1

Question Paper
Operations Management-I (MB241): April 2008
• Answer all 83 questions.
• Marks are indicated against each question.
Total Marks : 100
1.
Decisions like identiIying the manpower requirement. determining the inventory levels. vendor
identiIication etc. are taken by the operations managers to IulIill the requirements Ior a period oI one or
two years. These decisions can be classiIied under
(a) Investment decisions
(b) Tactical decisions
(c) Operational decisions
(d) Capital decisions
(e) Strategic decisions.
( 1 mark)
<Answer>
2.
Achieving the production targets to meet the market demand is important Ior any organization.
Productivity can be improved by splitting and dividing the iob into sub tasks and assigning them to
workers based on their skills and capabilities. This concept is known as
(a) Hawthorne studies
(b) ScientiIic motion study oI iobs
(c) Division oI labor
(d) Scheduling techniques oI employees
(e) Moving assembly line.
( 1 mark)
<Answer>
3.
Mr. Daniel. M.D oI ABC Limited. delivered his speech. 'To gain signiIicant market share. we should
enter into the market beIore the competitors do that. We need to introduce the product into the market
very quickly. I hope it is good enough to adopt the strategy oI¨. Which oI the
Iollowing is the strategy that Mr. Daniel is suggesting Ior the company?
(a) Convenience and location
(b) Product variety and Iacility size
(c) Shorter product cycle
(d) Quality
(e) Market diIIerentiation.
( 1 mark)
<Answer>
4.
Goel Corporation is an electronics manuIacturing company. Because oI the growing competition. the
company wants to produce new and diIIerent electronic goods in each product cycle. The operations
manager is required to select a strategy which helps the company to become competitive. Choose the
best strategy to achieve the above results.
(a) Shorter product cycle
(b) Production Ilexibility
(c) Low cost process
(d) Quality
(e) Convenience and Location.
( 1 mark)
<Answer>
5.
The showroom manager oI Sona Ltd.. explained in the meeting. 'It is not enough to have one or two.
We need to display more models. more designs and more varieties. We need to Iill our showroom. Then
only we can attract the customer. And we need to adopt an appropriate strategy such
as¨. What is the best strategy Ior Sona Ltd.. to become competitive as explained by the
showroom manager?
(a) Shorter product cycle
(b) Production Ilexibility
(c) Convenience and location
(d) Product variety and Iacility size
(e) Market expansion and penetration.
( 1 mark)
<Answer>

2
6.
Large industries use boilers. The boilers we see in one company cannot be seen in another company.
Their design. structure. material combination and purpose vary Irom user to user. Kalpana Steel &
Alloys Ltd.. is planning to produce boilers. Which oI the Iollowing is a suitable operations strategy Ior
Kalpana Steel & Alloys Ltd.?
(a) Product Iocused system
(b) Process Iocused system
(c) Customized product design
(d) Standard product design
(e) High technology implementation.
( 1 mark)
<Answer>
7.
Customization is an expensive process. Expenses in customization can be reduced by adopting modern
manuIacturing methods. which use a base Iramework that is common to all versions oI product.
Attributes and Ieatures are to be added or deleted to the product based on the speciIic requirements.
This concept is known as
(a) Product development
(b) Prototype development
(c) PlatIorm development
(d) Process development
(e) Design development.
( 1 mark)
<Answer>
8.
Organizations need to Iorecast the demand Ior their products and services so that all relevant plans can
be developed accordingly. Weighted moving average is one oI the methods used in Iorecasting. which
is calculated using the Iormula
n
t 1 t t
t 1
WMA C A
+
=
=

.where
t
C
is the weight given to period t`. Which oI the Iollowing statements is true?
(a) The sum oI weights is equal to 0.1
(b) The sum oI weights is equal to 1.0
(c) The sum oI weights is equal to 0.01
(d) The sum oI weights is equal to 10.00
(e) The sum oI weights is equal to 100.0.
( 1 mark)
<Answer>
9.
Demand Iorecasting is central to the planning and control Iunctions oI the organization. Forecasting
demand accurately is diIIicult. but necessary iI an organization wants to achieve a proIitable return on
its investment. Exponential smoothing is one oI the methods used Ior Iorecasting. Which oI the
Iollowing statements is true regarding exponential smoothing method?
(a) More weightage is assigned to past data
(b) More weightage is assigned to recent data
(c) Weights decrease exponentially Irom past to recent
(d) Weights increase exponentially Irom recent to past
(e) Weights are assigned based on the order oI the smoothing equation.
( 1 mark)
<Answer>
10.
M/s Eagle Finance Corporation Ltd.. wants to Iorecast the demand Ior its services. For this purpose. the
organization selected a Iorecasting model. In the assessment oI the Iorecasting model. the tracking
signal was obtained as 0.392. What is the perIormance oI the Iorecasting model?
(a) Forecasting model is underestimating
(b) Forecasting model is overestimating
(c) Forecasting model is accurate
(d) Forecasting model is not appropriate
(e) Forecasting model is optimum.
( 1 mark)
<Answer>
11.

Demand Forecast 37 28 21 21 31 24
( 2 marks)
<Answer>


3
Actual Demand 27 23 21 31 33 25
From the above data. calculate the tracking signal.
(a) -0.128
(b) -0.228
(c) -0.328
(d) -0.428
(e) -0.528.

12.
The actual sale Ior July is 10.000 units. and the Iorecasted sale is 9.000 units. Estimate the sales Ior the
month oI August by exponential smoothing method. iI the smoothing constant is 0.23
(a) 5.230 units
(b) 6.230 units
(c) 7.230 units
(d) 8.230 units
(e) 9.230 units.
( 2 marks)
<Answer>
13.

Month Demand
(Units)
°Weight
Jan
Feb
Mar
Apr
May
220
228
222
226
220
0.10
0.15
0.20
0.25
0.30
From the above data. Iorecast the demand Ior the month oI June by using weighted moving average
method.
(a) 213 units
(b) 223 units
(c) 233 units
(d) 243 units
(e) 253 units.
( 2 marks)
<Answer>
14.
Abdullah Electronics Ltd.. produces certain electronic goods. the demand Ior which is dynamic or
unstable. II you were to Iorecast the demand Ior the next season by using exponential smoothing. which
oI the Iollowing statements indicates the right selection oI smoothing coeIIicient?
(a) A low alpha value is preIerable
(b) A high alpha value is preIerable
(c) Alpha value is assigned based on the beta value
(d) Alpha value is provided based on the value oI D
t-1

(e) Alpha value is given based on the value oI F
t-1
.
( 1 mark)
<Answer>
15.
The Iollowing data belongs to XYZ Co.
Demand Forecast 45 40 30 40 45 45
Actual Demand 35 35 30 50 47 46
The Mean Square Error is
(a) 30.63
(b) 32.43
(c) 34.13
(d) 36.23
(e) 38.33.
( 2 marks)
<Answer>
16.
The Iollowing data belongs to Kalyani & Co.
Demand Forecast 19 17 15 18 13 17
Actual Demand 18 12 15 19 15 18
( 2 marks)
<Answer>

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Actual Demand 18 12 15 19 15 18
From the above data. calculate Mean Absolute Percentage Error.
(a) 9
(b) 11
(c) 12
(d) 14
(e) 16.

17.
In transportation problem. m` represents the number oI origins and n` represents the number oI destinations.
The solution is Ieasible iI the number oI occupied cells in the solution is equal to
(a) m ¹ n
(b) m - n
(c) m ¹ n - 1
(d) m ¹ n ¹ 1
(e) m × n.
( 1 mark)
<Answer>
18.
The initial Ieasible solution Ior a transportation problem is given below.

