Section 1

Each question from 1 to 10 carries 0.5 marks. First two wrong answers do not
carry any penalty. For each wrong selection thereafter, 1/4th of a mark is deducted
as a penalty.

1. Which of the following aggregate planning strategies is NOT an example of

demand side options to meet fluctuations in demand?
A. During low demand periods, apparel manufacturers attract customers by
providing deep discounts
B. In periods of high demand, General Motors opts to increase production rates by
either going for overtime or by increasing the number of shifts
C. Home appliances manufacturer Usha tries to balance demand fluctuations it
experiences by producing both Home cooling and heating solutions
D. Honda showrooms regularly backorders requests for Activa due to demand for
the products especially in festive season
E. Cinepolis once used a strategy to price all the shows on Wednesday at flat 100
rupees.
2. Which of the following statements is/are FALSE about Statistical Process
control?
(i) An 𝑥̅ chart indicates that a gain or loss of uniformity has occurred in
dispersion of a production process.
(ii) A p-chart is appropriate to plot the number of typographic errors per page of
text.
(iii) Mistakes stemming from workers’ inadequate training represent an
assignable cause of variation.
A. (iii) only
B. (ii) only
C. (i) and (ii)
D. (ii) and (iii)
E. None of these

3. Which of the following input is directly or indirectly not required to make a

Material Requirements Plan (MRP)?
A. Demand forecasts
B. Inventory on hand
C. Proportion of production subcontracted
D. Bottleneck cycle time
E. All of the above are required to prepare an MRP
4. Jars of pickles are sampled and weighed. Sample measures are plotted on
control charts. The ideal weight should be precisely 11 oz. Which type of
chart(s) would you recommend?
A. p-chart
B. c-chart
C. both an x-bar chart and an R-chart
D. an x-bar chart, but not an R-chart
E. both a p-chart and a c-chart
5. Which of the following statements is/are FALSE?
(i) MRP is generally applicable to items with dependent demand.
(ii) The quantity required of a dependent demand item is computed from the
demand for the final products in which the item is used.
(iii) Gross material requirements always take into account the amount of
inventory on hand.
A. (i) and (ii)
B. (iii) only
C. (i) and (iii)
D. (ii) only
E. None of these

6. Using the cut-and-try (or trial and error) method for aggregate operations
planning, we can determine the production requirement in units of product. If
the beginning inventory is 100 units, the demand forecast is 1,200 units, and the
necessary safety stock is 20 percent of the demand forecast, which of the
following is the production requirement (in units)?
A. 1200 B. 1100 C. 1440 D. 1340 E. 1540
7. From an operational perspective, yield or revenue management is least effective
under which of the following scenarios/examples?
A. Airlines like British Airways where passengers can choose to fly in Executive,
Business, Premier Economy and Economy classes.
B. Sales for the tickets of cricket match between India and South Africa in WC19,
England have already begun
C. Hotel rooms in tourist locations like Seychelles
D. Products for which we can safely use chase strategy
E. Products for which we can safely use level strategy

8. A plot below the lower control limit on the range chart:

(i) should be ignored since lower variation is desirable
(ii) may be an indication that process variation has decreased
(iii) should be investigated for assignable cause
A. I and II
B. I and III
C. II and III
D. II only
E. I, II, and III

9. Which of the following is NOT TRUE about the four step MRP process?
A. To successfully explode, we need information about bill of materials and
product structure
B. The Net step involves analyzing master production schedule and current on
hand inventory to arrive at the net inventory
C. For the lot sizing rule, firms use lot for lot when holding costs are high
compared to ordering cost
D. Offsetting is required even when the time gap between order placement and
order receipt is zero
E. Choose this option if all the above statements are true
 10. The Master production schedule of a mobile phone calls for 50 units of
product A. There are currently 20 units of Product A on hand. 8 units of
Product B are required to make one Product A. There are 40 units of product B
available in inventory. The gross requirements for Product A and net
requirements for Product B are
A. 30, 120 B. 50, 120 C. 50, 100 D. 30, 100 E. 30, 200
Section 2
Each question from 11 to 20 carries 1 mark. First (two) wrong answer does not
carry any penalty. For each wrong selection thereafter, 1/2 of a mark is deducted
as a penalty.
11. This is the age of fake babas, quacks and superficial gurus. Some of them are
also masquerading as Quality gurus. However, as you are trained adequately
in the quality aspects, it won’t be tough for you to identify who is really a
genuine quality guru and who isn’t. Please go through the statements of some
of the quality gurus on control charts and find out who is probably the most
genuine among them.
Guru 1: Firms should only worry about identifying defects. Control charts
helps them only to estimate the proportion of output that is acceptable
Guru 2: Firms should be most worried about labor utilization. Control charts
primary job is to provide meaningful work for quality inspectors
Guru 3: Control charts help firms distinguish between random variations in
output from assignable variations in output from the processes.
Guru 4: The main reason why firms draw control charts is to separate items
that within tolerances/specifications from those which are not.

