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INDUSTRIAL MANAGEMENT

BASIC CONCEPTS OF MANAGEMENT 2


ORGANIZATIONAL STRUCTURE 8
ORGANISATIONAL BEHAVIOUR 12
COMMUNICATION 13
HUMAN RESOURCE MANAGEMENT 15
CONCEPTS OF PRODUCTION MANAGEMENT 22
PRODUCT DEVELOPMENT 25
MATERIAL MANAGEMENT 26
QUALITY MANAGEMENT 36
FINANCIAL MANAGEMENT 45
MARKETING MANAGEMENT 49
WORK STUDY 56
PLANT MAINTENANCE AND MATERIAL HANDLING
60
MISCELLANEOUS 62
Plant Maintenance and Material Handling **
Miscellaneous **
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BASIC CONCEPTS OF MANAGEMENT
Multiple Choice Type Questions
1. Who is the father of Scientific Management? [WBUT 2009]
a) Frank Gilberth b) F. W. Taylor
c) Mark Parker Follet d) Max Weber
Answer: (b)
2. Hierarchy Theory of Motivation was professed by [WBUT 2010]
a) F.W. Taylor b) Abraham Maslow
c) Henry Fayol d) Elton Mayo
Answer: (b)
3. X & Y theory was created by [WBUT 2010]
a) McGregor b) A. Maslow c) P. F. Druckerd) F. W. Taylor
Answer: (a)
4. Henry Fayol concentrated on [WBUT 2010]
a) Productivity b) Top level c) Middle d) Upper level
Answer: (a)
5. Luther Gulick states seven functions of management under the catch word
a) PODSCORB b) PDOSCORB [WBUT 2010]
c) DOPSCORB d) PSCORBOD
Answer: (a)
6. Which function of the management is the basic of all other functions?
a) controlling b) staffing c) planning d) directing [WBUT 2010]
Answer: (c)
7. The Wage Boards appointed by the Government and usually consist of number of
persons [WBUT 2010]
a) 5 b) 7 c) 10 d) 12
Answer: (c)
8. Decision making helps in [WBUT 2010]
a) improving efficiency b) increasing profits
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c) achieving organizational goal d) implementing a policy
Answer: (c)
9. Planning is [WBUT 2010]
a) looking ahead b) looking back
c) guiding people d) delegation of authority
Answer: (a)
10. Who is the father of Human Relation approach? [WBUT 2011]
a) Elton Mayo b) Henri Fayol
c) F.W. Taylor d) Mary Parker Foilet
Answer: (a)
11. Management is a art of [WBUT 2011]
a) profit making b) misleading customer
c) getting thing done by others d) satisfying the competitors
Answer: (c)
12. Management is [WBUT 2011]
a) an art b) a science
c) both (a) & (b) d) none of these
Answer: (c)
Short Answer Type Questions
1. Highlight the basic elements of Scientific Management. [WBUT 2009]
Answer:
Following are the basic elements of scientific management:
1. Selection of personnel
2. Placement of personnel
3. Training of personnel
4. Job analysis includes the followings:
i) Time study
ii) Motion study
iii) Fatigue study
5. Incentive system
6. Appointment of function foreman
7. Good relation between worker and manager
All the above are human aspect element. Non human aspect elements are as follows:
1. Separation of planning from doing
2. Standardization
3. Economy
2. What do you mean by Management? Write down the main functions of
management? [WBUT 2011]
Answer:
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1
st
part:
Management is a functional concept and can be defined as It is an effort for getting
things done in order to achieve the predetermined goals of the concern through co-
ordination of human and other elements. But, as its scope is so wide it is not easy task to
define management. It is correct perspective. The difficulty is mainly due to the fact that
the word management is highly concerned with the people. The behaviors and attitude of
the people are highly unpredictable and defy all calculations. Besides, management is a
growing science and its generalization is thus in the process of development. For this it is
very difficult to confirm its subject matter within a tight compartment of a short
definition. Thus various Authors, Writers and Economists define management in different
ways but main idea of these definitions is more or less similar though differ in their
wordings. Economists define management as a factor of production, Sociologists
consider management as a group of persons and as per specialists management is a
system of authority.
2
nd
part:
Management is a functional concept and can be defined as It is an effort for getting
things done in order to achieve the predetermined goals of the concern through co-
ordination of human and other elements. The major role and functions of management are
as follows:
a) Planning: The first function of management is planning. The planning works out in
broad outlines the things that need to be done and the methods of doing them in an
orderly manner.
b) Organizing: Once the plan is formulated then there is the need for organizing. This
is nothing but a structure created to give successful form of all the combined efforts.
c) Staffing: In organizing, the manager seeks to establish position and decide the duties
and responsibilities that belong to each one. But in case of staffing, the manager finds
the right man for each job, brings and trains the whole staff for this purpose and
maintains congenial atmosphere for work.
d) Commanding: Planning and organizing are not sufficient to move the staff into
action. For this command is necessary. Command is the starting signal or order to
enable the staff member to move into operational activities.
e) Directing: Direction is associated with command. Directions include guidance and
supervision of work of the subordinate. Direction is a continuous process and
involves making decision giving necessary instruction for work performance.
f) Motivating: Motivation is psychological acts that help the workers to do more work.
It is psychological aspect since it is linked to mental state. Motivation is the actuating
force, which inspires a worker to put his best in the accomplishment of the task.
g) Controlling: The work of planning, organization, command, direction and
motivation if carried into effect smoothly and properly, leaves nothing to be desired
for the accomplishment of the objectives.
h) Coordinating: In a large organization, the number of workers and volume of work is
large. The jobs of different workers need to be harmonized. This task is performed
with the help of Coordination.
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Long Answer Type Questions
1. a) Briefly describe the contribution made by HENRY FAYOL in the field of
modern management.
b) Briefly describe the two sets of assumption about human behaviour as per
DOUGLAS McGREGOR. [WBUT 2011]
Answer:
a) Henry Fayol:
Henri Fayol, a french industrialist, is regarded as Father of modern management. His
management thought can be classified under three broad categories:
a) Functions of management,
b) Principles of management,
c) Activities, which managers should perform
Functions of Management:
Management is a process, which concerns itself with efficient use of resources (men,
material, machinery and capital) in most economic way for achieving the desired result. It
includes five primary functions i.e. a) Planning, b) Organisation, c) Staffing, d) directing,
e) controlling and integrating functions is called Co-ordinating.
Principles of Management:
Fayol distinguished fourteen principles of management which have been widely used and
accepted and form core of most management teachings and practices. These principles
are:
i) Division of labour:
The more people specialize, the more efficiently they can perform their duties.
ii) Authority and responsibility:
Responsibility refers to all the duties or activities that must be done to complete a job.
For good results, these responsibilities must be delegated to the lowest possible level of
employees having the ability to perform. Responsibility without authority is meaningless.
Employees must have sufficient authority to carry out their assigned responsibilities.
Authority is the individuals right to take decisions and take actions required to complete
ones assigned responsibility.
iii) Discipline:
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Members in an organization need to respect the rules and agreements that govern the
organization. To Fayol, discipline will result from good leadership at all levels of the
organization, fair arrangement, and judiciously enforced penalties for infractions.
iv) Unity in command:
Each employee must receive instructions about a particular operation from only one
person. Fayol believed that when an employee reported to more than one superior,
conflicts in instructions and confusion of authority would result.
v) Unity of direction:
Those operations within its organization that have the same objective should be directed
by only one manager using one plan. For example, the personnel department in a
company should not have two directors, each with a different hiring policy.
vi) Subordination of individual interest to the common good:
In any undertaking the interests of employees should not take precedence over the
interests of the organization as a whole.
vii) Remuneration:
Compensation for work done should be fair to both employees and employer.
viii) Centralization:
Decreasing the role of subordinates in decision making is centralization. Increasing their
role is decentralization. Fayol believed that managers should retain that responsibility but
also need to give their subordinates enough authority to do their jobs properly. The
problem is to find the best amount of centralization in each case.
ix) The hierarchy:
The line of authority in an organization often represented today by the neat boxes and
lines of the organization chart grows in order to rank from top management to the
lowest level of the enterprise.
x) Order:
Materials and people should be in the right place at the right time. People in particular
should be in jobs or positions most suited for them.
xi) Equity:
Managers should be both friendly and fair to their subordinates.
xii) Stability of staff:
A high employees turn over rate is not good for efficient functioning of an organization.
xiii) Initiative:
Subordinates should be given the freedom to conceive and carry out their plans, even;
though some mistakes may result.
xiv) Esprit de corps:
Promoting team spirit will give the organization a sense of unity. To Fayol, even small
factors could help to develop this sprit. He suggested, for example, the use of verbal
communication instead of formal communication whenever possible.
b) Following are the two sets of assumptions about human behaviour as per DOUGLAS
McGREGOR.
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Daouglas McGregor proposed two distinct views of human beings: one basically
negative, labelled Theory X, and the other basically positive, labelled Theory Y. After
viewing the way in which managers dealt with employees, McGregor concluded that a
managers view of the nature of human beings is based on certain grouping of
assumptions and that he or she tends to mould his or her behaviour towards employees
according to these assumptions.
Under Theory X, the four assumptions held by managers are:
1. Employees inherently dislike work and, whenever possible, will attempt to avoid
it.
2. Since employees dislike work, they must be coerced, controlled, or threatened
with punishment to achieve goals.
3. Employees will avoid responsibilities and seek formal direction whenever
possible.
4. Most workers place security above all other factors associated with work and will
display little ambition.
In contrast to these negative views about the nature of human beings, McGregor listed the
four positive assumptions that he called Theory Y:
1. Employees can view work as being as natural as rest or play.
2. People will exercise self-direction and self-control if they are committed to the
objectives.
3. The average person can learn to accept, even seek responsibility.
4. The ability to make innovative decisions is widely dispersed throughout the
population and is not necessarily the monopoly of those in management positions.
Significance
Theory X assumes that lower-order needs dominate individuals. Theory Y assumes that
higher-order needs dominate individuals. McGregor himself held to the belief that Theory
Y assumptions were more valid over Theory X. Therefore, he proposed such ideas as
participative decision making, responsibility and challenging jobs, and good group
relations as approaches that would maximize an employees job motivation.
1. Write short note on Time study and Motion study. [WBUT 2009]
Answer:
Taylor, along with Gilbreth, tried to determine the best way to perform each and every
job. Time study is defined as the art of recording, analyzing and synthesizing the time
elements of any operation. Time study involves the determination of the time required for
each element of workers job, by observing his movements. Time study is conducted
after motion study. Motion study involves study of movements which are involved in
doing a job, in parts, and thereby eliminating wasteful movements and retaining only
necessary movements.
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ORGANIZATIONAL STRUCTURE
Short Answer Type Questions
1. State how authority and responsibility are interrelated. [WBUT 2009, 2011]
Answer:
Delegation of Authority
The process by which authority passes from one managerial level to another is known as
delegation. As organisations grow in size and complexity, no one person can perform all
the tasks or exercise all the authority that is needed to accomplish goals.
Delegation of authority is not the same as division of work. As Henry Fayol says,
"Division of work permits reduction in the number of objects to which attention and
effort must be directed and has been recognised as the best means of making use of
individuals and of groups of people".