Using the stepping stone method. Iind out the cell that can be assigned a new value to obtain optimum
solution.
(a) Cell (F1.W1)
(b) Cell (F2.W1)
(c) Cell (F1.W2)
(d) Cell (F3.W2)
(e) Cell (F2.W3).
( 2 marks)
<Answer>
19.
The weight oI a bangle is 5g. It contains plastic and metal which costs Rs.5 and Rs.8 per g respectively.
The bangle contains not more than 4 g oI plastic and not less than 2 g oI metal.
II the decision variables are
1
x
and
2
x
. choose the correct set oI constraints.
(a)

2
x 4; ≥

1
x 2 ≤

(b)

1 2
x x 4 + ≤
;
1 2
x x 2 + ≥

(c)

1 2
x x 5 + ≥
;
1 2
x x 8 + ≤

(d)

1 2
x x 5 + ≤
;
1 2
x x 4 + ≥

(e)

1
x 4; ≤

2
x 2 ≥
.
( 1 mark)
<Answer>
20.
Which oI the Iollowing statements is true regarding Key column in simplex method?
(a) Key column is the column where the index value is zero
(b) Key column is the column where the index value is minimum
(c) Key column is the column where the index value is maximum
(d) Key column is the column where the basic variable is minimum
(e) Key column is the column where the solution variable is maximum.
( 1 mark)
<Answer>


5
21.
Mr. James. the Ioreman oI Mona Ltd.. Iixed his workmen activities Ior the coming week. Which oI the
Iollowing category oI decisions does it come under?
(a) Strategic decisions
(b) Tactical decisions
(c) Operational decisions
(d) Planning decisions
(e) Controlling decisions.
( 1 mark)
<Answer>
22.
Which oI the Iollowing statement(s) is/are true regarding shop system`. proposed by F.W.Taylor?
I. Standardized work methods and work Ilow should be Iollowed.
II. Standard output time is to be set Ior each task.
III. Each worker should be rotated on diIIerent iobs in order to acquire multi skills.
(a) Only (I) above
(b) Only (II) above
(c) Only (III) above
(d) Both (I) and (II) above
(e) All (I). (II) and (III) above.
( 1 mark)
<Answer>
23.
Now-a-days. diIIerent types oI computer systems are available to help operations managers. Royal
Automobiles Ltd.. has recently computerized its operations. In their system. a group oI automated
machines are controlled by a central computer. The system is capable oI producing a large quantity oI
products that have similar processing requirements. Which oI the Iollowing systems is being reIerred to
in the present context?
(a) Computer Aided Design
(b) Computer Aided ManuIacturing
(c) Flexible ManuIacturing System
(d) Automated Storage and Retrieval System
(e) Computer Integrated ManuIacturing.
( 1 mark)
<Answer>
24.
New product development always starts with idea generation. Once the idea is generated. that needs to
be tested and veriIied Ior the possibilities oI converting it into commercial production. Which oI the
Iollowing studies tests the product both technically and economically?
(a) Market study
(b) Feasibility study
(c) Study oI consumer behavior
(d) Hawthorne study
(e) ScientiIic motion study.
( 1 mark)
<Answer>
25.
The initial simplex table is given below.
i
C

700 400 0 0 0
B
C


Basic variables
Solution variables 1
X

2
X

1
S

2
S

3
S

Ratio
0 1
S

400 3 2 1 0 0 400/3÷133.3
0 2
S

300 2 1 0 1 0 300/2÷150
0 3
S

500 5 1 0 0 1 500/5÷100
i
Z

0 0 0 0 0
i i
(C Z ) −

700 400 0 0 0
The values oI the revised key row are given by
(a) 133.3. 1. 2/3. 1/3. 0. 0
(b) 150. 1. 1/2. 0. 1/2. 0
(c) 100. 1. 1/5. 0. 0. 1/5
(d) 400. 1. 1/5. 0. 0. 1/5
(e) 700. 1. 2/3. 1/3. 0. 0. ( 2 marks)
<Answer>

6

26.

For the above transportation table.
(a) Row penalty values are 8. 0. 8 and column penalty values are 10. 8. 4
(b) Row penalty values are 6. 4. 2 and column penalty values are 2. 8. 2
(c) Row penalty values are 2. 6. 4 and column penalty values are 2. 8. 4
(d) Row penalty values are 8. 0. 2 and column penalty values are 8. 8. 4
(e) Row penalty values are 2. 4. 6 and column penalty values are 8. 0. 2.
( 2 marks)
<Answer>
27.
The MD oI the Funnel Corp. Ltd.. was worried about the increasing cost oI components. And he was
also not happy with the quality oI the components. Mr. David. the operations manager convinced the
MD Ior producing components in-house. The concept in the above situation reIers to
(a) Modernization and expansion
(b) Horizontal integration
(c) Forward integration
(d) Backward integration
(e) Cellular manuIacturing.
( 1 mark)
<Answer>
28.
XYZ Ltd.. is a manuIacturer oI electronic items like transistors. tape recorders. video games etc. These
products can be made in batches. Because oI the growing competition. the company wants to produce
new and diIIerent electronic goods in each batch. Which oI the Iollowing is the proper process design
Ior the company?
(a) Cellular manuIacturing
(b) Group technology
(c) Process Iocused
(d) Process manuIacturing
(e) Discrete unit manuIacturing.
( 1 mark)
<Answer>
29.
A work centre is a group oI machines to work on products which are similar in shape and processing
requirements. Work centers are used in
(a) Discrete unit manuIacturing system
(b) Process manuIacturing system
(c) Process Iocused manuIacturing system
(d) Group technology manuIacturing system
(e) Product Iocused manuIacturing system.
( 1 mark)
<Answer>
30.
Which oI the Iollowing statements is/are not true regarding economic analysis oI diIIerent production
systems?
I. In product Iocused production system. variable costs are higher than the other systems.
II. In iob shop production system. comparatively higher Iixed costs are required.
III. In cellular manuIacturing system. Iixed costs and variable costs lie between product Iocused ( 1 mark)
<Answer>


7
production system and process Iocused production system.
(a) Only (I) above
(b) Only (II) above
(c) Only (III) above
(d) Both (I) and (II) above
(e) All (I). (II) and (III) above.

31.
Managers generally use assembly charts to redesign. update and evaluate their production processes.
Which oI the Iollowing statement(s) is/are true regarding assembly charts?
I. Operations and inspections are indicated in these charts.
II. Operation delays and transportation are indicated in these charts.
III. Various steps oI operation and their Irequency is indicated in these charts.
(a) Only (I) above
(b) Only (II) above
(c) Only (III) above
(d) Both (I) and (II) above
(e) All (I). (II) and (III) above.
( 1 mark)
<Answer>
32.
The Iollowing picture represents the cost volume relationship Ior location A and location B.


Scale on X- axis: - 1 cm ÷ 10.000 units
Y- axis: 1 cm ÷ Rs. 5 lakh
Which oI the Iollowing statements are true with respect to the above diagram?
I. For 50.000 units oI sales. location A is preIerable.
II. For 50.000 units oI sales. location B is preIerable.
III. For 80.000 units oI sales. location A is preIerable.
IV. For 70.000 units oI sales. location A is preIerable.
V. For 70.000 units oI sales. location B is preIerable.
(a) Both (II) and (III) above
(b) Both (II) and (V) above
(c) Both (III) and (IV) above
(d) Both (III) and (V) above
(e) (I). (III) and (V) above.
( 1 mark)
<Answer>
33.
Companies use diIIerent types oI layouts which are suitable to their production activity. Process layout
is one oI them. Which oI the Iollowing statements is not true regarding process layout?
(a) Production requires more time
(b) More Iloor space is required
(c) Sometimes there will be accumulation oI work at diIIerent units
(d) In case oI breakdown oI one machine. the work transIer to another machine is not possible
( 1 mark)
<Answer>

8
(d) In case oI breakdown oI one machine. the work transIer to another machine is not possible
(e) Better utilization oI men and machines is possible.