A. Guru 1 B. Guru 2 C. Guru 3 D. Guru 4 E. None of these

12. Alfred Hitchcock is considered as one of the most meticulous and obsessive
directors of all time. He is very particular about the process of film-making
and is considered to have even coined the word “self-plagiarism in style”.
Given that he was an ardent follower of process, let’s assume that he would
have used control charts as well to see how to perfect the film making process.
On the sets of one of his most talked about movie “Psycho”, Hitchcock was
analyzing the different takes of a particular scene. He enumerated the different
elements of the scene such as lighting condition, the dialogue delivery, the
movement of protagonists etc. This formed the sample size for him. One of his
assistants reported to him just the upper control limit and lower control limit of
the proportions of defectives of that process (scene) as 0.13 and 0.07. Can you
help him identify the average proportion of defectives in this scene and the
corresponding sample size respectively?
A. 0.13, 0.07
B. 0.07, 0.13
C. 0.01, 900
D. 0.1, 900
E. 0.01, 90
13. Which of the following statements is/are TRUE about chase and demand
strategy?
(i) All fruit vendors use chase strategy as it is costly for them to maintain constant
inventory levels with varying levels of demand
(ii) Sugar refineries use a level strategy as varying production rates or having idle
time is very costly for the firm
(iii) NGOs use chase strategy as hiring and firing costs for the firm are very low.
(iv) Service organizations can never use chase strategy as subcontracting and
varying workforce size is extremely costly
A. (i) only
B. (i) and (ii)
C. (i), (ii) and (iii)
D. (i), (iii) and (iv)
E. (i), (ii) and (iv)

14. Recollect the Indian startup which was selling Ganga maati (sand from the
banks of river Ganga) to Silicon Valley based on the idea by Swami
Nithyananda from the last quiz. Each sand bag weighed an average of 25 kgs,
with a standard deviation of 0.64 kg. Given the superconscious state of the
startup, they were very meticulous about process control. They randomly
selected 100 orders of 16 bags each to study the process. What should be the
upper control limit and lower control limit that have to be chosen by this
startup respectively (in kgs)?
A. 23.08, 26.92 B. 24.52, 25.48 C. 24.966, 25.033 D.24.986, 25.013
E. None of these

15. Based on the information below, classify the items as dependent demand (DD)
and independent demand (ID) items.
Product P – Product P is a cupcake maintained by a retailer who buys it from
a supplier at a wholesale price of Rs. 15 and sells it customers at a retail price
of Rs. 20. The retailer has a buyback contract with the supplier for a buyback
value of Rs. 12.
Product Q – Product Q’s gross requirements are always calculated based on
the Planned order release of Product X.
Product R and Product T – Product R and Product T are in two different
BOMs. While Product R’s Planned order releases are in the weeks 6, 7 and 9
(from the MRP table), Product T’s planned order releases are in the weeks 1, 2
and 4.
A. DD – Product P; ID – Product R; Cannot be determined – Q and T
B. DD – Product R; ID – Product P; Cannot be determined – Q and T
C. DD – Products Q and R; ID – Products P and T
D. DD – Products P and T; ID – Products Q and R
E. DD – Product Q; ID – Product P; Cannot be determined – R and T
 16. Which of the following statements is/are FALSE about Bullwhip effect?
(i) In an automobile supply chain, the variation in inventory level is likely to be
more for Auto component manufacturers than the variation for auto resellers.
(ii) Given the expertise that firms in the supply chain have in their industry, each
firm in the supply chain should use their own data to forecast the demand
accurately
(iii) FMCG firms like P&G and Unilever request only aggregate data such as
quarterly level data from retailers to reduce the variability in inventory levels in
the supply chain
A. (i) only
B. (iii) only
C. (ii) and (iii)
D. (i), (ii) and (iii)
E. None of these