Delegation of authority denotes the superior vesting decision-making power in his
subordinate. No one can delegate an authority which he himself does not have.
Delegation is one of the most important skills a manager must possess. The overworked
managers are often those who do not know how to delegate. For they lack the skill to get
results through others. An individual can perform limited work in a day, all by himself.
But through delegationthrough dividing his load and sharing his responsibilities with
othershe can accomplish much more. No manager and no organisation can run
smoothly and effectively without delegation.
Elements of Delegation
The number of delegation marks the effectiveness of the manager and influences the
relationship between the superior and the subordinate.
Delegation is the process where a manager divides the work assigned to him so as to get
help from others in accomplishing the same. It involves the following four steps that arc
indivisible:
the determination of results expected
the assignment of tasks
the delegation of authority for accomplishing these tasks
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the exaction of responsibility for their accomplishment
Looked at differently, these four steps have three elements: responsibility, authority and
accountability. Delegation is the entrustment of responsibility and authority to another
and the creation of accountability for performance. Let us briefly consider these three
elements.
Responsibility
Responsibility refers to the activities which must be performed to carry out the task
assigned. Responsibility can be delegated.
Authority
Authority refers to the powers and rights entrusted to enable performance of the task
assigned or delegated. Certain authority is imperative to shoulder a given responsibility.
In organisations people derive authority mainly from two sources: position and personal.
Position authority is related to powers of decision-making, reward and punishment.
Personal authority refers to the expert knowledge and certain qualities which are part of
the personality of an individual manager. Position authority can be delegated, but not
personal authority. Authority could be formal or informal. Here we refer to formal
authority that is clear, structured and communicated to all.
Accountability
Accountability is the obligation to carry out responsibility and exercise authority as per
established standards or norms. It is an obligation to account for, and report upon, the
discharge of responsibility or use of authority. Accountability can not be delegated. The
person who delegates continues to be responsible to his superior for what he had
delegated as well.
Since accountability cannot be delegated, the accountability of superiors for the acts of
their subordinates is absolute. By the same token, we see that the delegate is accountable
to the delegator to the extent he is delegated responsibility and authority For example, if
the line managers are not given the responsibility to train the operators, they cannot be
held accountable for the operators proficiency.
While accountability always moves upward, responsibility and authority move downward
in a hierarchy. A person can be accountable only to one superior for delegated
responsibility and authority. Accountability is easy to establish if the standards and
measures of performance are predetermined.
2. State the concept of Delegation of Authority. [WBUT 2010]
Answer:
The process by which authority passes from one managerial level to another is known as
delegation. As organisations grow in size and complexity, no one person can perform all
the tasks or exercise all the authority that is needed to accomplish goals.
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Delegation of authority is not the same as division of work. As Henry Fayol says,
"Division of work permits reduction in the number of objects to which attention and
effort must be directed and has been recognised as the best means of making use of
individuals and of groups of people".
Delegation of authority denotes the superior vesting decision-making power in his
subordinate. No one can delegate an authority which he himself does not have.
Delegation is one of the most important skills a manager must possess. The overworked
managers are often those who do not know how to delegate. For they lack the skill to get
results through others. An individual can perform limited work in a day, all by himself.
But through delegationthrough dividing his load and sharing his responsibilities with
othershe can accomplish much more. No manager and no organisation can run
smoothly and effectively without delegation.
Long Answer Type Questions
1. Mention the basic steps in the formation of an organization. [WBUT 2009]
Answer:
In order to form a company, the promoters are needed. According to Companies Act,
1956 at lease two persons required for private limited company and seven persons
required for public limited company. For formation of a company, the following step
should be considered.
Preliminary Planning: In the first stage, the promoter with the expert knowledge
discovers an idea of a new project and prepares a draft planning about the proposed
business.
Preliminary Investigation: The promoter is to require preparing a draft account as
regards estimated income and expenditure of the proposed business. If the proposal is
profitable, the promoter will proceed for the next step i.e., searches for capital, labour,
raw materials, etc. If required, promoter can take advice from different experts. He will
then prepare a draft plan on the basis of information received form enquiry in respect of
different matters. This draft plan on the basis of information received form enquiry in
respect of different matters. This draft plan shall mention the amount of Authorised
Capital, Working Capital and Capital Budgeting Decision.
Assembling Promoters: After preparation of planning the promoters assemble to make
discussion and contact. A board of promoters is constituted with adequate number of
entrepreneurs who desirous of making capital investment and participating actively in
promotion. This entrepreneur would sign on the documents needed for incorporation.
Procurement of Industrial License: As per provisions of the Industrial Development
and Regulation Act, 1951, Industrial license must be obtained from the Govt.
Department.
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Preparation of Different Documents: In accordance with the provisions of the
companies Act, 1956, every company has to submit different documents along with the
requisite fees for registration.
The documents are as follow:
i) Memorandum of association
ii) Article of Association.
iii) Concept from the Directors to act as a director.
iv) Letter of concept from Directors as regards qualifying shares.
v) Address of the registered office, etc.
Obtaining Certificate of Incorporation: After submitting the necessary documents
along with prescribed fees to the Registrar of Companies, the Registrar will look over the
documents thoroughly. If he satisfied, he would incorporate the name of the company and
issue a certificate to it. This certificate is known as certificate of incorporation.
Preparation of Prospectus: After incorporation, a document is circulated for inviting the
public to subscribe for capital and loan. It is known as prospectus. It is not obligatory to
circulate the prospectus. If the prospectus is not circulated then a statement in lieu of
prospectus to be submitted to the Registrar containing in writing the different matter with
conditions relating to the issue of shares to the public.
Allotment of Shares
Concerned with the allotment of shares on the basis of prospectus issued, people apply
for share. Allotment of shares is made to them who have submitted the application.
Certificate of Commencement of Business: Within a month after the allotment of
shares, the secretary or director so authorised would apply on behalf of the company, to
the registrar to the effect that minimum subscription has been collected and other
necessary conditions have been complied. Then the Registrar will issue a certificate of
commencement of business.
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ORGANISATIONAL BEHAVIOUR
Short Answer Type Questions
1. Briefly discuss the theory of motivation of Maslow. [WBUT 2010]
Answer:
The Maslows need Hierarchy theory views and individuals motivation as a
predetermined orders of needs which he strives to satisfy. The theory makes the
following assumptions
a) People have an unending stream of needs. As soon as one need is satisfied, another
need spring up in its place.
b) Only unsatisfied needs motivate mans behavior.
c) Peoples need have a definite order of priority i.e., needs can be arranged in the
ascending order of their importance called need hierarchy.
d) Physiological, safety and social needs are lowest order needs and esteem needs and
self actuation needs are termed as higher order needs.
The above needs can be shown through following chart.
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Higher Order
needs
Lower
Level
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Generally it has been observed that a worker is motivated when his/her lower level needs
satisfied.
COMMUNICATION
Multiple Choice Type Questions
1. When authority flows from the top executive to the lower level of employees it is
known as [WBUT 2009]
a) Functional Organisation
b) Staff Organisation
c) Formal Organisation
d) Line organization
Answer: (c)
2. When communication flows from lower level to upper level, it is known as
[WBUT 2009]
a) Downward communication
b) Upward communication
c) Formal communication
d) Oral communication
Answer: (b)
Short Answer Type Questions
1. How do you overcome the barriers in communication? [WBUT 2010]
Answer:
Methods of Overcoming Barrier
1. Clear organization policy:
It is quite essential that the organizational policy be made clear so that flow of
communication can takes place smoothly .The policy should be clear and unambiguous
so as to unable the organization to easily promote the flow of communication.
2. Specification of the subject matter:
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The policy should clearly specify the subject matter to be communicated. Of course, this
does not require the contents of the communication to be prescribed in a completely
exclusive manner.
3. Ignoring proper channel in case of necessity:
In general, communication through proper channel is essential for orderly and smooth
flow of information. But it should not always be made operative. The system of
communication through proper channel serve the purpose adequately as regards
conveyance of routine type of information. But this principle may be overlooked as and
when situation demands.
4. Sharing responsibility of communication:
It is desirable that every person in the organization shares the responsibility of good
communication. The person at the top level have a special responsibility in this regard.
When the top-level management assumes such special responsibility, the communication
system can be successfully achieved.
5. Facility for promotion of communication:
Organization should provide adequate facilities for promotion of communication. It will
not be sufficient to provide adequate facilities, but at the same time due care should be
given towards their proper and effective use.
6. Development of inter-personal relationship:
Communication is regarded as an interpersonal process. So, it requires to develop inter-
personal relationship based on mutual trust, respect and confidence which are essential
for its promotion. The organization climate should, therefore, be radically modified to
make it more intimate and personal. An educative programme should be arranged where
manager should be instructed to identify the need and significance of communication,
need for developing close personal contacts.
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HUMAN RESOURCE MANAGEMENT
Multiple Choice Type Questions
1. For registration of trade union the minimum number of members required is
a) 7 b) 14 c) 21 d) 28 [WBUT 2009]
Answer: (a)
2. Trade Union Act was passed in the year [WBUT 2009]
a) 1965 b) 1926 c) 1950 d) 1980
Answer: (b)
Short Answer Type Questions
1. How does Personal Management differ from Human Resource Management?
Answer: [WBUT 2009]
Personnel management Human resource management
1. The personnel management emphasize
on clearly defined rules, procedures,
agreement and contracts. The personnel
Manager is governed by the rules and
procedure. Work force is controlled
through collective bargaining.
Human Resource management emphasize
open ended contracts linked to exigencies
of business. Management assumes special
responsibility to motivate people in the
organization and to constantly inspire
performance based on commonality of
goals.
2. The main aim of Personnel
Management is to create a good
relationship between employer and
employee and manager in personnel
department conducting routine based
management.
Human Resource Management arouse
conscience of employees and ensures their
maximum contribution.
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3. Personnel management focuses to
individual development and capacity.
Human Resource management develops
and increase efficiency of human resource.
4. Generally Personnel Management is
applicable in business organisation hence
its scope is limited.
Human Resource Management is not only
applicable in business organisation but
also in Govt. and different social sectors.
Hence, its scope is unlimited.