34.
Managers use diIIerent models Ior developing a process layout. Load distance model is one oI them.
Which oI the Iollowing statement(s) is/are true regarding load distance model?
I. This model uses templates to develop product and Iixed position layouts.
II. It is used to minimize the material Ilow.
III. In this model. generally the load is not Iixed.
IV. In this model. computerized relative allocation oI Iacilities technique is used.
V. In this model. generally the load is Iixed.
(a) Only (I) above
(b) Only (IV) above
(c) Both (II) and (V) above
(d) Both (III) and (IV) above
(e) (I). (II) and (IV) above.
( 1 mark)
<Answer>
35.
Line balancing is a part oI assembly line study. Which oI the Iollowing statements is not true regarding
line balancing?
(a) Line balancing mainly ensures that each workstation gets equal amount oI time approximately.
(b) The total amount oI work is divided into diIIerent tasks.
(c) The cycle time is determined by the minimum time required at any workstation.
(d) The workIlow is slow at bottleneck.
(e) The tasks are assigned to workstations such that the work is perIormed in a Ieasible sequence.
( 1 mark)
<Answer>
36.
A production line consists oI Iour workstations. The total time required to complete all the work is 3
minutes and the cycle time is 30.56 sec. Calculate the eIIiciency oI the production line.
(a) 4.47
(b) 3.47
(c) 2.47
(d) 1.47
(e) 0.47.
( 2 marks)
<Answer>
37.
Manoi Bearings Ltd wanted to set up a new plant Ior manuIacturing automobile bearings. The
management identiIied Orissa. Bihar and Madhya Pradesh to set up the plant. The Iixed cost per year
and the variable cost per unit at each oI the three locations are given below.
Location

Fixed Cost
(Rs.)
Variable Cost
(Rs.)
Orissa 50.000 300
Bihar 75.000 250
Madhya Pradesh 1.00.000 200
The product is expected to be sold at Rs. 500 and the company hopes to sell 300 units per year. Which
oI the Iollowing statements is true?
(a) Orissa is most proIitable location and the likely proIit is Rs.10.000
(b) Bihar is most proIitable location and the likely proIit is Rs. 20.000
(c) Madhya Pradesh is most proIitable location and the likely proIit is Rs. 30.000
(d) Both Bihar and Madhya Pradesh are equally proIitable and the likely proIit is
Rs. 50.000
(e) Both Orissa and Bihar are equally proIitable and the likely proIit is Rs.40.000.
( 2 marks)
<Answer>
38.
Visakhapatnam Shipyard is planning to construct a ship which can accommodate nearly 50.000
passengers and with a luggage capacity oI 70.000 tons. Which oI the Iollowing is the best suited layout
Ior the given proiect?
(a) Process layout
(b) Product layout
( 1 mark)
<Answer>


9
(b) Product layout
(c) Fixed position layout
(d) Hybrid layout
(e) Cellular manuIacturing layout.

39.
Analytic Delphi Method helps managers take complex multi-location decisions. Which oI the Iollowing
statement(s) is/are true regarding Analytic Delphi Method?
I. In this method. a Iorecasting team Iorecasts the Iuture trends in the physical and social
environments.
II. The long term strategic goals and obiectives oI the organization are identiIied by the strategic
management team.
III. In this method. the coordinating team can consist oI either external consultants or internal
employees.
(a) Only (I) above
(b) Only (II) above
(c) Only (III) above
(d) Both (I) and (II) above
(e) All (I). (II) and (III) above.
( 1 mark)
<Answer>
40.
Location selection is a critical Iactor to be considered Ior setting up a company. Several models and
techniques are available that help managers make appropriate location decisions. Which oI the
Iollowing statements is not true regarding point rating method?
(a) Weightage is assigned to the Iactors in the Iorm oI points
(b) The site with more points is considered to be suitable Ior selection
(c) Tangible cost Iactors are assigned points
(d) The drawback oI this method is that a high score in any Iactor can overcome a low score in any
other Iactor
(e) Relative importance is provided Ior tangible cost Iactors when compared to others.
( 1 mark)
<Answer>
41.
Now-a-days. service organizations are expanding and gaining importance. Service organizations use
service Iacility layouts. Which oI the Iollowing statements is true regarding layout Ior a hospital?
(a) Hospital layouts are designed around customer receiving service Iunctions
(b) Hospital layouts are designed around technology. processing oI physical materials and
production eIIiciency
(c) Hospital layouts are developed by mixed-model line balancing
(d) Hospital layouts are based on process layout
(e) Hospital layouts are developed by computerized relative allocation oI Iacilities technique.
( 1 mark)
<Answer>
42.
The desired output Ior an assembly line is 480 units per day. The assembly line operates Ior a period oI
240 minutes a day. The process involves the tasks A. B. C. D. E and F. Task time Ior each task is given
in the Iollowing table. Find the theoretical minimum number oI workstations required to balance the
assembly line.
Task A B C D E F
Task time(Seconds) 32 15 12 16 9 24

(a) 2
(b) 3
(c) 4
(d) 5
(e) 6.
( 2 marks)
<Answer>
43.
The workers in the metal section oI Mohan Fabrication Ltd.. are not happy with the iob design. Their
concern is about materials. These materials are too heavy and proper liIting Iacilities are not there. In
this particular context. which oI the Iollowing statements is true?
(a) Job design is economically not Ieasible
(b) Job design is behaviorally not Ieasible
(c) Job design is technically not Ieasible
( 1 mark)
<Answer>

10
(c) Job design is technically not Ieasible
(d) Job content is not properly deIined
(e) Job description is not properly explained.

44.
Mr.David is asked to critically examine and deIine the complete iob requirements oI a scientist and
submit a report to the GM oI research wing. The report should contain : Duties. responsibilities. tasks.
lab. equipment. chemicals. solutions. electronic items. computers. qualiIication. experience. height.
weight. analytical skills. vision. training. health. drinking habits. heart rate. blood test. ECG. etc. In this
context. which oI the Iollowing is a correct statement?
(a) Mr. David needs to prepare iob speciIication
(b) Mr. David needs to prepare iob description
(c) Mr. David needs to prepare iob content
(d) Mr. David needs to do iob analysis
(e) Mr. David needs to do iob identiIication.
( 1 mark)
<Answer>
45.
Job title. iob identiIication. iob duties and iob speciIications are the basic components oI
(a) Job analysis
(b) Job content
(c) Job description
(d) Job recruitment
(e) Job training.
( 1 mark)
<Answer>
46.
Job design plays an important role in operations management. The operations manager is required to
design the iob properly. A good iob design helps the organization in achieving optimum beneIits. In this
regard. which oI the Iollowing statement(s) is/are true?
I. Job title describes the purpose and responsibilities oI the iob.
II. Job identiIication describes the skills and qualiIications.
III. Job speciIication describes the department. number oI workers. reporting authority. etc.
(a) Only (I) above
(b) Only (II) above
(c) Only (III) above
(d) Both (I) and (II) above
(e) All (I). (II) and (III) above.
( 1 mark)
<Answer>
47.
In a time study. the cycle time is 2.50 minutes; worker perIormance rating is 75 percent. average allowance
Ior the activity is 15 percent oI the normal time. Calculate the standard time.
(a) 1.21min
(b) 2.21min
(c) 3.21min
(d) 4.21min
(e) 5.21min.
( 2 marks)
<Answer>
48.
Specialization is one oI the important components in iob design. Specialization has its own merits and
demerits. Which oI the Iollowing statements is not an advantage oI specialization?
(a) Productivity increases because oI learning curve eIIect
(b) Supervision and training oI workers is easy
(c) Scope Ior higher degree oI mechanization and automation
(d) In the absence oI a worker. it is easy to shiIt the work to another worker
(e) Simple work instructions and easy production control.
( 1 mark)
<Answer>
49.
Human resource is a very important resource Ior an organization. Managing manpower is a challenging
iob Ior the operations manager. He/she needs to design the iob oI an employee in such a manner that it
beneIits both employee as well as the organization. Job content is the central aspect oI iob design.
Which oI the Iollowing statement(s) is/are true regarding iob content?
I. Job content speciIies the responsibilities.
( 1 mark)
<Answer>


11
II. Job content includes interaction with the people.
III. Job content states about the machinery and equipment.
(a) Only (I) above
(b) Only (II) above
(c) Only (III) above
(d) Both (I) and (II) above
(e) All (I). (II) and (III) above.