17. Hardik Patel (one of your super seniors) was doing his summer internship at a
firm called Libratherm. One of the projects he was working on was to create a
procurement plan based on multiple versions of MRP table (for a product
structure) that was given by one of his supervisors at the shop floor. As the
MRP tables were made on paper and the handwriting of the supervisor was not
legible, he was unable to identify easily the lot-sizing rule that was used.
However, the costs associated with each lot sizing rule were calculated and
clearly mentioned at the bottom. Which of the following lot sizing rule is most
likely going to be a Lot for Lot (L4L) rule?
Lot sizing Rule X Lot sizing Rule Y Lot sizing Rule Z
Carrying 200 Carrying 0 Carrying 1000
cost cost cost
Ordering 400 Ordering 800 Ordering 200
cost cost cost

A. Lot sizing rule X

B. Lot sizing rule Y
C. Lot sizing rule Z
D. Cannot be determined
E. None of the above

18. In the above question, which of the following lot sizing rules is most likely
going to be Least Unit cost rule?
A. Lot sizing rule X
B. Lot sizing rule Y
C. Lot sizing rule Z
D. Cannot be determined
E. None of the above
19. Which of the following does not represent cost of quality?
B. Inspired by its major customers, TAFE sends select shop floor workers to
Japan every year to get training in Toyota Production System fundamentals
C. Quality Assurance Engineers in Manhattan Associates spend hours, stress
testing their Warehouse Management Solution products before Go-live at the
Customer location.
D. A Properly Groomed Pupil (PGP) had to spend two extra hours redoing his
case submission as he forgot to consider a valuable piece of information
during his analysis
E. Audi recalled 9000 cars last Friday in US after 50 cars for possible fuel leaks
F. To commemorate Indian team’s successful test cricket season, Nike is
planning to release a range of high-quality all white apparel.

20. Refer to the Bill of Materials for Product A given below in Figure 1. If there is
no existing inventory, how many units of D, E and G must be purchased to
produce 6 units of item A?
A. 18, 36 and 6 units respectively
B. 24, 36 and 6 units respectively
C. 6, 24 and 36 units respectively
D. 6, 18 and 36 units respectively
E. None of these

Figure 1: BOM for product A

Section 3:
Please answer the following questions (21 to 23) independently by using the space
provided below the questions to show the steps used to arrive at the answer.
21. Cummins manufactures cylinder liners for the marine and truck engine
markets. They wish to understand the levels of process control and capability
for the critical characteristics of the liners. One such characteristic is bore
diameter. The firm has a tolerance for this dimension of 33.0mm  0.80mm.
The quality manager has measured 20 subgroups of 5 (each subgroup
consisting of consecutively produced parts) in order to create a pair of
statistical process control charts. The table below shows the averages and
ranges for the subgroups.
a) Draw and appropriately annotate an appropriate pair of control charts for the data
(control limit calculation constants are available below for reference). Ensure
that all calculations used are shown and explained (3.5 marks)
b) Briefly discuss your observations of the patterns of the chart. (1.5 marks)

Subgroup 1 2 3 4 5 6 7 8 9 10
Average 33.2 32.5 33.8 33.8 33.1 32.8 33.3 34.0 34.7 33.4
Range 1.6 1.3 1.2 1.3 1.5 1.1 1.4 1.5 1.2 1.2
Subgroup 11 12 13 14 15 16 17 18 19 20
Average 33.2 33.7 33.0 34.1 33.2 32.9 33.2 33.5 33.0 32.8
Range 1.3 1.1 1.7 1.2 1.3 1.8 1.4 1.5 1.0 1.3