5. Personnel Management is old and
hence it is regarded as traditional
concept.
Human Resource Management is new
concept.
6. Personnel Management is related to
the behaviour and conduct of all
employees of an organisation.
Human Resource Management considers
the utilization of the whole human
resource as the main force.
7. Personnel Management is a branch
science.
Human Resource Management is social
science.
2. State the benefits of performance Appraisal. [WBUT 2010]
Answer:
Performance appraisal may be defined as a process and a system for knowing as to how
efficiently and effectively the assigned work is carried out by employees and identifying
suitability of employees for other jobs, particularly of higher responsibility in an
organization.
Uses / Purposes of Performance Appraisals
1) Performance Appraisal is a useful tool for both employee and employer. Employees
should know how efficiently they have done their duties and what improvement is
required for their performance. On the other hand, employer can assess areas of
strength and weakness of their employees.
2) Most of the business unit decide their action regarding increment, promotion and
reward of their employees on the basis of performance appraisal.
3) Performance appraisal identifies the strength and weakness of the employees. Weak
Performance may be improved through proper training.
4) Performance appraisal helps the management to determine the deficiencies, if any, in
respect of their recruitment and selection process.
5) It helps the management to confirm an employee at the end of the probation period.
6) It acts as a tool for development of manpower in an organization.
7) It leads an improvement in managerial leadership by means of periodic and effective
appraisal.
8) It guides the manager for assessing future assignment.
Periodic appraisal of performance of subordinates may help the departmental managers to
be alert on their duties of supervision and control.
Long Answer Type Questions
1. a) Define the concept of industrial relation. [WBUT 2010]
b) State the factors affecting industrial relations.
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c) What are the causes of industrial dispute? State the steps that have been taken by
the Government to prevent industrial disputes.
Answer:
a) Industrial relations, also called Labour-management relations or Employer-
employee relations, represent the relationships that exist in an industrial organization
between the employer and employees as between employees and employees. Poor
industrial relations cause industrial disputes, which reduces productivity of the concern.
The employee also suffer by way of loss of wages and salaries. Society also suffers due
to higher prices and shortage of goods and services. A healthy industrial relations
depends on Employer, Employee, Government, trade union and society.
b) Factors Affecting Industrial Relations
1. Enlightened Management: Enlightened management who recognize
rights of workers and utilizes every opportunity to appreciate the sincere efforts of
the employees.
2. Strong and Responsible Trade Unions: Strong and responsible trade
unions who promote welfare of workers without harming interests of management. A
responsible union is one, which exhorts workers to produce more, persuades
management to give higher wages.
3. Economic Satisfactions of Workers: Only satisfied workers will think
through their hearts instead through their mind.
4. Social and Psychological Needs Satisfaction: As man is a social
animal, satisfaction of social and psychological needs encourage them for
participation in management, suggestion schemes, grievance committee, etc. help to
build good industrial relationships.
5. On-The-Job Conditions: Good lighting, safety conditions, provision of
drinking water, management efforts to reduce noise/vibrations, shorter hours of work,
flexible timings etc. gives the feeling to employees that management thinks for them
which helps to improve industrial relations.
6. Off-The-Job Conditions: Off the job conditions in the form of
conditions at home have influenced the industrial relations.
7. Literacy of Workers: Educated workers have greater sense of
responsibility and are not misled by outside trade union leaders.
c) Causes of Industrial Disputes
1) Economic Causes:
Industrial disputes relate to economic causes includes
a) Demand for higher wages.
b) Demand for higher dearness allowance.
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c) Demand for share in the profits of the Company.
d) Demand for better working conditions.
e) Rationalization and automation in Industry
f) Demand for facilities such as medical, education, housing etc.
2) Managerial Causes:
It includes the followings
a) Attitude of employers towards labour in respect of (i) not to recognize the
trade unions (ii) recognize the rival union (iii) not to follow the labour policy.
b) Defection recruitment policy includes
i) Hire and Fire Policy, (ii) Recruitment of Casuals, (iii) Wrong transfer and promotion
policies (iv) not making worker permanent for long.
c) Delays in labour agreement.
d) Incorrect interpretation of terms of agreement.
e) Inefficient leadership.
f) Layoff and retrenchment.
3) Other Causes:
It includes -
i) Irresponsible trade union.
ii) Political affiliation.
Steps Taken by Government to Prevent Industrial Disputes
The Government of India has taken following measures to prevent industrial disputes:
a) Wages Boards have been set up by the Government of India for various
industries such as jute, cotton, textile, sugar, cement iron & steel etc., whose main
function is to fix wages in the respective industries.
b) The payment of Bonus Act 1965, which was introduced in the year 1965
provides for payment of minimum bonus at 8.33% of annual income for employees
drawing monthly salary of Rs. 15000 or less.
c) The Industrial Employment (standing Order) Act, 1946 requires each
employer to make their standing orders covering conditions of employment and get
them certified from the certifying officer and make them known to all workers.
d) Works committee, under the Industrial Dispute Act, 1947, every industrial
unit employing 100 (one hundred) or more workers is required to set up a work
committee consisting of representatives of employer and employees, to maintain a
good relation between employer and employee.
e) Joint Management Councils were suggested by the Government in its
industrial resolution 1956 to initiate the process of labour participation in
management but unfortunately the measure has not found much roots.
f) National Arbitration Promotion Board set up in 1967, comprising
representatives of employers and employees organizations, public undertakings and
central and state government to promote voluntary arbitration to settle industrial
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disputes. Industrial disputes referred to voluntary arbitration if conciliation efforts
fail.
Procedure for Settlement of Industrial Disputes
2. a) Write down the different types of Production system. [WBUT 2011]
b) How does production planning differ from production control?
IMEI-19
Employees Employer
Refer to Works
Committee
Other cases
Mutually Settled
Not Settled
Conciliation Officer Conciliation Board
Settlement Reached
Voluntary Arbitration
Settled Not Settled
Not Refer to Govt.
Settle
Both the parties free to
strike or lockout
Industrial Dispute
Refer to Govt.
Not Settled
Industrial Tribunal
Labour Court
POPULAR PUBLICATIONS
c) State the functions of the production planning.
Answer:
a) Following are the types of production system
1. Mass production or flow line production system: These systems have simplest flow
characteristic constituting straight line flow. Facilities are arranged according to the
sequence of operations where the output of one stage becomes input to the next stage.
2. Batch production system: If a variety of products are made with relatively small
volume of production it may not be possible to layout a separate line for each product. In
such cases, batch production concept is adopted. When product is made in a certain
quantity it is called as Batch quantity. After a while it is discontinued and another
product is scheduled in a certain batch quantity. The various products compete for the
share of machine. The machines are for general purposes. Material flow in such systems
is more complex than in mass production systems.
3. Job production system: A job production does not have its own standard products but
accept whatever customer order comes in. Thus it is essentially a group of facilities and
processes that meets a wide variety of customer orders in varying batch sizes.
4. Project production system: This type of production system generally adopted when
there is a huge volume of one work, i.e., a ship production, a construction of a
multistoried building or construction of a bridge etc. etc. Generally this system have
definite beginning and definite end.
b) Planning and control are the two important components of the management process.
Planning involves the consideration of all input variables to achieve defined output goals.
Control involves the corrective actions taken when the actual output varies from the
desired one by bringing the actual output in line with the planned input.
Production planning, in particular, would therefore consist mainly of the evaluation and
determination of production-inputs such as labour (manpower), machinery and
equipment, materials, and utilities to achieve the desired goals. The definition of the goals
is also, of course, a part of the production planning process.
We may break down the planning process into various stages as follows
i) Defining objectives and setting priority to attain these
ii) (a) Studying the environment external to the system being planned.
(b) Studying the internal environment of the system being planned.
iii) Determining realizable targets (quantified as far as possible).
iv) Gearing the inputs to achieve these targets.
Production Control is the updating and revising procedure where, according to the
requirements, the labour assignments, the machine assignments, the job priorities, the line
speeds, the production routes, etc. may be revised. It is basically a correcting mechanism,
which goes on throughout the implementation process of the already drawn up production
plan and schedule.
IMEI-20
INDUSTRIAL MANAGEMENT
In order to continuously monitor the progress of implementation, many control
techniques such as Gantt Charts, Line of Balance, PERT/CPM, etc. may be used.
Essentially these are bar charts, with the latter two showing some sequence relationship.
Extraordinary revision of schedules would need an extra person to look after the changes
and monitor and communicate decisions and information faster on the production line.
Such a person, who is not uncommon in industries, is called an expediter.
In order to control the production schedule as efficiently as possible, a procedure called
Short Interval Scheduling is used in many western countries. This is nothing but
scheduling production to a micro level, thereby exercising tight control over the minute
deviations from the already drawn-up production schedule.
c) Function of production planning
2. Write short note on Collective Bargaining. [WBUT 2009]
Answer:
Good industrial relations are essential to achieve healthy productivity in the Organization.
To achieve good industrial relation, it is essential that industrial disputes should be
resolved quickly and amicably. One of the excellent methods of resolving industrial
disputes is collective bargaining.
Collective bargaining is a process in which representatives of employer and employees
meet, discuss and attempt to negotiate an agreement that specifies the nature of future
relationship between the employer and the employee.
Objective/Importance of Collective Bargaining
1) It provides an effective democratic method for settlement of industrial disputes.
2) It results in better understanding between employer and employees.
3) It facilitates smooth implementation of the decision.
IMEI-21
Engineering and
maintenance
planning
Manpower
planning
Marketing
planning
Financial and
investment
planning
Production planning
Quality
planning
Distributions
planning
Materials and procurement planning
POPULAR PUBLICATIONS
4) Collective bargaining slowly and steadily builds up atmosphere of faith and trust
between workers and employer.
5) Elimination of industrial disputes leads to greater job satisfaction, higher productivity
and more wages.
CONCEPTS OF PRODUCTION
MANAGEMENT
Multiple Choice Type Questions
1. The production which has definite beginning and definite end is known as
a) Project Production b) Job Production
c) Batch Production d) Mass Production
Answer: (a) [WBUT 2009, 2011]
2. Productivity is the
a) Output-Input Ratio b) Input-Output Ratio
c) Both of these d) None of these [WBUT 2009]
Answer: (a)
Long Answer Type Questions
1. Write short notes on the following:
a) General OC curve on acceptance sampling C-7 [WBUT 2010]
b) Mass production and flow production [WBUT 2010]
Answer:
a) The Operating Characteristic Curve
It is useful to have a simple picture that allows us to compare sampling plans as to how
they will react to different lots with unknown, varying fraction defective. Such a
comparison is provided by the operating characteristic curve (OCC) which displays the
probability of accepting a lot with any fraction defective.
IMEI-22
1.00
97%
84%
0.50
14%
1%
0.0
0% 2% 5% 10% 15%
n = 35, c = 1
n = 150, c = 6
Incoming Fraction Detective (t)
Fig: II Operating Characteristics Curve
P
r
o
b
a
b
i
l
i
t
y