50.
Manpower and machine power are two important resources oI an organization. The operations manager
has to exercise proper care Ior optimal utilization oI both manpower and machine power. Work
measurement is a tool used to determine the quantity oI labor and number oI machines required Ior a
particular operation. Which oI the Iollowing statements is not a condition to be satisIied Ior work
measurement?
(a) The worker should be an average perIormer
(b) The selected iob should use diIIerent types oI tools and materials
(c) The iob should be measurable
(d) The iob should have a deIinite start time
(e) The iob should have a deIinite end time.
( 1 mark)
<Answer>
51.
In organizations. time study is used to measure the time required Ior a speciIic task. Time study consists
oI several steps. In which oI the Iollowing steps is the iob divided into a number oI elemental tasks?
(a) Observation
(b) Job identiIication and division
(c) Allowances
(d) Computing normal time
(e) Computing standard time.
( 1 mark)
<Answer>
52.
The work standard oI a iob is 5 minutes 30 seconds. Mr.Gopal completed the iob in 429 seconds. What
is the rating oI Mr.Gopal?
(a) 70 °
(b) 80 °
(c) 90 °
(d) 110 °
(e) 130 °.
( 2 marks)
<Answer>
53.
An operations manager has to manage both manpower and machine power in an eIIicient manner. He
needs to know the working times and idle times oI both men and machines. The percentage oI time an
employee or equipment was occupied or idle is known as
(a) PerIormance measurement
(b) Predetermined motion study
(c) Time study
(d) Ratio delay
(e) Historical Analysis.
( 1 mark)
<Answer>
54.
DiIIerent techniques are used Ior work measurement. Basic motions involved in each and every task are
considered in some oI these techniques. In which oI the Iollowing techniques. recorded standard time
Ior the basic motions is used?
(a) Time study
(b) Work sampling
(c) Historical analysis
(d) Employees selI timing
(e) Predetermined Motion Time Study.
( 1 mark)
<Answer>
55.
The Iollowing inIormation belongs to ABC Co.
June July Aug Sep
Opening stock (Units) 523 160 380 29
( 2 marks)
<Answer>

12
Opening stock (Units) 523 160 380 29
Demand (Units) 15.000 14.600 15.200 14.800
Working days 23 24 22 23
Productivity ÷ 39 units / day.
No oI workers ÷ 14
Shortage cost ÷ Rs.3 / unit.
Find shortage cost Ior the month oI August.
(a) Rs.8.424
(b) Rs.7.424
(c) Rs.6.424
(d) Rs.5.424
(e) Rs.4.424.

56.
Organizations need to produce output as per the market demand. But some organizations maintain a
constant rate oI production irrespective oI demand. This strategy is know as
(a) Varying workIorce size strategy
(b) Varying workIorce utilization strategy
(c) Varying size oI inventory strategy
(d) Back order strategy
(e) Subcontracting strategy.
( 1 mark)
<Answer>
57.
Organizations need to plan to satisIy the market demand. Plans are oI diIIerent types. The individual
products that are similar are combined together as a product group and considered in planning process.
This concept is known as
(a) Master planning
(b) Operations planning
(c) Capacity planning
(d) Production planning
(e) Aggregate planning.
( 1 mark)
<Answer>
58.
An aggregate plan is to be developed careIully by considering several variables. Operations managers
Iollow diIIerent strategies Ior developing aggregate plans. Which oI the Iollowing describes a pure
strategy Ior developing aggregate plans?
(a) A combination oI two or more pure planning strategies
(b) A strategy using only one pure planning strategy without using other pure planning strategies
(c) A strategy aiming purely on proIit maximization
(d) A strategy which IulIils organizational requirements
(e) A strategy developed purely by the top management.
( 1 mark)
<Answer>
59.
Human resource is considered the most important resource Ior an organization. EIIective operations
management requires organizations to adopt proper manpower strategies. In varying the utilization oI
the workIorce strategy
(a) WorkIorce remains constant
(b) WorkIorce increases when demand is more
(c) WorkIorce decreases when demand is less
(d) Material is increased when orders are more
(e) Material is reduced when orders are less.
( 1 mark)
<Answer>
60.
Change is the property oI nature and society. Business world has to observe changes in the environment
and needs to do necessary modiIications in planning and scheduling activities oI operations. This is a
continuous process and is dynamic in nature. This concept is known as
(a) Master requirements planning
(b) Rolling through time
(c) Capacity planning
(d) Master scheduling
( 1 mark)
<Answer>


13
(d) Master scheduling
(e) Aggregate planning.

61.
Multinational companies consist oI several units. It is a challenging iob Ior operations manager to
prepare production plan Ior all the units that leads to achievement oI production goals. Which oI the
Iollowing is a detailed plan that speciIies the exact timing Ior the production oI each unit?
(a) Business plan
(b) Aggregate plan
(c) Aggregate capacity plan
(d) Master production schedule
(e) Detailed capacity plan.
( 1 mark)
<Answer>
62.
There are many aggregate output planning models available to help managers. Which oI the Iollowing
models is used to evaluate the perIormance oI a speciIic plan based on the real world variables and
situations?
(a) Graphical method Ior aggregate output planning
(b) Linear programming model
(c) Linear decision rules
(d) Computer search model
(e) Computer simulation model.
( 1 mark)
<Answer>
63.
Demand is not stable in business. Fluctuations in demand and uncertainties in production activities
should be managed eIIectively by adopting suitable strategies. Which oI the Iollowing statements is
true regarding back order strategy?
(a) Past order commitments are IulIilled in the current period
(b) Current order commitments are IulIilled in the current period
(c) Current order commitments are IulIilled in the Iuture period
(d) Future order commitments are IulIilled in the current period
(e) Past order commitments are IulIilled in the Iuture period.
( 1 mark)
<Answer>
64.
The investment made in inventory does not provide immediate return. The company could have earned
iI the capital was invested in some other productive activity. Hence loss exists in holding inventory. The
cost associated with the loss is known as
(a) Inventory cost
(b) Holding cost
(c) Opportunity cost
(d) Handling cost
(e) Carrying cost.
( 1 mark)
<Answer>
65.
Costs trade oII Ior XYZ Company is given by the Iollowing diagram.
( 1 mark)
<Answer>

14

Which oI the Iollowing is the economic order quantity Ior the company?
(a) 20.000 units
(b) 25.000 units
(c) 30.000 units
(d) 35.000 units
(e) 40.000 units.

66.
Inadequate inventory hampers the production process. and also aIIects the sales. ThereIore Iirms
maintain adequate inventory by the reorder process. Which oI the Iollowing statements is true
regarding inventory level at the end oI each reorder cycle?
(a) Should ensure zero inventory levels at the end oI each reordering cycle
(b) Should ensure minimum inventory levels at the end oI each reordering cycle
(c) Should ensure maximum inventory levels at the end oI each reordering cycle
(d) Should ensure optimal inventory levels at the end oI each reordering cycle
(e) Should ensure 100° inventory levels at the end oI each reordering cycle.
( 1 mark)
<Answer>
67.
Kasturi & Brothers makes wooden tables Ior its customers. and stores them in the Iinished goods store.
Further inIormation is as Iollows. Sales per year ÷ 200 tables. setup cost ÷ Rs.1.200. carrying cost ÷ 20
percent per year. table cost ÷ Rs.25. How many tables should be made in a production lot to maintain
optimal inventory at Iinished goods store?
(a) 12
(b) 22
(c) 32
(d) 42
(e) 52.
( 2 marks)
<Answer>
68.
Organizations spend more than 50 percent oI the total cost on purchases. When it is economical.
material and components are produced in-house. The cost Ior setting up the production equipment is
known as setup cost. Setup cost is to be accounted in
(a) Purchase costs
(b) Carrying costs
(c) Holding costs
(d) Ordering costs
(e) Opportunity costs.
( 1 mark)
<Answer>
69.
One oI the key issues Iaced by operations managers is optimization oI inventory costs. Opportunity cost
is an element oI inventory cost structure. hence due consideration is required in inventory decisions. ( 1 mark)
<Answer>


15
Opportunity cost is included in
(a) Ordering cost
(b) Stock-out cost
(c) Carrying cost
(d) Setup cost
(e) Purchase cost.