Control chart constants

n 2 3 4 5 6 7 8 9 10 11 12 13
A2 1.880 1.023 0.729 0.577 0.483 0.419 0.373 0.337 0.308 0.285 0.266 0.249
D3 0.000 0.000 0.000 0.000 0.000 0.076 0.136 0.184 0.223 0.256 0.283 0.307
D4 3.267 2.575 2.282 2.114 2.004 1.924 1.864 1.816 1.777 1.744 1.717 1.693

n 14 15 16 17 18 19 20 21 22 23 24 25
A2 0.235 0.223 0.212 0.203 0.194 0.187 0.180 0.173 0.167 0.162 0.157 0.153
D3 0.328 0.347 0.363 0.378 0.391 0.404 0.415 0.425 0.435 0.443 0.452 0.459
D4 1.672 1.653 1.637 1.622 1.609 1.596 1.585 1.575 1.565 1.557 1.548 1.541
 22. The bill of materials of a product A is shown below. If 100 units of A are required in
Week 10, develop the MRP schedule, specifying when items are to be ordered and
received. There are currently no units of inventory on-hand. (5 marks)

Level
A 0

B(2) C(4) 1

D(3) E(2) F(2) E(2) 2

Period: 1 2 3 4 5 6 7 8 9 10

Item: A Gross requirements

Lead Time = 1 week Scheduled receipts

Safety Stock = NIL Projected available balance

Lot sizing Rule = L4L Net requirements

On Hand Inventory = 0 Planned order receipts

Planned order releases

Gross requirements
Item: B
Scheduled receipts
Lead Time = 2 weeks
Projected available balance
Safety Stock = NIL
Net requirements
Lot sizing Rule = L4L
Planned order receipts
On Hand Inventory = 0
Planned order releases

Gross requirements
Item: C
Scheduled receipts
Lead Time = 2 weeks
Projected available balance
Safety Stock = NIL
Net requirements
Lot sizing Rule = L4L
Planned order receipts
On Hand Inventory = 0
Planned order releases
 Item: D Gross requirements

Lead Time = 3 weeks Scheduled receipts

Safety Stock = NIL Projected available balance

Lot sizing Rule = L4L Net requirements

On Hand Inventory = 0 Planned order receipts

Planned order releases

Gross requirements
Item: E
Scheduled receipts
Lead Time = 2 weeks
Projected available balance
Safety Stock = NIL
Net requirements
Lot sizing Rule = L4L
Planned order receipts
On Hand Inventory = 0
Planned order releases

Gross requirements
Item: F
Scheduled receipts
Lead Time = 3 weeks
Projected available balance
Safety Stock = NIL
Net requirements
Lot sizing Rule = L4L
Planned order receipts
On Hand Inventory = 0
Planned order releases

23. Recollect the beer game that we played in the class. The supply chain is now
revamped to have only a manufacturer and a retailer and the rest of setting is
similar to the beer game we played. There are 4 units of beer on hand and 8
units in transit/in production (4 with one-week delay and 4 with a two-week
delay) for both the manufacturer and the retailer. The lead time for the retailer
is 2 weeks and the production delay for the manufacturer is also 2 weeks. This
time around you have perfect information about the consumer demand for the
first four weeks. They are 4, 6, 8 and 8 units respectively. Assuming that the
manufacturer always maintains 100% fill rate, identify the orders that retailer
has to place in each week that minimizes the total cost of holding and backlog
for the retailer at the end of 4 weeks. Also, indicate the on-hand inventory of
the retailer at the end of each week. (5 marks)

More information regarding the game is provided below:

There are only two costs involved in this simplified version of a logistics
supply chain: inventory holding costs (Rs.100/case/week) and backorder costs
(Rs.200/case/week). The Game is played in a five-step cycle
1. Receive your incoming inventory from your supplier (or the brewery),
and advance shipping delays.
2. Receive orders from your customer.
3. Fill (ship) orders: If your inventory is insufficient, fill as many orders
as you can and add the remaining unfilled order amount to your backlog.
You may not ship more beer than what is ordered from you plus what is in
your backlog.
4. Count and record status -- current inventory and backlog. You will
never have cases in both current inventory and backlog.
5. Place orders.
6. Go to Step 1.
SPACE FOR ADDITIONAL/ROUGH WORK