o
f

A
c
c
e
p
t
i
n
g

t
h
e

S
a
m
p
l
e

(
P
a
)
INDUSTRIAL MANAGEMENT
Above figure II shows OCC for two single sampling plans. A and B with n = 35, c = 1
and n = 150, c = 6, respectively. For example, suppose that a lot with f = 10 per cent
defectives is considered to be a bad lot and a lot with f = 2 per cent defectives is
considered to be a good lot. From above figure, it is clear that sampling plan. A would
stand a 14 per cent chance of accepting a bad lot. The same unfortunate error can occur
with the sampling; plan B, with larger sample size also, but the probability of error is
much smaller. In fact it is only 1 per cent. The sampling plan B is also better at not
rejecting good lots (f = 2 per cent). Sampling plan A has 16 per cent chance of rejecting a
good lot whereas sampling plan B has only 3 per cent chance of rejecting a good lot.
It is not surprising that a larger sample does a better job of discriminating between good
and bad lots. It has more information. However, the price for increased accuracy is higher
inspection costs. The design of a sampling plan has to optimally trade off cost with
discrimination.
The values of the ordinates of the Operating Characteristic Curve are determined from
the Poisson Distribution.
Design of Single Sampling Plan
You have to design a sampling plan (n, c) that has an OCC that meets certain pre-
specified requirements. Generally the design is based on the following criteria that are
related to the probability of making either of the following errors; accepting a bad lot ()
and rejecting a good lot (). The criteria are established subjectively and ultimately
should reflect the cost of accepting a bad lot or rejecting a good lot. Needless to say
before and values can be specified, one has to decide what is a good lot and what is
bad lot. Invariably this is done by specifying the lower/upper limits of fraction
defective(f), as illustrated below:
IMEI-23
POPULAR PUBLICATIONS
AQL(Acceptable Quality Level) the fraction defective (f) that the user considers
acceptable. Thus if a batch were known to have a fraction defective equal to AQL, it
should not be rejected.
LTPD (Lot Tolerance Per cent Defective) the fraction defective that defines a bad lot or
one that should be rejected of course, AQL must be less than LTPD
Producers Risk () the largest allowable probability of rejecting a good lot (due to
statistical error). Note that a good lot has fraction defective less than or equal to AQL
(generally 5 per cent).
Consumers Risk () the largest allowable probability of accepting a bad lot (due to
statistical error). Note that a bad lot as fraction defective greater than or equal to LTPD
(generally 10 per cent).
b) Mass production and flow production:
These systems have simplest flow characteristics constituting straight-line flow. Facilities
are arranged according to sequence of operations where the output of one stage becomes
input to the next stage. The whole system is cascaded.
Major production management problems in mass production system are balancing of
production/assembly lines, machine maintenance and raw materials supply. In a
production line consisting of the series of production centres, if workload is unbalanced,
then the most bottle-necked production stage will govern the whole output rate. This will
result in increased throughput time and poor capacity utilization thus contributing to low
productivity. Hence a production or assembly line should be designed such that its
workload is as evenly balanced as possible. Maintenance becomes important because if
any production stage is under breakdown it will block the whole line unless quickly
restored back into operational effectiveness. Raw material to first stage is important to
avoid shortage and subsequent starvation of the whole line.
IMEI-24
INDUSTRIAL MANAGEMENT
PRODUCT DEVELOPMENT
Multiple Choice Type Questions
1. What is the concept that holds that consumer will prefer products that are widely
available and inexpensive called? [WBUT 2010]
a) Production concept b) Product concept
c) Marketing concept d) Selling concept
Answer: (c)
2. If input increase while output remain constant, what will happen to productivity?
a) It will increase b) It will decrease [WBUT 2010]
c) It will remain same d) None of these
Answer: (b)
IMEI-25
POPULAR PUBLICATIONS
MATERIAL MANAGEMENT
Multiple Choice Type Questions
1. EOQ means [WBUT 2009]
a) Excess Order Quantity b) Economic Order Quantity
c) Exempted Order Quantity d) none of these
Answer: (b)
2. Mechanization of material handling increases [WBUT 2011]
a) output cost b) handling cost
c) efficiency and economy in handling d) none of these
Answer: (c)
Long Answer Type Questions
1. a) Define EOQ? State the importance of EOQ in inventory control.
Answer: [WBUT 2009]
1
st
part:
Economic Order Quantity:
The economic order quantity (EOW) refers to that order quantity within the range of
possible order quantities, which minimizes total cost per annum. Total cost consists of
two parts
(1) Ordering Cost
(2) Carrying Cost
Ordering Cost:
Ordering Cost means total expenses incurred for placing order and includes the expenses
incurred for following activities
IMEI-26
INDUSTRIAL MANAGEMENT
(a) Preparation of Purchase Order,
(b) Cost of receiving Goods,
(c) Documentation
(d) Processing Cost,
(e) Transport Cost
(f) Intermittent Costs of Chasing Orders, rejection of faulty goods
(g) Additional Costs of frequent or small quantity orders.
Carrying Cost:
Carrying Cost includes the followings.
(1) Storage Cost (Rent, Lighting, Heating, refrigeration, air conditioning etc.)
(2) Stores staffing, equipment maintenance and running costs
(3) Material handling Cost
(4) Stock Audit, Stock taking or perpetual inventory cost
(5) Obsolescence and Security Costs
(6) Costs of money tied up in inventory
(7) Pilferage and damage cost
Ordering cost is independent of the quantity of orders, while carrying cost increases with
the increase in the quantity ordered. Thus, ordering cost decreases as the size of the
purchase increases (because in that case the number of purchase decreases), but the
carrying cost increases with the increase in the size of purchase. It is, therefore, necessary
to find a balance between ordering costs and carrying costs in order to find the most
favorable quantity.
Graphical Representation of EOQ:
EOQ Determination:
2AB
EOQ
CS

EOQ :- Economic order quantity


A :- Annual Consumption
B :- Buying Cost per order
C :- Cost per Unit
S :- Carrying Cost
IMEI-27
COST
EOQ
COST
EOQ (Units)
ORDER QUANTITY
O
ORDERING COST
TOTAL COST
CARRYING
COST
POPULAR PUBLICATIONS
2
nd
part:
Following are the importance in case of Economic Order Quantity:
1. To stabilized production
2. To take advantage of price discount
3. To meet the demand during the replenishment period
4. To prevent loss of orders
5. Minimized blockage of capital in inventory
b) A particular item has demand of 15,000 units per year. The cost of one
procurement is Rs. 200 and the holding cost per unit is Rs. 1.50 per year.
Determine
i) the Economic Order Quantity
ii) the number of orders during the order
iii) the gap between two orders
iv) the total cost per year if the cost of one unit is Rs. 75. [WBUT 2009]
Answer:
Annual Demand (D) = 15,000 units
Cost of Procurement (Co) = Rs. 200/
Holding cost (Cn) = Rs. 1.50 per years.
i)
( )
0
2 2 15000 200
EOQ 2000
1.50
Q
n
DC
C



ii) N*( optimal no. of orders placed per annum)=
15, 000
7.5
2000
D
Q


No. of orders placed must be a whole number, so it should be 8.
iii) Optimal time interval between two orders (t*)
=
No of months in a year
N


12
1.5 months
8

Two consecutive orders has been placed between 1.5 months or 45 days interval.
iv) Minimum total yearly inventory cost =
0
2
n
DC C
Total Cost = Cost of Purchasing +
0
2
n
DC C
=
0
2
p n
D C DC C +
p
D = Annual Demand
C = Cost of unit
1
1
]
= 15, 000 75 2 15000 200 1.50 +
IMEI-28
INDUSTRIAL MANAGEMENT
= 11,25,000 + 3000
= Rs. 11,28,000/- only
2. a) Discuss briefly the concept of ABC analysis in material Management. C-13
[WBUT 2010]
Answer:
ABC Analysis is a basic tool, which helps the management to place their efforts where
the results would be useful to the greatest possible extent. The first important step in
inventory management is to have a selective approach to fix-up inventory levels, order
quantities, and the extent to which the control can be exercised. The selective approach
mainly depends on the annual consumption of various items.
For example, the items like nuts and bolts (though being equally important) cost less than
the items like engines. But we cannot safely stock the items like engines because of their
heavy cost, while the items like nut-bolts can be easily stocked. Thus, less control is
required for stocking the items like nut-bolts etc. But, more emphasis should be given to
control the stocking of big items like engines. The investment of such items is substantial,
and record keeping is expensive.
ABC (Always Better Control) analysis is a very effective tool for such selective control.
This technique involves the classification of inventory items into three categories A, B
and C in descending order of annual consumption and annual monetary value of each
item. Based on ABC analysis, an average pattern of percentages of items and percentages
of their annual consumption value may be planned as below:
Category Percentage of items (%) Percentage of Annual Usage (%)
A 10 80
B 20 15
C 0 5
In practice it is experienced that bulks of items in an inventory have low usage value.
Annual usage value = (annual requirement) per unit cost.
Thus for better and more economic control of items in inventory, the items should be
classified according to their significance or priority for recording. So for effective
inventory control a decision has to be made that which items are little things and which
need more careful control. The items of an inventory can be classified according to the
following characteristics.
(i) Items, which are functionally critical to the operations, no matter how
little they cost.
(ii) Items those are important because their usage value is very high.
(iii) Items having average usage value.
(iv) Items, which have, low usage value.
The ABC analysis is based on Paretos Law that a few high usage value items
constitute a major part of the capital invested in inventories, where as bulk of items in
inventory having low usage value constitute insignificant part of the capital.
This concept is based upon selective control. If there are large numbers of items to be
analyzed, then sampling technique may be used for ABC analysis.
IMEI-29
POPULAR PUBLICATIONS
In ABC analysis, the items are classified in three main categories based on their
respective usage value:
(i) Category A items. More costly and valuable items are classified as A. Such items
have large investment but not much a number, e.g., say 10% of items account for 75% of
total capital invested in inventory. So, more careful and closer control is needed for such
items.
The items of this category should be ordered frequently but in small number. A periodic
review policy should be followed to minimize the shortage percentage of such items and
top inventory staff should control these items. These items have high carrying cost and
frequent orders of smaller size for these items can result in enormous savings.
(ii) Category B items. The items having average consumption value are classified as
B. Nearly 15% of the items in an inventory account for 15% for the total investment.
These items have less importance than A class items, but are much costly to pay more
attention on their use. These items cannot be overlooked and required lesser degree of
control than those in category A. Statistical sampling is generally useful to control
them.
(iii) Category C items. The items having low consumption value are put in category C.
Nearly 75% of inventory items account only for 10% of the total invested capital. Such
items can be stoked at an operative place where people can help themselves with any
requisition formality. These items can be charged to an over head account. In fact, loose
control of C items increase their investment cost and expenditure on shelf-wear,
obsolescence and wasteful use, but this will not be so much offset for the saving in
recording costs.
b) ABC Co. wants to buy a product. The price discount is as follows: [WBUT 2010]
Quantity Unit Price (Rs.)
Less then 500 12
500 but less then 1600 11.80
1600 but less then 4000 11.60
Annual demand for the material is 8000 kg, ordering cost per order is Rs. 12 and
stock holding cost is 20% of the cost of material per annum. You are required to
compute the best ordering quantity and total annual inventory capital.
Answer:
Annual Demand (D) = 8000 kg; Ordering cost per order (Co) = Rs. 12/-
Inventory carrying cost (I) = 0.20, Unit price (Cp)
EOQ at these three prices are given below:
Price (Rs.) Range of price
quantity (Q)
EOQ Quantity to be
purchased
IMEI-30
INDUSTRIAL MANAGEMENT
Rs. 12 0 500 Q < <
2
2 8000 12
12 0.20
282.85 283
o
p
D C
C I