70.
Venu Engineering Company is engaged in Iabrication work. The company is running in two shiIts per
day. The average consumption oI drilling bits is 23 per shiIt. It will take 12 working days to receive the
material Irom the supplier. Calculate the reorder point.
(a) 352
(b) 452
(c) 552
(d) 652
(e) 752.
( 2 marks)
<Answer>
71.
Which oI the Iollowing statements is not true in Fixed Order Period System?
(a) Order period is Iixed
(b) Order quantity varies
(c) Lower levels oI saIety stock are maintained
(d) The quantity ordered depends on the current inventory level
(e) The quantity ordered depends on the Iuture inventory requirement.
( 1 mark)
<Answer>
72.
Value analysis is an important responsibility oI purchasing manager. Which oI the Iollowing statements
is true regarding value analysis?
(a) Value analysis should be carried out by the purchase department
(b) Value analysis is to be done by the engineering department
(c) Value analysis is conducted by the production department
(d) Value analysis is the coordinated eIIort oI the engineering. production and purchase personnel
(e) Value analysis is to be perIormed by the suppliers.
( 1 mark)
<Answer>
73.
Make or Buy Analysis (Agni Gold Oils Ltd..)

On X axis. Iigures indicate demand in thousand units.
On Y axis. Iigures indicate cost in rupees thousand.
Make` decision is suitable Ior Agni Gold Oils Ltd.. iI the requirement is
(a) More than 10.000 units
(b) More than 20.000 units
(c) More than 30.000 units
(d) More than 40.000 units
( 1 mark)
<Answer>

16
(d) More than 40.000 units
(e) More than 50.000 units.

74.
Golkonda Aluminium Limited is engaged in manuIacturing aluminum wires and rods. The company
had been procuring packing boxes Irom vendors at a price oI Rs.70 per box. Now. the company is
planning to make them in-house. For installation oI production equipment. the Iixed cost is estimated to
be Rs.8.000. and variable cost is Rs.50 per box. What should be the demand oI the boxes Ior the
company to go Ior in-house production?
(a) More than 100 units
(b) More than 200 units
(c) More than 300 units
(d) More than 400 units
(e) More than 500 units.
( 2 marks)
<Answer>
75.
Purchasing is an important Iunction Ior an organization. Internet-based purchasing is expanding by iet
speed. Many small organizations combine their orders to get a volume discount Irom suppliers. The
concept oI getting discount beneIits by combining orders is known as
(a) Syndicated buying
(b) Bulk purchasing
(c) High discount orders
(d) Shipping order
(e) High volume purchase.
( 1 mark)
<Answer>
76.
An organization places orders at equal intervals oI time (T1÷T2÷T3). Which oI the Iollowing
statements is true iI the organization is Iollowing P-Inventory system?
(a) Order quantity during periods T1 and T2 is equal
(b) Order quantity during periods T1 and T3 is equal
(c) Order quantity during periods T1. T2 and T3 is equal
(d) Order quantity during periods T1. T2 and T3 is diIIerent
(e) Order quantity gradually increases Irom period T1 to T2. and then T2 toT3.
( 1 mark)
<Answer>
77.
Purchasing involves huge amount oI capital. It is a cost center. Hence control is required. The supplier
is authorized to dispatch material only aIter receiving legal documents Irom the buyer. that is known as
(a) Indent
(b) Quotation
(c) Material requisition
(d) Purchase order
(e) Bill oI material.
( 1 mark)
<Answer>
78.
The production supervisor oI XYZ Co. observed the lower bottom end curvature oI angular component
as being 42 degrees. But they are in need oI a component with 45 degrees curvature. He inIormed the
same to the production manager and also to the quality manager. They want to inIorm the matter to the
supplier. Which oI the Iollowing statements is true in the present context?
(a) The production supervisor has to communicate to the supplier
(b) The production manager has to communicate to the supplier
(c) The quality manager has to communicate to the supplier
(d) The purchase manager has to communicate to the supplier
(e) The Ioreman has to communicate to the supplier.
( 1 mark)
<Answer>
79.
The term purchasing` reIers to buying oI material or an item. This is not an easy task. Purchasing
activity involves several steps and procedures. Sending and receiving quotations is one oI the steps.
Which oI the Iollowing statements is true regarding quotations?
(a) Quotations are sent Irom user department to purchase department
(b) Quotations are sent Irom purchase department to potential suppliers
(c) Quotations are sent Irom potential suppliers to purchase department
(d) Quotations are sent Irom purchase department to indenting department
(e) Quotations are sent Irom indenting department to prospective suppliers.
( 1 mark)
<Answer>


17
(e) Quotations are sent Irom indenting department to prospective suppliers.

80.
Generally. marketing department preIers high levels oI inventories to enhance sales. Storing huge
inventory is risky and needs insurance. Insurance cost oI inventory is to be included in
(a) Purchase cost
(b) Carrying cost
(c) Stock out cost
(d) Ordering cost
(e) Setup cost.
( 1 mark)
<Answer>
81.
People are the primary resource Ior any organization. Managing workIorce is a complex and critical
iob. Job design makes a iob comIortable Ior an employee and productive Ior the employer. In this
context. iob design aims at
(a) Maximizing employee perIormance
(b) Optimizing employee perIormance
(c) Minimizing employee perIormance
(d) Assigning more responsibilities to employee
(e) Maximizing proIits.
( 1 mark)
<Answer>
82.
The Iollowing diagram explains the obiectives oI iob design.

In the diagram diIIerent areas are marked diIIerently and indicated by numbers Irom 1 to 7. Which area
among the Iollowing indicates desirable obiective oI Job Design?
(a) Area indicated by 1
(b) Area indicated by 3
(c) Area indicated by 2
(d) Area indicated by 7
(e) Areas indicated by 4. 5 and 6.
( 1 mark)
<Answer>
83.
Work measurement is the process oI identiIying time standards Ior a iob. Operations managers use past
data to set work standards. In this technique. in order to arrive at a normal time. the output oI a
particular worker or department. over a speciIied period oI time. is divided by the number oI work
hours expended. This technique is known as
(a) Motion study
(b) Employee selI-timing
(c) Historical Analysis
(d) Time study
(e) Predetermined Motion Time Study.
( 1 mark)
<Answer>


18
END OF QUESTION PAPER



19
Suggested Answers
Operations Management-I (MB241): April 2008
Ans Reason


1. B Tactical decisions are medium term in nature and have a time Irame oI one or two
years.
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2. C Division of labor:- Division oI iob into subtasks and assigning them to workers
based on their skills and capabilities is called division oI labor.
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3. C Shorter Product Cycle:- The Iirst company that enters a market usually gains a
signiIicant market share over subsequent entrants. The speed oI product introduction
is dependent on the Ilexibility and adaptability oI the production system. A company
which is more adaptable than its competitors can introduce product into the market
relatively quickly and will gain the advantage oI the untapped market demand and
will be able to gain signiIicant market share.
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4. B Flexible production system:-To produce new and diIIerent products in each
production cycle. the production Iacilities should be Ilexible. Rearrangement oI
equipment and reconIiguration oI product lines should be made easy and Iast. This
is possible by adopting a Ilexible production system.
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5. D Product variety and facility size:- Attracting the customer is more important Ior
business. In our question. the showroom manager wants to attract the customers by
providing more and more varieties on display. This concept Iocuses on the strategy
product variety and Iacility size`.
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6. C Customized product design:- Customer satisIaction is the key to the success oI
business. The products should be designed to satisIy the individual customer needs.
Customization oI product design is necessary when the customization is high and the
quantity to be produced is low. The products in our question are the examples Ior
customized products. They cannot be standardized and they cannot be produced in
large scale (mass production).
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7. C Platform development:- In platIorm development. Iirms use a base Iramework that
is common to all versions oI product. Attributes and Ieatures are to be added or
deleted to the product based on the speciIic requirements.
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8. B Weighted moving average:- Sometimes the Iorecaster wants to use moving average
but does not want all n` periods equally weighted because oI some trend or
seasonality in demand. There is no set rule Ior calculating weights. Experience and
trial and error methods are used to assign weights to a particular data. Each element
is weighted by a Iactor and the sum oI the weights should be equal to one.
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9. B Exponential smoothing method:- Exponential smoothing method is based on the
assumption that most recent data is a better indicator oI Iuture trends than the past
data. The demand Ior the most recent period is given maximum weightage. The
weights assigned to preceding periods decrease exponentially.
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10. B The perIormance oI a Iorecasting model can be monitored by Tracking signal. II a
Iorecast model makes accurate predictions then the tracking signal will be very close
to zero. II demand deviates widely Irom the Iorecast over a period oI time the
tracking signal deviates signiIicantly Irom zero. A positive tracking signal indicates
that the Iorecasts are lower than actual demand (underestimating). A negative
tracking signal indicates that the Iorecasts are higher than the actual demand
(overestimating).
Thus the perIormance oI a Iorecasting model is monitored over a period.
Tracking signal Forecasts Actual PerIormance oI the Iorecasting model
¹ ve Lower More Underestimating
- ve More Lower Overestimating
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11. D < T0P

