Recent Trends in Maintenance

Necessity of Project Management

Part Four: Technology and Globalization in Operations Management

21. TRENDS IN OPERATIONS TECHNOLOGY

22. GLOBALIZATION AND OPERATIONS MANAGEMENT

Sources of Global Competitive Advantage

Chapters Title Multiple Choice Questions

Chapter 1 Operations Management – An Overview 1-16

Chapter 16 Supply Chain Management 426-443

Chapter 18 Productivity and Quality Management 461-493

Chapter 20 Project Management 530-557

Chapter 21 Trends in Operations Technology 558-582

understanding of the basic concepts discussed in the textbook. Answering these

them to real-life business situations.

applications then? d. Coordinating

b. Reducing clerical costs take can be broadly classified into various

a. Seven years or more

controlling etc, in production systems. The c. Two to four months

10. Operations Management deals with which

5. Decisions on production and process 11. Operations Management involves the

a. Planning a. Rise in quality of products

c. Costs and quality

production by Ford 19. Which of the following is not categorized

14. Who was involved in the Hawthorne a. Administrative costs

c. Elton Mayo 20. Who generally develops corporate

perform tasks that are repetitive or

22. Rainbow Electronics manufactures a a. Designing the production system

autonomous business units with

called? relationship between the role of operations

b. Strategic business units increases as the product moves up the

decreases as the product moves up the

this kind of production process? moves up the lifecycle

c. Lower costs a. A prototype is used to test the technical

term planning while operational planning a. 5.0 years