283
Rs. 11.80 500 1600 Q <
2
2 8000 12
11.80 0.20
285
o
p
D C
C I

500
Rs. 11.60 1600 4000 Q <
2
2 8000 12
11.60 0.20
288
o
p
D C
C I

1600
Case I Cost of unit ( )
p
C = Rs. 12/-, Order Quantity (Q) = 283
Total cost of Inventory = (Annual cost of material) + (Annual Order Cost)
+ (Annual Inventory carrying cost)
( )
2
p o p
D Q
D C C C I
Q
_
+ +

,
( )
8000 283
8000 12 12 12 0.20
282 2
_ _
+ +

, ,
96, 000 339.22 339.6 Rs.96, 678.82 + + /-
Case II Cost of unit ( )
p
C = Rs. 11.80/- Order Quantity (Q) = 800
Total cost of Inventory
( )
8000 500
8000 11.80 12 11.80 0.20
500 2
_ _
+ +

, ,
= Rs. 94,400/- + Rs. 192/- + Rs. 590/- = Rs. 95, 182/-
Case III Cost of unit ( )
p
C = Rs. 11.60/- Order Quantity (Q) = 1600
Total cost of Inventory
IMEI-31
POPULAR PUBLICATIONS
( )
8000 1600
8000 11.60 12 11.60 0.20
1600 2
_ _
+ +

, ,
= Rs. 91,200 + Rs. 60/- + Rs. 1856/-
= Rs. 93,116/-
Considering the above three cases, strategically we can say that the Case III situation is
the best alternative, as this strategy can save (Rs. 96,678.82 Rs. 93,116) = Rs. 3568.82
over Case I and it can save (Rs. 95,182 Rs. 93,111)= Rs. 2,066/- over Case I.
Best ordering Quantity = 1600 kg per order; total annual inventory capital, Rs. 93,116/-
3. a) A company uses 2000 units per annum of special studs in the manufacture of
its products. The studs are procured from a local manufacturer at a basic price of
Rs. 10 each. The procurement cost per order is Rs. 20 and inventory carrying cost is
20%. The suppliers following discount on the basic price for order quantities of
Order Quantity Discount
400 799 2%
800 1599 4%
1600 and above 6%
What quantity should be ordered to optimize cost? [WBUT 2011]
Answer:
Annual Demand (D) = 2000 units
Unit price (Cp) = Rs. 10/-
Procurement cost (C0) = Rs. 20/-
Inventory carrying Cost (I) = 0.20
Economic Order Quantity ( )
0
2 2 2000 20
* 200units
10 0.20
p
DC
Q
C I



Quoted prices for quantities are shown below:
Price Value Range of purchase
quantity
Quantity to
be purchased
Cp(I) Rs. 100.98=9.8
400 Q < 799
400
Cp(II) Rs. 100.96=9.6
800 Q < 1599
800
Cp(III) Rs. 100.94=9.4
1600 Q
1600
Case I:
Considering Economic Order Quantity (Q*) = 200 units.
Annual Total Cost (arc)
= [Purchase cost] + [Ordering cost] + [Inventory cost]
[ ]
2000 200
2000 10 20 10 0.20
200 2
1 1
+ +
1 1
] ]
20, 000 200 200 + + Rs. 20, 400/
Case II:
Considering Order Quantity (when discount rate 2%)
= 400 units; unit cost = Rs. 9.8/-
IMEI-32
INDUSTRIAL MANAGEMENT
Arc [ ]
2000 400
2000 9.8 20 9.8 0.20
400 2
1 1
+ +
1 1
] ]
19, 600 100 392 + +
Rs. 20, 092/
Case III:
Considering Order Quantity (when discount rate 4%) = 800 units; Unit cost = Rs. 9.6/-
Arc [ ]
2000 800
2000 9.6 20 9.6 0.20
800 2
1 1
+ +
1 1
] ]

19, 200 50 768 + +

Rs. 20, 018/
Case IV:
Considering Order Quantity (when discount rate 6%) = 1600 units; Unit cost = Rs. 9.4/-
Arc [ ]
2000 1600
2000 9.4 20 9.6 0.20
1600 2
1 1
+ +
1 1
] ]

18,800 25 1536 + +

Rs. 20, 361/
Based on above four Annual total cost calculation, we can conclude that the company
should place the order 800 at a time that will optimize the cost at the maximum level.

b) What are the two costs associated with inventory management? [WBUT 2011]
Answer:
Following are the cost associated with inventory.
1. Purchased cost (cost of the goods purchase)
2. Capital cost (money invested in purchase)
3. Ordering cost (expenses incurred for placing order)
4. Write short note on
a) VED Analysis [WBUT 2010, 2011]
b) FSN analysis [WBUT 2010]
Answer:
a) VED Analysis
VED analysis represents classification of items bases on their criticality. The analysis
classifies the items into three groups called vital, essential and desirable.
Vital Category encompasses those items for want of which production would come to
halt. Essential group includes items whose stock outs-cost is very high. And Desirable
group comprises of items which do not cause any immediate loss of production or their
stock-out cost is nominal.
VED (Vital Essential Desirable) analysis is carried out to identify critical items. An
item which usage wise belongs to C category may be critical from production point of
view if its stock-out can cause heavy production loss.
An item may be vital for a number of reasons, namely
IMEI-33
POPULAR PUBLICATIONS
If the non-availability of the item can cause serious production losses.
Lead time for procurement is very large
It is non-standard item and is procured to buyers design.
The sources of supply is only one and is located far off from the buyers plant.
Steps involved in making VED analysis are as under:
(i) Identify the factors to be considered for VED analysis. The commonly considered
factors are: effect on production (i.e. stock out cost in the event of its non
availability), lead time, nature of the item and sources of supply.
(ii) Assign points / weightages to the factors according to their importance to the
company. Typical examples of the weightages to the above four factors may be 30,
30, 20 and 20 points.
(iii) Divide each factor into three degrees and allocate points to each degree. Usually, the
first degree is assigned points equal to the weightages of its factor; second degree is
allocated points equal to twice the weightage of the factor and third degree is
assigned points equal to thrice the weight age of the factor.
(iv) Prepare categorization plan (Table A) which provides the basis of classification of
items into vital essential and desirable categories.
(v) Evaluate items one by one against each factor and assign points to the item
depending upon the extent of presence of the factor in the item.
(vi) Place the items into V, E and D categories depending upon the points scored by
them (Table B) and basis of classification set under step (iv).
Table A: Typical VED analysis categorization plan.
Factor First Degree Second
Degree
Third degree
1 Stock out cost
In the event of non
availability (30)
Above Rs. X
(30)
Between
Rs. x to y (60)
Above Rs. y (90)
2 Lead time for
Procurement (30)
1-4 Weeks (30) 4-8 weeks (60) Over 8 weeks (90)
3 Nature of the item
(20)
Produced to
Commercial
Standard, or off
the shelf
availability (20)
Produced to
Suppliers
design (40)
Produced to buyers
design or proprietary
items (60)
4 Sources of supply
(20)
Local (20) Outstation
(40)
Imported, Quota items
i.e. controlled supply
(60)
Table B: Typical categorization plan
Points Classification
100-160 Desirable
IMEI-34
INDUSTRIAL MANAGEMENT
161-230
231-300
Essential
Vital
VED analysis is best suited for spares inventory. In fact, it in advantageous to use more
than one method e.g. ABC and VED analysis together would be helpful for inventory
control of spares.
b) FSN Analysis
FSN analysis is based on the consumption figures of the items. The items under this
analysis are classified into three groups: F (fast moving), S (low moving) and N (non
moving)
To conduct the analysis, the last date of receipt or the last date of issue whichever is later
is taken into account and the period, usually in terms of number of months that has
elapsed since the last movement is recorded.
Such an analysis helps to identify:
i) active items which require to be reviewed regularly.
ii) surplus items whose stocks are higher than their rate of consumption; and
iii) non moving items which are not being consumed. The last two categories are
reviewed further to decide on disposal action to deplete their stocks and thereby
release companys productive capital.
Further detailed analysis is made of the third category in regards to third year wise stocks
and items can be sub-classified as non-moving for 2 years, non-moving for 3 years, non-
moving for 5 years and so on.
IMEI-35
POPULAR PUBLICATIONS
QUALITY MANAGEMENT
Multiple Choice Type Questions
1. Which of the following is a principle of Total Quality Management? [WBUT 2009]
a) Customer satisfaction b) Continuous improvement
c) Both (a) & (b) d) None of these
Answer: (c)
Long Answer Type Questions
1. a) State the meaning and objectives of control charts. [WBUT 2009]
Answer:
A fundamental aim of process control is to evolve system of differentiating between the
variations due to chance causes and those due to assignable causes so that the latter can
be identified and removed thereby improving the quality of the product. The basics tool
used for this purpose is called control chart. A control chart is a visual display of the
inspection results of the samples of a product. It incorporates carefully derived statistical
limits, which help to discriminate between random variability and assignable variability.
A control chart consists of three lines a central line, upper control limit and lower control.
To construct the chart, time variable is taken along the abscissa (x-axis) and the quality
characteristic of the product is taken along the ordinate (y-axis). The control parameters-
central line, upper control limit and lower control limit-are drawn by horizontal lines. The
central line denotes the mean value of the quality characteristic. The upper control limit is
located at 3 standard deviation above the central line and the lower control limit is located
at 3 standard deviations below the central line.
Samples of fixed size are taken at specified intervals of time. Each sample is inspected
for the given quality characteristic. The values of the samples are plotted on the graph
according to the time variable. The trend of the points in the chart is studied to know the
IMEI-36
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state of the process. So long the sample points lie within the control limits, the process is
said to be under control. The variations that are observed are due to chance causes and
are not serious. The falling of the points outside the control limits indicates the
deterioration in quality and hence the presence of assignable cause. Such causes are
identified and corrected.
Sometimes the sample points within control limits exhibit certain patterns-a continuous
upward or downward trend, cyclical pattern, hugging pattern etc. Even though the points
are within limits, it indicates the presence of assignable causes and hence the need to take
a corrective action.
b) From the following information draw a P-Chart. Size of five samples is 100.
Sample Number: 1 2 3 4 5
No. of Defectives: 4 0 5 2 3
[WBUT 2009]
Answer:
Sample No. Sample Size No of Defectives Fraction Defectives
1 100 4 0.04
2 100 0 0
3 100 5 0.05
4 100 2 0.02
5 100 3 0.03
0.14
Average Fraction Defectives
( )
P =
0.14
0.028
5