20
Demand
Forecast
Actual
Demand
Deviation
Absolute
Deviation
37 27 -10 10
28 23 -5 5
21 21 0 0
21 31 10 10
31 33 2 2
24 25 1 1
-2 28
Sum oI deviations ÷ -2
Sum oI absolute deviation ÷ 28
Deviation is nothing but the Iorecasting error.
Running sum oI Iorecast errors (RSFE) is the sum oI deviations. hence RSFE ÷ -2
Mean absolute deviation ÷ Sum oI absolute deviations / no oI periods. ÷ 28/6 ÷ 4.67
Tracking signal ÷
RunningSumoI Forecast Errors
Mean Absolute Deviation
÷ -2 / 4.67 ÷ -0.428
12. E Demand Iorecast Ior period t` is derived Irom
1 1
(1 )

α α
− −
= + −

÷ Forecast Ior period t`
1


÷ Forecast Ior period t-1`
1


÷ Actual demand Ior period t-1`
Smoothing constant.
α
÷ 0.23
F ( Aug ) ÷ 0.23 ( 10.000) ¹ (1 0.23 ) (9000)
÷ 2300 ¹ 0.77 (9000)
÷ 2300 ¹ 6930
÷ 9230 units.
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13. B
Weighed Moving Average
t 1
(WMA )
+
÷
n
t t
t 1
C A
=


t 1
(WMA )
+
÷ Weighted Moving Average at the end oI the time period t
t
A
÷ Actual demand in time period t`
t
C
÷ Percentage weight given to time period t`
Hence. Weighted Moving Average Ior June
May
June t t
t Jan
(WMA ) C A
=
=


÷ (220 x 0.10) ¹ (228 x 0.15) ¹(222 x 0.20) ¹(226 x 0.25) ¹(220 x 0.30)
÷ 22¹34.2¹44.4¹56.5¹66
÷223.10 ÷ 223 Units.
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14. B The selection oI alpha is more critical. Alpha shows the eIIects oI past demand on
Iuture demand. A high alpha results in more weightage and a low alpha results in
relatively low weightage. New products Ior which demand is dynamic or unstable
are having more eIIect. more inIluence on the Iuture demand. A high alpha is more
appropriate Ior these products. II the demand is stable and believed to inIluence on
the Iuture demand. then a low alpha can be selected.
Product demand Alpha value
Dynamic & unstable High
Stable ( uniIorm ) Low
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21
15. E
F A
t t
(A F ) −

2
t t
(A F ) −

45
40
30
40
45
45
35
35
30
50
47
46
-10
-5
0
10
2
1
100
25
0
100
4
1
230
n ÷ 6

n
2
t t
t 1
1 1
MSE (A F ) 230 38.33
n 6
=
= − = × =


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16. C
t
F

t
A

t t
A F −

t t
A F −

t t
t
A F
A


19
17
15
18
13
17
18
12
15
19
15
18
-1
-5
0
1
2
1
1
5
0
1
2
1
0.06
0.42
0
0.05
0.13
0.06
0.72
n
t t
t 1
t
A F
A
=


÷0.72
MAPE ÷
n
t t
t 1
t
A F 100
n A
=



M A P E ÷ (100 / 6 ) × 0.72 ÷ 12
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17. C In transportation problem the Ieasible solution is obtained when the number oI
occupied cells is equal to m¹n-1.
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18. B For this. the closed paths to the unoccupied cells have to be Iound out and the net
cost change has to be calculated.
The closed path Ior (F1.W1) :
(F1.W1) (F1.W3)-(F3.W3) (F3.W1)
Net cost change ÷3-1.2¹2-1÷2.8 ( Positive . ThereIore nothing can be assigned to
this cell )
Closed path Ior (F1.W2) :
(F1.W2) (F1.W3)-(F2.W3) (F2.W2)
Net cost change ÷5-1.2¹6-4÷5.8 ( Positive . ThereIore nothing can be assigned to
this cell )
Closed path Ior (F2.W1) :
(F2.W1) (F2.W3)-(F3.W3) (F3.W1)
÷3-6¹2-1÷-2 ( Negative value . so some quantity can be assigned to this cell. The
quantity is equal to the minimum quantity oI the minus cells in this closed path.)
The minus cells are (F2.W3)÷3 and (F3.W1)÷8
ThereIore (F2.W1) should be assigned the value 3 Irom (F2.W3).
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19. E The bangles contain not more than 4 g oI plastic and not less than 2 g oI metal. As
per the decision variables x
1
is plastic and x
2
is metal respectively.
The Iirst constraint is Plastic. And the second constraint is metal.
Plastic ≤ 4 g
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22
Metal ≥ 2 g
Hence the constraints are
1
x 4 ≤
;
2
x 2 ≥

20. C
In simplex table. key column is the column where the index value (
i i
C Z −
) is
maximum.
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21. C Operational decisions: - The decisions related to day to day work. one week and
less than one week are known as Operational decisions. Operational decisions are
short time in nature and generally have a time Irame oI one week or less than one
week.
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22. D The Iollowing statements are true regarding shop system` proposed by Taylor.
• Standardized work methods and work Ilow should be Iollowed.
• Standard output time is to be set Ior each task.
• Each worker should be assigned a particular task based on his
skill.
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23. C Flexible Manufacturing System:- Flexible ManuIacturing System (FMS) is a set oI
automated machines. which is controlled by a central computer. FMS systems are
capable oI producing a large quantity oI products that have similar processing
requirements.
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24. B Feasibility study:- Feasibility study considers whether the idea generated is Ieasible
both technically and economically. Such studies test whether the production oI the
product is technically Ieasible and proIitable to produce and market.
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25. C X1 is the key column and S3 is the key row. 5 is the key element. All the values oI
the key row are divided by the key element to obtain the new values oI the revised
key row.
Hence 100. 1. 1/5. 0. 0. 1/5 are the new values.
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26. E The penalty Ior each row/column is the diIIerence between the least cost and the next
least cost oI that row/column.
Transportation Table
W1 W2 W3 Supply Penalty
F1 19 25 17 195 19 - 17 ÷2
F2 21 17 21 145 21 - 17 ÷ 4
F3 11 17 19 95 17 - 11 ÷ 6
Demand 170 120 145
Penalty 19 - 11 ÷ 8 17 - 17 ÷ 0 19 - 17 ÷2
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27. D Backward integration reIers to the ownership oI the production and distribution
chain backwards. i.e.. towards source oI supplies. It involves reducing the
dependency on suppliers and producing the spares and components to be used in the
production by themselves.
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28. E Discrete unit manuIacturing reIers to the production oI distinct products by using the
same production system. i.e.. aIter one batch the same system can be utilized Ior the
production oI diIIerent or new items oI the same type to be produced in the next
batch.
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29. D Work centers are used in group technology layout or group technology production
system. In this. the machines are grouped into work centers to work on products
similar in shape and processing requirements.
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23
30. D

