Operations Management (OPMG)

Indian School of Business

Practice Problems

1. Since becoming the CEO, you have noticed that your mailbox is perennially full. On average,
about half of the emails in your inbox are “unimportant” emails (those from professional
industry associations, company-wide emails etc.) that are copied to you but don’t need your
response. The rest are “important” and need your personal response. You believe in clutter
free inbox, so you process every email that comes, either by simply moving it to a separate
folder or by responding to it and then moving it to a separate folder. Naturally you prioritize
processing “important” emails and as a result the time spent by “unimportant” emails in your
inbox is four times that spent by “important” emails. If you receive 15 total emails every hour
on average, how many of these are “important”?
A. 3
B. 5
C. 12
D. Cannot be determined

2. When a homeowner wants to sell his or her home, the property is typically posted on a regional
listing service. In a particular region, 60% of the new properties added to the listing service in
an average week are “houses”. The remaining 40% of new listings added are “condominiums”.
The average house listed on the service stays there for 4.5 weeks, before it is either sold or
the listing taken out for other reasons. The average condominium stays listed for 8.25 weeks.
What percent of active property listings on the service (i.e., properties posted on the listing
service but not yet removed) are condominiums?
A. 40
B. 45
C. 50
D. 55
(Q3–Q4) Mt. Kinley is a strategy consulting firm that divides its consultants into three classes:
associates, managers, and partners. The firm has been stable in size for the last 20 years with
about 200 associates, 60 managers, and 20 partners on average. The work environment at Mt.
Kinley is quite competitive with an “up or out” culture. After four years, an associate either
becomes a manager or is asked to leave the firm. Similarly, after six years, a manager either
becomes a partner or leaves the firm. Partners stay with the firm for another 10 years on
average before leaving to pursue other “life goals”. The firm recruits MBAs from top B-schools
as associates. No hires are made at the manager or partner level.
3. How many new MBA graduates does Mt. Kinley have to hire every year?
A. 200 graduates per year
B. 100 graduates per year
C. 50 graduates per year
D. 10 graduates per year

4. What % of MBA graduates hired by Mt. Kinley become partners?

A. 100%
B. 20%
C. 10%
D. 4%

5. After going through tough times, Rent-A-Dress has successfully pivoted its business model and
has scaled up to a demand of 150 rentals per day. They only serve the 10-day rental segment
and continue sending two dresses per rental to provide flexibility to their customers. They have
improved their internal processes so that it only takes 5 days to complete ALL steps needed
for a returned dress to be with a new customer again. They have also made changes to the
dresses they procure and the cleaning process so that the dresses now have a useful life of 150
days. What is the average number of new dresses that RAD needs to purchase each month?
(If none of the choices match your exact answer, pick the closest value.)
A. 9000
B. 900
C. 300
D. 30

6. (Q6–Q7) The X-ray scanner used at the airport security check can screen carry-on bags at
the rate of 12 per minute. Around 5% of the bags set off an alarm during this scan and have to
undergo an additional thorough check by a security officer, which takes 90 seconds on average.
What is the maximum possible rate at which bags can go through the security check? Assume
that the security officer’s time required in all other steps is negligible.
A. 600 per hour
B. 40 per hour
C. 720 per hour
D. Cannot be determined

7. During heightened security conditions, close to 6.67% of the bags screened by the X-ray scanner
are selected for additional screening by the security officer. What is the maximum possible rate
at which bags can go through the security check during heightened security conditions?
A. 600 per hour
 B. 40 per hour
C. 720 per hour
D. Cannot be determined

8. (Q8–Q9) Albiote Laboratories has invested in a high-performance centrifuge to treat blood

samples received from clinics. In the first step of chemical purification, a technician places
test tubes containing the sample in a purifier and adds necessary chemicals; this step takes 3
minutes per sample. In the second step, the same technician loads the sample test tubes in
the centrifuge (which can hold up to 5 samples) and adjusts its settings and switches it on.
This loading and setting step takes 5 minutes, irrespective of the number of samples placed
in the centrifuge. The actual centrifuging step itself takes an additional 25 minutes and does
not require the technician to supervise. Assume that the unloading step is instantaneous and
clinics send their samples in groups of 5 to the lab. What is the capacity of the process in
terms of the number of treated samples per hour?
A. 5 samples per hour
B. 10 samples per hour
C. 15 samples per hour
D. 20 samples per hour

9. It has been observed that the minimum time taken to finish treating a set of 5 samples, starting
with the time it is received from the clinic to when it is finished, is 45 minutes. In steady state,
the process operates at 75% capacity and there are 15 samples in process on average. What is
the average waiting time experienced by samples?
A. 75 minutes
B. 65 minutes
C. 45 minutes
D. 35 minutes