i) Central line
( )
P 0.028
ii) Upper control line
( )
( )
1
3
P
P P
UCL P
n

+

Samplessize=100 n
=
( ) 0.028 1 0.028
0.028 3
100

+
= 0.028+30.0165
= 0.028+0.0495
=0.078
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iii) Lower Control line
( )
( )
1
3
P
P P
LCL P
n


=
( ) 0.028 1 0.028
0.028 3
100

= 0.028-0.0495
= 0.0215=0
(Since the negative control is always as zero).
2. a) Define TQM. [WBUT 2010]
b) Write down the essential elements of TQM.
c) Explain the benefits of TQM.
Answer:
a) TQM is to improve efficiency and effectiveness of the organization that enables defect
prevention leading to maximization of customer satisfaction by developing right attitude
and control. TQM is an organizational activity and it must reach every employee of the
organization. TQM is a way to improve quality of products and services continuously and
it therefore includes every level and every activity of the organization.
Since TQM stands for Total Quality management, it includes
1) all area and function i.e. marketing, production, sales, Engineering, planning,
administration, accounts or anyother.
IMEI-38
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f
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0 1 2 3
4 5
LCL
CL
UCL
Sample no.
0.01
0.02
0.03
0.04
0.05
0.06
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INDUSTRIAL MANAGEMENT
2) All activities namely order booking, costing, designing, B.O.M. preparation, planning,
indenting, sourcing, ordering, storing, issuing, handling, assembly, testing, inspection,
packing, dispatching, invoicing, transporting etc.
3) All employees, be they owners, directors, manager, supervisors, workers, vendors,
sub-contractors, service providers of customers.
4) Always (i.e. at all times) that is month after month, every day of the month, every
hour of the day and every minute of the hour.
5) All places, be it factory, office, branch or anyother premises of the firm.
b) Following are the essential elements of TQM.
1. Quality Inspection: Salvaging, sorting. Investigating, corrective actions, identifying
sources of non-conformance and dealing with them.
2. Quality Planning: Developing quality manuals, producing process performance data,
planning for quality.
3. Quality Management: Statistical process control, third party approval, quality system
audit, use of quality costs, involvement of functions in direct to production process.
4. Total Quality Management (TQM): Continuous improvement system perspective
involves all operations and at all levels (company wise), undertakes performance
measurement; focus on leadership, teamwork and participation of every one, employee
empowerment.
c) Benefits of TQM
TQM can result in the following improvements:
1) Greater customer satisfaction.
2) Lower cost of manufacturing.
3) Lower inventory investment.
4) Reduction in product development time.
5) Shorter throughput time.
6) Lesser cost of procurement.
7) Lower cost of inspection.
3. a) State the advantages of SQC over mass inspection. [WBUT 2010]
Answer:
Statistical Quality Control underlines a basic philosophy that prevention is better than
cure and a stitch in time saves nine. SQC prevents the occurrence of defectives by
exercising control over the process rather than inspecting goods for conformance after
they have been produced. The most common device used for this purpose is Shewhart
control chart introduced in the year 1931. A control chart is a visual display of
statistically significant changes that may occur in a process. The chart evaluates whether
the process is in the state of statistical control or not. If it is the fluctuations are due to
random variability and if it is not, they are due to assignable variability.
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b) The following are the quantity of a finished product from 5 samples of a shampoo
manufacturing company. The specification limit for a bottle is 60 1 ml. Construct
X
and R chart and examine whether the process is under control or not.
[WBUT 2010]
For this sample size
2 3 4
0.729, 0, 2.282 A D D
Sample No Quantity
X1 X2 X3 X4
1 60.6 62 60.4 61
2 61 59.5 59.8 60.5
3 60.3 59 59.5 60
4 60.3 60.5 61 59.4
5 61.2 64 62 60
Answer:
Step I
X
Average of each sample
11 12 13 14
4
X X X X
X
+ + +

The Range (R) is obtained as the difference between the highest and lowest measurement
of a sample.
Sample No. Arithmetic Mean
( )
X Range ( ) R
1 61 1.6
2 60.2 1.5
3 59.7 1.3
4 60.3 1.6
5 61.8 4
Step II Calculate Grand average
( )
X and the mean average
Grand average
( )
X is the average of the averages
( ) 61 60.2 59.7 60.3 61.8
60.6
5
X
+ + + +

R
average of sample ranges
( ) 1.6 1.5 1.3 1.6 4
2
5
+ + + +

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Step III Setup control chart for the average
( )
X .
X
Central line ( )
60.6
x
CL
Upper Control Limit
( )
2
x
UCL X A R +
[ ] 60.6 0.729 2 60.6 1.458 62.1 + +
Lower Control Limit
( ) [ ]
2
60.6 0.729 2 59.1
x
LCL X A R
Since all the points are within the control limit, so the process is under control.
Step IV Setup a Range Chart
R chart
Central line ( )
R
CL =R=2
Upper control limit ( )
R 4
UCL =D R=2.2822=4.564 4.6
Lower control limit ( )
R 4
LCL =D R=02=0
IMEI-41
59
59.5
60
60.5
61
61.5
62
1 2 3 4 5
UCL
x
CL
x
LCL
x
M
e
a
s
u
r
e
m
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t
Sample No.
M
e
a
s
u
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t
1
2
3
4
4.5
5
1 2 3 4 5
Sample No.
R
UCL
R
LCL
R
CL
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The values of R for the test data have been plotted into the chart. Since all the points are
within the control limits, hence variability is within the limits.
4. From the following data observed during inspection of dimensions of an item.
Determine: [WBUT 2011]
a) Mean/average dimension
b) Upper control limit
c) Lower control limit
d) Plot the dimensions to see whether the process is under control or not:
Data: 1.65, 1.70, 2.00, 1.65, 2.50, 2.25, 1.70, 1.60, 1.50
2.00, 1.70, 2.25, 2.50, 1.50, 2.25, 1.60, 1.65, 1.60
Answer:
a) Central line ( )
C
1.65 1.70 2.00 1.65 2.50 2.25 1.70 1.60 1.50
2.00 1.70 2.25 2.50 1.50 2.25 1.60 1.65 1.60
18
+ + + + + + + + _

+ + + + + + + + +
,

= 1.86
b) Upper Control limit
( )
3
C
UCL C C +
1.86 3 1.86
1.86 3 1.36
1.86 4.08 5.94
+
+
+
c) Lower Control limit
( )
3
C
LCL C C +
1.86 3 1.86
1.86 3 1.36
2.22 0