Economic analysis: - Each type oI process design requires a diIIerent amount oI
Iunds Ior its implementation. because Iixed and variable costs are tending to diIIer
Irom one production system to another. The greater the investments in Iixed assets.
the greater are the Iixed costs. Variable costs diIIer with the volume oI production in
each period. Above Iigure illustrates the diIIerent costs associated with diIIerent
production volumes and types oI process design Ior a hypothetical product.
Product Focused System: - Product Iocused system is associated with high Iixed
cost because oI expensive machinery. automated controls and Iixed position material
handling equipment. The variable costs associated with this system are relatively
low as compared to the other types oI process design.
Process Focused 1ob Shop System: - In this system comparatively lower initial
investment in Iixed assets (low Iixed cost) is required. but there is steep growth in
variable costs when the production volume is increased.
Cellular Manufacturing: - The Iixed and variable costs oI a cellular manuIacturing
process design generally lie between the other two i.e. product Iocused system and
process Iocused iob shop system.
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31. A Assembly charts:- Assembly charts are used to obtain a general understanding oI
entire process involved in producing products which involve assembly oI a number
oI parts. They provide an overall macro view oI the movement oI components and
sub-assemblies in the process oI producing a Iinished product. In these charts it is
standard practice to indicate operations by circles and inspections by squares.
Statement I only relate to assembly charts.
Process charts: Process charts are similar to assembly charts. except that they include
extra inIormation like description oI the various steps involved. their Irequency oI
occurrence. the time Ior each step. the distance travelled and so on. Non-productive
activities like storage. delay and transport are indicated in the process charts.
Statements II and III relate to process charts.
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32. B For 50.000 units oI sales location B is preIerable because both Iixed cost and
variable costs are less than location A.
For 70.000 units oI sales the variable cost is equal Ior both location A and location B
. But the Iixed cost is less Ior location B. Hence location B is more suitable.
For 80.000 units oI sales the diIIerence in variable cost is minor. Hence the decision
can be made on the basis oI Iixed cost or on the net total cost. The Iixed cost Ior B is
much lower than A. thereIore location B is preIerable.
Hence statement 2 and 5 are true.
Cost analysis Ior location A and B
Sales Cost Location A Location B
Fixed Cost More Less
50.000 Variable cost More Less
70.000 Variable cost Equal Equal
80.000 Variable cost Less More
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33. D Option (d) is incorrect statement. One oI the advantages in process layout is that
breakdown oI equipment can easily be handled by transIerring work to another
machine because similar machines (Iunctions) are grouped at one place.
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34. C The load distance model is used to minimize the material movement. In this model.
the number oI loads moved and the distance between the process centers is
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considered. Here the load represents standard amount oI material. (It means Iixed
amount).
35. C In line balancing. the cycle time is determined by the maximum time required at any
work station.
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36. D
Number oI workstations (

) ÷ 4
Sum oI task times ( total time to complete the work ) ( T ) ÷ 3 minutes ÷ 3 x 60
seconds ÷ 180 sec
Cycle time (C) ÷ 30.56 sec.
EIIiciency oI the line ÷
a
T
N XC
÷
180
4 X30.56
÷
180
122.24
÷ 1.47
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37. A Expected Revenue per year ÷ 500 X 300 ÷ Rs. 1. 50.000
The Iollowing table gives the calculation oI likely proIit at the three centers. At
Orissa. the likely proIit is Rs. 10.000. at Bihar. there is no proIit. and at Madhya
Pradesh. there is a negative proIit oI Rs. 10.000. Hence Orissa is the most proIitable
location.
All Iigures are in rupees.

Fixed
Cost Variable Cost Total Cost ProIit
Orissa 50000 300 X 300 ÷ 90.000 1.40.000 1.50.000 - 1.40.000÷10.000
Bihar 75000 250 X 300 ÷ 75.000 1.50.000 1.50.000 - 1.50.000 ÷0
Madhya Pradesh 100000 200 X 300 ÷ 60. 000 1.60.000 1.50.000 - 1. 60.000 ÷ -10.000
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38. C Fixed position layout involves movement oI all men and machinery to the product
that remains stationary. For example. construction oI ship. rocket assembly. aircraIt
assembly. etc. are the products which are huge and remain stationary. Fixed position
layout is required Ior these products.
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39. E All statements are true regarding Analytic Delphi Method.
I. In this method. a Iorecasting team Iorecasts the Iuture trends in the physical and
social environments.
II. The long term strategic goals and obiectives oI the organization are identiIied
by the strategic management.
III. In this method. the coordinating team can consist oI either external consultants
or internal employees.
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40. C All statements are true except option (c).
Only intangible Iactors are assigned points.
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41. B The Iundamental diIIerence between a service Iacility and a manuIacturing Iacility is
that service Iacility exists to bring together the customer and the organization`s
services. There are two diIIerent types oI layouts oI service Iacilities based on the
degree oI customer contact. At one extreme is that layout which is totally designed
around customer receiving service Iunctions. and the other is that layout which is
designed around technology. processing oI physical materials and production
eIIiciency.
In banks. layouts are designed around customer receiving service Iunctions. They
give importance Ior customer convenience.
In hospitals. layouts are designed around technology. processing oI physical
materials and production eIIiciency. The primary Iocus in hospitals is on the medical
treatment which depends on the medical technology used such as surgery. radiology.
laboratory tests and patient treatment etc. So the layout is designed based on the
technology and processing.
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42. C The sum oI task times oI the process T ÷ (32 ¹ 15 ¹ 12 ¹ 16 ¹ 9 ¹ 24 ) ÷ 108 sec
Operation time per day ÷ 240 min ÷ 240 X 60 sec
Desired daily output ÷ 480 units
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Cycle time ÷
Operation time per day 240 X60
30
Output per day 480
= =
sec
Theoretical minimum number oI workstations required
t
SumoI task times oI the process (T) 108
N 3.6
Cycle time (C) 30
= = =

Workstations cannot exist in decimal. hence rounded up.
ThereIore. a minimum oI 4 workstations are required to balance the assembly line.
43. C The iob design should be technically Ieasible.
Technical Ieasibility considerations are
• Convenient work load
• Required machinery
• Required equipment
• Required training.
In our question. the workmen do not have proper liIting machines. Hence. the iob
design is not technically Ieasible.
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44. D Job analysis is the investigation oI the iob content and all other inIormation related to
iob content. Setting and deIining all requirements which is stated in the question is
part oI iob analysis.
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45. C Job title. Job identiIication. Job duties and iob speciIications are the basic
components oI iob description.
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46. A The Iollowing statements are true regarding iob design.
Job title describes the purpose and responsibilities.
Job speciIication describes the skills and qualiIications.
Job identiIication describes the department. number oI workers. reporting authority.
etc.
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47. B Average cycle time ÷ 2.50 minutes
PerIormance rating ÷ 75 ° ÷ 0.75
Normal time ÷ Average cycle time x perIormance rating
÷ 2.50 x 0.75 ÷ 1.875
Available Iraction ÷ 1-0.15÷0.85
Standard time ÷ Normal time / Available Iraction
÷ 1.875 / 0.85 ÷ 2.21 minutes.
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48. D In specialization. the worker becomes more skilled and eIIicient in a particular area.
He does not posses a variety oI skills. In the production process. the Ilexibility is
low. In the absence oI a worker. it is diIIicult to shiIt the work load to another
worker.
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49. E All statements are true regarding iob content.
Job content speciIies the responsibilities.
Job content includes interaction with the people.
Job content states about the machinery and equipment.
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50. B In work measurement the selected iob should be standardized. The iob should use
standard tools and materials. Then only it is possible to estimate time standard.
When the iob is using diIIerent tools and materials. diIIerent times will be observed.
and it is not possible to get time standard.
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51. B 1ob identification and division :- This is the Iirst step in time study. The iob is
divided into a convenient number oI elemental tasks. Elemental tasks should have
identiIiable break points. i.e. a speciIic starting point and a speciIic ending point. so

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that the time taken Ior the completion oI such tasks can be measured.
52. A Work standard ÷ 5 min 30 sec ÷ 300 sec ¹ 30 sec ÷ 330 sec
330 sec is rated as 100°
When a person takes more time. his perIormance decreases by the excess time taken.
II a person takes less time his perIormance increases more than 100° by the
diIIerence oI the time.
Time taken by Gopal ÷ 429 seconds
Excess time taken by Gopal ÷ 429-330÷99 sec
His perIormance decreases by (99/330) x 100 ÷ 30 °
ThereIore his perIormance ÷ 70 °