10. In a simple process, work flows from activity A to activity B to activity C. Activity A takes
10 minutes and is performed by Abhilash. Activity B takes 15 minutes and is performed by
Bharat and Chetna together, while activity C takes 10 minutes and is performed by Chetna
and Abhilash. What is the bottleneck in this process?
A. Activity A
B. Activity C
C. Activity B
D. Cannot be determined

11. Alarmed by complaints about poor customer service, Cheap Loans Inc. have decided to replace
human agents with a chatbot. This has reduced the standard deviation in the service times
by half. The overall capacity and all other aspects of the service process remain unchanged. If
the average waiting time with human agents was 100 seconds, which of the following is NOT
likely to be the new waiting time?
 A. 20
B. 30
C. 40
D. 50

12. Snippy, a new startup by an ISB alumnus, provides EV bikes on rent from a single location in
Bandra Kurla Complex, Mumbai. The average rental duration is around 30 minutes whereas
the standard deviation is around 15 minutes. The time between two successive arrivals to the
station has a mean of 5 minutes and a standard deviation of 10 minutes. Snippy wants the
average waiting time for a customer to be less than 15 minutes. The minimum number of bikes
that are required to be kept at the station are:
A. 6
B. 7
C. 8
D. 9

13. Vroom runs a hyperlocal model of grocery delivery for busy professionals. A survey of the target
segment found that the customers want the delivery time to be between 150 min and 180 min.
However historical data shows that the actual delivery time follows a Beta distribution with
mean 165 and standard deviation 10. Vroom’s delivery manager checks for abnormal shocks
to the process by collecting a random sample of 25 orders every day and checking the sample
average against the control limits of 161 and 169. The cost of each investigation is INR 20,000.
What is the approximate average cost of investigation per day (over the long run)?
A. 20,000
B. 5,000
C. 1,000
D. 500

14. The specification limits for the coil temperature in an Espresso machine are 185 Fahrenheit
and 175 Fahrenheit. However, there is variability in the process with mean of 180 Fahrenheit
and standard deviation of 5 Fahrenheit. Suppose the machine has a problem and the standard
deviation increases to 10 Fahrenheit. Which of the following is LIKELY to happen?
A. The width of the USL and LSL band will increase.
B. More defects will be generated until the problem is detected and resolved.
C. Sample mean is less likely to be out of control limits until the problem is detected
and resolved.
D. None of the above

15. C & A’s potato chip filling process has a lower specification limit of 9.5 oz. and an upper
specification limit of 10.5 oz. What is the maximum allowable standard deviation that achieves
the sigma-capability of 3?
 A. 0.5
B. 0.25
C. 0.167
D. Not enough information

16. You are planning to carry a prepaid travel card during a month long international vacation (er..
international immersion program!!). Your incidental expenditure during the trip is likely to be
normally distributed with a mean of $900 and standard deviation of $100. If the balance on
the travel card is exhausted, you will have to use your international credit card, which charges
1.2% for every dollar you spend. Any unspent amount can be transferred back to your bank
account after the trip. Assume that the savings bank interest is around 4.8% per annum. How
much amount should you load on the card (rounded up to the full dollar)?
A. $833
B. $968
C. $978
D. $985

17. You have started a bakery that is committed to selling fresh, artisan, organic products. Your
two main products are bread and cake. Assume that demand for both have the same mean
but bread has lower variability than cake. Your partner, who is an industry old-hand suggests
that the optimal service level for cakes should be higher. Do you agree?
A. Yes, because more variability in demand requires a greater service level.
B. Yes, because more stock should be kept to protect against higher variability.
C. No, because the optimal service level does not depend on demand variability.
D. No, because the optimal service level depends only on the mean demand.

18. Exquisite Wine Wholesalers (EWW) imports fine European wines into the country four times
a year to meet its stable demand of around 1600 barrels per annum. The cost of placing and
receiving each order (including freight, portage etc.) is $5,000 whereas the opportunity cost
for EWW is 10% per annum and the cost of each barrel is $4,000. The annual cost of ordering
and inventory holding for EWW’s operation is:
A. $200,000
B. $100,000
C. $80,000
D. $20,000

19. (Questions 19–20) Inspired by Kristen’s success story, Krish from the Inspirational School
of Business decided to launch a cookie business. The business receives 12 orders per hour from
6 pm until 9 pm. Krish starts processing the orders from 6 pm itself (without postponing
homework!!) at the rate of 6 orders per hour. What is the average wait time for an order
during a typical night?
 A. 0.5 hours
B. 1 hour
C. 1.5 hours
D. 2 hours

20. Krish can rent additional equipment to increase the process capacity to 9 orders per hour. How
much maximum rental per day should he be willing to pay for such equipment? Assume that
Krish’s business incurs a cost of $2 for every hour that an order waits and that Krish values
his own time at $10 per hour.
A. $128
B. $108
C. $92
D. $72