[Negative value cannot be considered, it should be taken as zero]
d)
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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
1.0
2.0
3.0
4.0
5.0
6.0
Sample No.
C
UCL
C
CL
C
LCL
N
u
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e
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The inspected data is plotted in the graph that indicates that all the measured data are
within the specified limit, so we conclude that the process is under control.
4. Write short notes on the following:
a) Quality circle [WBUT 2009]
b) Random and assignable causes [WBUT 2010]
c) Statistical Quality control [WBUT 2010]
Answer:
a) Quality circle:
Quality circle is basically a small group of employees who volunteer to meet regularly to
undertake work of related project such as quality, productivity, safety, efficiency, cost,
working conditions etc. and develop recommendations to improve effectiveness in the
selected functional area.
The size of the quality circle is very important. Too big size (too many members) may
not provide enough time to each member to effectively participate and two small sizes
(few members) may make a circle dormant.
An idle size of the circle is seven to ten members but in any case it should not exceed
fifteen members.
More than one circle may be form if too many employees in a particular work area are
willing to participate in the quality circle activities. If there are twenty five clerks in the
organization doing identical jobs, 2 3 circles may be formed.
b) Random and assignable causes:
One of the powerful statistical techniques of quality control is Acceptance Sampling.
This technique is generally used in those situations where items are inspected in batches,
generally known as lots. For example, you may receive a shipment of 10,000 electric
bulbs and you may have to decide whether to accept the shipment or return it back to the
supplier. The acceptability will depend on the acceptable quality of the lot. Suppose you
decide to accept if the average fraction defective is less than 5 per cent. Then to ascertain
the actual quality you may decide to inspect each and every bulb. Such a strategy of 100
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per cent inspection, however, may often be expensive and impractical. In such cases a
more intelligent way is to use the concept of Sampling Inspection.
The idea of sampling inspection is to inspect only a small portion of the lot and infer the
quality of the lot, based on the quality of the sample. Acceptance is based on the
inference made from the sample and hence the technique is known as Acceptance
Sampling. Typically a lot is specified by its size (N) and the fraction (f) of defectives that
are expected to be present (at the most) in the lot. The principles of statistics are used in
the inference process.
Interestingly the concept of acceptance sampling is no different from the strategy adopted
by a typical housewife who decided whether or not a pot-full of rice is cooked by
inspecting just a spoonful of grains.
Two things must be kept in mind. In order that sampling inspection might work, the
sample must be representative of the lot. Typically this is ensured by choosing the sample
at random so that every portion of the lot has equal representation in the sample. Such a
sampling is known as Random Sampling. Secondly, a sample is only representative and
not identical (in characteristic) with the lot. In the inference process, therefore a few good
lots will be rejected and a few bad lots will be accepted. We can control such sampling
errors, but they cannot be eliminated. In fact in the design of sampling plans we will
ensure that the errors are kept below certain acceptable levels.
c) Statistical Quality control:
Statistical Quality Control underlines a basic philosophy that prevention is better than
cure and a stitch in time saves nine. SQC prevents the occurrence of defectives by
exercising control over the process rather than inspecting goods for conformance after
they have been produced. The most common device used for this purpose is Shewhart
Control Chart introduce in the year 1931. A control chart is a visual display of
statistically significant changes that may occur in a process. The chart evaluates whether
the process is in the state of statistical control or not. If it is, the fluctuations are due to
random variability and if it is not they are due to assignable variability.
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FINANCIAL MANAGEMENT
Multiple Choice Type Questions
1. Margin of Safety is the [WBUT 2009]
a) Excess Actual Sales over Break-even Sales
b) Excess Break-even Sales over Actual Sales
c) Excess Actual Sales over Targeted sales
d) None of these
Answer: (a)
2. Contribution is the difference between [WBUT 2009, 2011]
a) Sales and Fixed cost
b) Sales and Variables cost
c) Sales and Cost of goods sold
d) None of these
Answer: (b)
3. Financial management deals with [WBUT 2009]
a) satisfying the needs of customer
b) training and development of employees
c) procurement and utilization of found
d) designing user-friendly products
Answer: (c)
4. Positive working capital is the excess of [WBUT 2011]
a) current liability over current assets
b) current assets over current liabilities
c) current assets over fixed assets
d) none of these
Answer: (b)
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Short Answer Type Questions
1. What is the margin of safety? How can it be improved? [WBUT 2011]
Answer:
Margin of Safety
The excess of actual sales over break-even sales is known as margin of safety. It
represent the amount by which sales revenue call fall before a loss is incurred. At BEP
there is no profit no loss, sales beyond BEP represents margin of safety because any sales
above the BEP will give some profit.
Margin of Safety = Total sales BEP Sales.
M.S. Ratio =
.
100
M S
S

Margin of Safety =
P
P/P Ratio
Margin of safety can be improved by taking the following steps
a) By increasing level of production,
b) By increasing selling price,
c) By reducing Fixed/Variable cost.
d) By increasing contribution by charting the sales mix or by dropping un-profitable
products.
2. State the concept of Break-Even Analysis. Give example. [WBUT 2011]
Answer:
Break-Even Analysis indicates the estimated profit or loss at various levels of output. The
break-even point as indicated in the following graph is that point at which total cost line
and total sales lines intersect each other.
Example
Determine graphically (a) Break even point (b) Profit if the output is 25,000 units.
Out
Put
(units)
Variable
Cost Per
Unit
Rs.
Total
Variable
Cost
Rs.
Fixed
Cost
Rs
Total
Cost
Rs.
Selling
Price
Per Unit
Rs.
Total
Sales
Rs.
0
5,000
10,000
15,000
20,000
25,000
30,000
5
5
5
5
5
5
5
0
25,000
50,00
0
75,00
0
1,00,00
0
1,25,000
1,50,00
0
75,00
0
75,00
0
75,00
0
75,00
0
75,00
0
75,00
75,00
0
1,00,00
0
1,25,000
1,50,00
0
1,75,00
0
2,00,000
2,25,000
10
10
10
10
10
10
10
0
50,000
1,00,000
1,50,000
2,00,000
2,50,000
3,00,000
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INDUSTRIAL MANAGEMENT
0
75,00
0
Assumption of Break Even Analysis
1. All cost can be segregated between fixed and variable.
2. Variable cost per unit remains fix throughout the year.
3. Fixed cost remains fix throughout the year.
4. Selling price per unit remain unchanged all level of activity.
5. There is no opening or closing stock.
6. There will be no change in operating efficiency.
7. The volume of output or production is the only factors, which influence
the cost.
Long Answer Type Questions
1. a) What is Cost Volume Profit Analysis? [WBUT 2009]
Answer:
Cost volume profit analysis is a technique for studying the relationship between COST,
Volume and Profit. Profit of an undertaking depend upon a large number of factors. But
the most important of these factors are the COST of manufacturer, volume of sales and
selling prices of the product. The CVP relationship is an important tools used for profit
planning of a business.
Cost volume profit analysis can be used to answer the following quarries
1) How much sales should be made to avoid losses?
2) How much should be the sales to earn desired profit?
IMEI-47
250
300
200
150
100
75
50
0 5000 10000 15000 20000 25000 30000
Output (Units)
FIXED COST LINE
Fixed
Express
Variable
Express
Profit Area
X
Y
Loss Area
TOTAL COST LINE
Break-even point
Angle of incidence
Profit
Margin of safest
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3) What will be the effect of change in prices, costs and volume on profits?
4) Which product or product mix is most profitable?
5) Which product should manufacture or buy?
b) State the assumption of Break-even Analysis. [WBUT 2009]
Answer:
Assumption of Break Even Analysis
8. All cost can be segregated between fixed and variable.
9. Variable cost per unit remains fix throughout the year.
10. Fixed cost remains fix throughout the year.
11. Selling price per unit remain unchanged all level of activity.
12. There is no opening or closing stock.
13. There will be no change in operating efficiency.
The volume of output or production is the only factors, which influence the cost.
c) From the following information calculate:
i) Profit Volume Ratio.
ii) Break even point sales.
iii) Sales-required to earn profit of Rs. 75,000.
iv) Profit when sales are Rs. 5,00,000.
Year Sales Profit
2007 Rs. 1,50,000 Rs. 30,000
2008 Rs. 2,00,000 Rs. 50,000
Fixed cost, variable cost and selling price during the years 2007 and 2008 remain
constant. [WBUT 2009]
Answer:
i) P/V- Ratio =
Increase in Profit
100
Increase in sales
=
20, 000
100
50, 000