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53. D Ratio delay shows the percentage oI time an employee or equipment was occupied or
idle.
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54. E The basic movements are considered in Predetermined Motion Time Study. In this
technique. recorded standard time is used Ior the movements associated to individual
elements. And total time determines the time taken Ior the whole task.
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55. A Actual production ÷ (No. working days) × (No. oI workers) × (Productivity
per day)
÷ 22 × 14 × 39 ÷ 12012.
Closing stock ÷ Opening stock ¹ Production Demand
÷ 380 ¹ 12012 15200
÷ 12392 15200
÷ 2808 ( shortage )
Shortage ÷ 2808
Shortage cost ÷ 2808 × Rs.3 ÷ Rs.8424.
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56. C Varying size oI inventory: - Under this strategy an organization maintains a constant
workIorce and level oI production. Constant rate oI production is maintained during
all periods irrespective oI the demand. When the demand is low. then there will be
accumulation oI production. This excess production is utilized during the periods oI
high demand.
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57. E Aggregate planning: The aggregate planning is based on the meaningIul measure oI
output. This is easy Ior organizations with single product. but is quite diIIicult Ior
organizations producing several products. In such a case meaningIul measure can be
Iound by identiIying groups or Iamilies oI individual products. These products
although diIIerent Irom one another. share common production processes or
consume similar resources. In aggregate plan. these individual products are
combined together as a product group and product type.
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58. B Pure planning strategies: - Functions in demand and uncertainties in production
activities can be eIIectively managed by varying size and utilization oI the
workIorce. and the size oI the inventory and through backorders. subcontracts and
varying plant capacity. II only one oI these strategies is adopted without using
others. then the strategy is called pure strategy.
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59. A Varying the utilization oI the workIorce: - Under this strategy. the company
maintains stable workIorce and the utilization oI workIorce varies according to the
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maintains stable workIorce and the utilization oI workIorce varies according to the
demand. When the demand is high. workers work overtime to meet the high demand.
When the demand is low workers wok limited time to meet only the limited demand
resulting in idle working hours.
60. B Rolling through time: - During implementation. the Master Production Schedule
(Operational plans) is required to be reviewed and updated continuously to suit the
changing environment. This is the dynamic nature oI planning and scheduling
activities and is known as 'Rolling through time¨.
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61. D Master production schedule: - Master production schedule is a manuIacturing plan.
which breaks up planned total production oI the Iirm into groups oI products or
product lots. It is a detailed plan that speciIies the exact timing Ior the production oI
each unit.
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62. E Computer simulation model is used to evaluate the perIormance oI a speciIic plan.
based on real world variables and situations.
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63. C In back order strategy. current order commitments are IulIilled in the Iuture. < T0P
64. C Opportunity cost:- Opportunity cost is the loss due to losing an opportunity. II the
company invested the capital in some other productive activity. then the company
might have earned something. By investing in inventory. the company lost an
opportunity. This is known as opportunity cost.
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65. B

Economic order quantity is the quantity at which the total annual cost is minimum.
As per the given diagram. the total annual cost is minimum at 25.000 units.
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66. A Reorder point:- The calculation oI the reorder point should ensure that the inventory
level reaches zero at the end oI each reordering cycle. This is because a positive
inventory level at the end oI cycle results in an increase in average inventory and an
associated cost.
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67. B This is in house production. The number oI tables to be made in a lot is nothing but
the economic order quantity. So we need to Iind out the economic order quantity.
EOQ ÷
0
h
2C D
C

Where
0
C
is the Iixed cost per order or set up cost
D is the annual usage or demand
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h
C
is the carrying cost per unit time
Carrying cost per unit ÷ carrying rate × unit cost ÷ 20° × 25÷ Rs.5.
h
C
÷ (carrying cost per unit) × (average inventory) ÷5 × 200 ÷ Rs.1000
0
C
÷Rs.1200
EOQ ÷
2 1200 200
1000
× ×
÷
480
÷21.9 ≅ 22
68. D When the item is produced within the Iirm. there are costs associated with the set up
oI the production equipment Ior running the production. These may be ordering cost
Ior equipment. transportation. installation etc. These costs Iall under ordering cost
and accounted in ordering costs.
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69. C Carrying costs:- Carrying costs represent the cost incurred while inventories are
stored. Investment made in inventory does not provide immediate returns. The
organization might have earned iI the capital was invested in some other productive
activity. The loss or cost associated with missing a productive opportunity (or cost
oI capital) is known as opportunity cost.
Carrying costs include both storing cost and opportunity cost.
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70. C Reorder point ÷ Average demand per unit time × lead time
Average demand ÷ 23 per shiIt
Demand and lead time. both should be speciIied in the same units.
Lead time ÷ 12 working days ( each working day running in two shiIts
)
÷ 24 working shiIts

Reorder point ÷ Average Demand ×Lead Time ÷ 23 × 24÷552
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71. C In Iixed order period system. higher levels oI saIety stocks are required to tide over
any unexpected demand variations. Hence lower levels oI saIety stocks are not
suIIicient.
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72. D Value analysis is the coordinated eIIort oI engineering. production and purchase
personnel. None oI the department can perIorm it independently because technical
and economical Iactors are included.
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73. E From the graph. it can be observed that the break even point is 50.000 units.
For less than 50.000 units total buying cost is lower than total making cost.
For more than 50.000 units total making cost is lower than total buying cost.
Hence make` decision is suitable only when the demand is more than 50.000.
Best decision Quantity
Buy Less than 50.000
Make More than 50.000
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74. D Price ÷ Rs.70 per box ( Purchase price )
Fixed cost ÷ Rs.8000 ( Ior production )
Variable cost ÷ Rs.50 per unit
Assume the break even demand is Q.
Total purchase price ÷ unit price × quantity
÷ 70 × Q
Total production cost ÷ Fixed cost ¹ (Variable cost ×Demand)
÷ 8000 ¹ ( 50 ) Q
At break even point.
Total production cost ÷ Total purchase cost
8000 ¹ ( 50 ) Q ÷ 70 × Q
20 Q ÷ 8000
Q ÷
8000
20
÷ 400
II the demand is more than 400 boxes. then only it is economical Ior the company to
go Ior in-house production.
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75. A Syndicated buying: - In syndicated buying. small organizations combine their orders
to get a volume discount Irom suppliers. For example. IiIty small oil companies can
combine their requirements to get volume discounts otherwise available only to large
oil companies.
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76. D Fixed Order Period System:-In Iixed order period system. the order period is Iixed.
but the order quantity varies with the requirement. The orders are placed at equal
intervals oI time ( T1÷T2÷T3) and the quantity ordered during these periods is
diIIerent Irom one another.
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77. D Purchase Order:- Purchase order is the legal document that authorizes the supplier to
supply goods. It represents the buyer`s obligation to buy the material against
speciIied terms and conditions.
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78. D Purchase manager is the channel or interIace between the vendor and the indenting
department. Hence the communication has to pass through the purchase manager.
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79. C

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80. B Insurance cost belongs to carrying or holding cost.
Carrying (holding) cost :- Carrying cost includes opportunity cost (cost oI capital).
storage costs (rent. lighting. reIrigeration etc.). staIIing. equipment. maintenance.
insurance. taxes on godown. taxes on inventory. security. obsolescence (deterioration
costs like breakage. spoil. etc.)
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81. B Optimization:- PerIormance oI workmen is not iust being more productive.
PerIormance in a broad sense includes cost. quality. delivery and Ilexibility. which
are the main obiectives oI operations management. Job design concentrates on
improving the perIormance oI the workmen by considering the obiectives oI cost.
quality. delivery and Ilexibility. Overworked employees may become de motivated;
as a result. the quality oI their work may be aIIected. Hence iob design is not aiming
at maximization but optimization oI the workmen perIormance. Optimization
balances all obiectives oI the organization. Job design helps in optimization oI the
economic. social and technical variables.
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82. D Desirable obiective oI Job Design:- Job design obiective has to IulIill the technical.
economical and social requirements without conIlicting with each other. In the
diagram. the area indicating number 7 is the area where all the three variables are in
common.
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83. C Historical Analysis:- Using scientiIic methods Ior setting work standards is not
always economical Ior the organization. To reduce the costs oI work measurement.
operations managers use historical data. In this technique the output oI a particular
worker or department is. over a speciIied period oI time. divided by the number oI
work hours expended. to arrive at the normal time. This technique is known as
Historical Analysis.
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