= 40%
ii) B.E.P Sales:
Contribution 2007 = 1,50,000 40% = 60,000
Fixed Cost = 60,000 30,000 = 30,000
B.E.P Sales =
F
P/V Ratio
=
30, 000
40%
= 75,000
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iii) Sales required to earn a Profit Rs. 75,000/
Required Sales =
F+P
P/V Ratio
=
30, 000 75, 000
40%
+
=
1, 05, 000
40%
= 2,62,500/
iv) Profit When Sales Rs. 5,00,000/
P = SP/V Ratio-F
= 5,00,000 40% F
= 2,00,000 30,000
= 1,70,000
MARKETING MANAGEMENT
Multiple Choice Type Questions
1. Which one is not the element of marketing mix? [WBUT 2009]
a) Product b) Price c) Place d) Packing
Answer: (d)
Long Answer Type Questions
1. How do you discuss BCG Matrix? [WBUT 2009]
Answer:
Large companies normally manage quite different Business, each requiring its own
strategy. General Electric classified its business into 49 strategic business units (SBUS).
An SBU has three characteristics
1. It is a single business or collection of related businesses that can be planned
separately from the rest of the company.
2. It has own set of competitors.
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3. It has a manager who is responsible for strategic planning and profit performance
and who controls most of the factors affecting profit.
The purpose of identifying the Companys strategic business unit is to develop separate
strategies and assign appropriate funding. One of the best known business portfolio
evaluation models is the Boston Consulting Group Model.
The Boston Consulting Group Approach
The Boston Consulting Group (BCG), a leading management consulting firm, developed
and popularized the growth phase matrix.(Fig. below). The eight circles represent the
current sizes and positions of eight business units in a hypothetical company. The dollar-
volume size of each business is proportional to the circles area.
The location of each business unit indicates its market growth rate and relative market
share.
The market growth rate on the vertical axis indicates the annual growth of the market in
which the business operates. In figure, it ranges from 0 percent to 20 percent. A market
growth rate above 10 percent is considered high.
Relative market share, which is measured on the horizontal axis, refers to the SBUs
market share relative to that of its largest competitor in the segment. It serves as a
Measure of the companys strength in the relative market segment.
The growth share matrix is divided into four cells, each indicating a different type of
business:
1. Question Mark
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Stars
Question
Marks
Cash Cow Dogs
3 1
2
4
5
7
8
6
10%
20%
10x
1x
0.1x
Relative Market Share
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Question marks are businesses that operate in high growth markets but have low relative
market shares. Most businesses start off as question marks as the company tries to enter a
high growth market in which there is already a market leader. A question mark requires a
lot of cash because the company has to spend money on plant, equipment and personnel,
to keep up; with the fast growing market, because it wants to overtake the leader. The
term question mark is appropriate because the company has to think hard about whether
to keep pouring money into this business.
2. Stars
If the question mark business is successful, it becomes a star. A star is the market leader
in a high-growth market. A company must spend substantial funds to keep; up with the
high market growth and fight off competitors attack. In Fig. 1, the company has two
stars. The company would be justifiably concerned if it had no stars.
3. Cash Cows
When a markets annual growth rate falls to less than 10 per cent, the star becomes a cash
cow if it still has the largest relative market share. A cash cow produces a lot of cash for
the company. The company does not have to finance capacity expansion because the
growth rate has slowed down. Because the business is the market leader, it enjoys
economies of scale and higher profit margin. The company in Fig. 3, has only one cash
cow and is therefore highly vulnerable. If this cash cow starts losing relative market
share, the company will have to pump money back into it to maintain market leadership.
4. Dogs
Dogs are businesses that have weak market shares in low growth markets. They typically
generate low profits or losses. The company in fig. 1 holds two dogs, and this may be two
too many. The company should consider whether it is holding on to these business for
good reasons (such as an expected turnaround in the market growth rate or a new
chance at market leadership) or for sentimental reasons.
The companys next task is to determine what objective, strategy and budget to assign to
each SBU. Four strategies can be pursued
1. Build
Here the objective is to increase market share, even forgoing short-term earnings to
achieve this objective if necessary. Building is appropriate for question marks whose
market shares must grow if they are to become stars.
2. Hold
Here the objective is to preserve market share. The strategy is appropriate for strong cash
cows if they are to continue yielding a large positive cash flow.
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3. Harvest
Here the objective is to increase short-term cash flow regardless of long-term effect.
Harvesting involves a decision to withdraw from a business by; implementing a program
of continuous cost retrenchment. This strategy is appropriate for weak cash cows whose
future is dim and from which more cash flow is needed.
4. Divest
Here the objective is to sell or liquidate the business because resources can be better used
elsewhere. This strategy is appropriate for dogs and question marks that are acting as a
drag on the companys profit.
2. Mention the basic element of marketing mix. [WBUT 2010]
Answer:
Marketing mix is the set of marketing tools that the firm uses to pursue its marketing
objectives in the target market.
The marketing tools can be broadly classified into four groups which is known as 4 Ps of
marketing. i.e., product, price, place and promotion.
Product includes the following:
i) Product variety
ii) Product quality
iii) Product design
iv) Product feature
v) Product brand name
vi) Product packing
vii) Product sizes
viii) Product services
ix) Product warranties
x) Product return
Price includes:
i) List price
ii) Discount
iii) Allowances
iv) Payment terms
v) Credit terms
vi) Others
Promotions includes:
i) Sales promotion
ii) Advertising
iii) Public relation
iv) Direct marketing
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Place includes:
i) Channels
ii) Coverage
iii) Location
iv) Inventory
v) Transportation
3. Write short notes on:
a) SWOT Analysis [WBUT 2009]
b) BCG matrix [WBUT 2010, 2011]
Answer:
a) SWOT Analysis:
The overall evaluation of a companys strengths, weakness, opportunities and threats is
called SWOT analysis.
External Environment Analysis (Opportunity and Threat analysis)
In general, a business unit has to monitor key macro environment for us (demographic,
economic, technological, political legal and social cultural) and significant micro
environment actors (customers, competitors, distributors, suppliers) that affect its ability
to earn profits. The business unit should set up a marketing intelligence system to track
trends and important developments. For each trend or development, management needs
to identify the associated opportunities and threats.
A marketing opportunity is an area of buyer need in which a company can perform
profitably. Opportunities can be classified according to their attractiveness and their
success probability. The companys success probability depends on whether its business
strengths not only match the key success requirements for operating in the target market
but also exceed those of its competitors. Mere competence does not constitute a
competitive advantage. The best performing company will be the one that can generate
the greatest customary value and sustain it over time.
An environmental threat is a challenge posed by an unfavorable trend, or development
that lead, in the absence of defensive marketing action, to deterioration in sales or profit.
Threats should be classified according to seriousness and probability of occurrence.
One management has identified the major threats and opportunities facing a specific
business unit, it can characterize that businesss overall attractiveness. Four outcomes are
possible.
An ideal business is high major opportunities and low in major threats.
A speculative business is high in both major opportunities and threats
A mature business is low in major opportunities and low in threats.
A troubled business is low in opportunities and high in threats.
Internal Environment Analysis (strengths/Weaknesses analysis)
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It is one thing to discern attractive opportunities and another to have the competencies to
succeed in these opportunities. Each business needs to evaluate its internal strengths and
weaknesses periodically. It can do so by using a form like the one shown in the marketing
menu checklist for performing strengths / weaknesses analysis. Management or an
outside consultant review marketing, financial, manufacturing and organizational
competencies and rates each factor as a major strength, minor strength neutral factor,
minor weakness or major weakness.
Clearly, the business does not have to correct all its weaknesses, nor should it go about all
its strengths. The big question is whether the business should limited itself to those
opportunities where it possesses the required strengths or should consider better
opportunities where it might have to acquire or develop certain strengths.
George stalk, a leading BCG consultant, suggests that winning companies are those that
have achieved superior in company capabilities, not just core competences. Every
company must manage some basic processes, such as new product development, sales
generation and other fulfillment. Each process creates value and requires
interdepartmental team work. Although each department may possess specific core
competences, the challenge is to develop superior competitive capability in managing the
companys key processes. George Stalk calls this capabilities based competition.
b) BCG matrix:
Large companies normally manage quite different Business, each requiring its own
strategy. General Electric classified its business into 49 strategic business units (SBUS).
An SBU has three characteristics.
1) It is a single business or collection of related businesses that can be planned
separately from the rest of the company.
2) It has own set of competitors.
3) It has a manager who is responsible for strategic planning and profit performance and
who controls most of the factors affecting profit.
The purpose of identifying the Companys Strategic business unit is to develop separate
strategies and assign appropriate funding. One of the best known business portfolio
evaluation models is the Boston Consulting Group Model.
The Boston Consulting Group Approach
The Boston Consulting Group (BCG), leading management consulting firm, developed
and popularized the growth phase matrix figure below. The eight business units in a
hypothetical company.
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Relative Market Share
The dollar-volume size of each business is proportional to the circles area. The location
of each business unit indicates its market growth rate and relative market share.
The market growth rate on the growth of the market in which the business operates. In
the above figure it ranges from 0 percent to 20 percent. A market growth rate above 10
percent is considered high.
Relative market share, which is measured on the horizontal axis, refers to the SBUs
market share relative to that of its largest competitor in the segment. It serves as a
Measure of the companys strength in the relative market segment.
The growth share matrix is divided into four cells, each indicating a different type of
business:
1. Question Mark
Question marks are businesses the operate in high growth markets but have low relative
market shares. Most businesses start off as question marks as the company tries to enter a
high growth market in which there is already a market leader. A question mark requires a
lot of cash because the company has to spend money on plant, equipment and personnel,
to keep up; with the fast growing market, because it wants to overtake the leader. The
term question mark is appropriate because the company has to think hard about whether
to keep pouring money into this business.
2. Stars
If the question mark business is successful, it becomes a star. A star is the market leader
in a high-growth market. A Company must spend substantial funds to keep; with the high
market growth and fight off competitors attack. In Fig. 1, the company has two stars. The
company would be justifiably concerned if it had no stars.
3. Cash Cows
When a markets annual growth rate falls to less than 10 percent, the star becomes a cash
cow if it still has the largest relative market share. A cash cow produces a lot of cash for
the company. The Company does not have to finance capacity expansion because the
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growth rate has slowed down. Because the business is the market leader, it enjoys
economies of scale and higher profit margin. The company in the above figure has only
one cash cow and is therefore highly vulnerable. If this cash cow starts losing relative
market share, the company will have to pump money back into it to maintain market
leadership.
4. Dogs
Dogs are business that has weak market shares in low growth markets. They typically
generate low profits or losses. The company in fig. 1 holds two dogs, and this may be too
many. The company should consider whether it is holding on to these business for good
reasons (such as an expected turnaround in the market growth rate or a new chance at
market leadership) or for sentimental reasons.
The companys next task is to determine what objective, strategy and budget to assign to
each SBU for strategies to be pursued.
WORK STUDY
Multiple Choice Type Questions
1. Job satisfaction refers to [WBUT 2009]
a) attitude of an employee towards his work
b) work culture
c) relationship between superiors and subordinates
d) appraisal of the performance of employees
Answer: (a)
Long Answer Type Questions
1. a) What is Job evaluation? [WBUT 2009]
b) State the importance of it.
c) Discuss the advantages and limitations of Job evaluation.
Answer:
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a) Job evaluation is the rating of jobs in an organization. This is the process of
establishing the value of jobs. It attempts to compare the relative intrinsic value of jobs
within an organization.
According to International Labour office Job evaluation is an attempt to determine and
compare the demands which the normal performance of a particular job makes on normal
workers, without taking into account the individual abilities or performance of the
workers concerned.
b) The importance of job evaluation are as follows
a) Provide a standard procedures for determining the relative worth of each job in a
plant.
b) Determine equitable wage differentials between different jobs in the
organization.
c) Eliminate wage inequalities.
d) Ensure that like wages are paid to all qualified employees for like work.
e) Form a basis for fixing incentives and different bonus plans.
f) Serve as a useful reference for setting individual grievances regarding wage rate.
g) Provide information for work organization, employees selection, placement,
training and numerous other similar problems.
h) Provide benchmark for career planning for the employees in the organization.
c) Advantages:
1. Job evaluation being a logical process and technique help in developing a
equitable and consistent wage and salary structure based on the relative worth of jobs
in an organization.
2. By eliminating wage differentials within the organization, job evaluation helps in
minimizing conflict between labour unions and management and, in turn, helps in
promoting harmonious relations between them.
3. Job evaluation simplifies wage administration by establishing uniformity in wage
rates.
4. It provides a logical basis for wage negotiations and collective bargaining.
5. In the case of new jobs, job evaluation facilities spotting them into the existing
wage and salary structure.
6. In the modern times of mechanization, performance depends much on the
machines than on the worker himself/herself. In such cases, job evaluation provides
the realistic basis for determination of wages.
7. The information generated by job evaluation may also be used for improvement
of selection, transfer and promotion procedures on the basis of comparative job
requirements.
8. Job evaluation rates the job, not the workers. Organizations have large number of
jobs with specializations. It is job evaluation here again which helps in rating all
these hobs and determining the wages and salary and also removing ambiguity in
them.
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Limitations:
1. In spite of many advantages, job evaluation suffers form the following
drawbacks/limitations:
2. Job evaluation is susceptible because of human error and subjective judgment.
While there is no standard list of factors to be considered for job evaluation, there are
some factors that cannot be measured accurately.
3. There is a variation between wages fixed through job evaluation and market
forces. Say Kerr and Fisher
9
, the jobs which tend to rate high as compared with the
market are those of junior, nurse and typist, while craft rates are relatively low.
Weaker groups are better served by an evaluation plan than by the market, the former
places the emphasis not on force but on equity.
4. When job evaluation is applied for the first time in an organization, it creates
doubts in the minds of workers whose jobs are evaluated and trade unions that it may
do away with collective bargaining for fixing wage rates.
5. Job evaluation methods being lacking in scientific basis are often looked upon as
suspicious about the efficacy of methods of job evaluation.
6. Job evaluation is a time-consuming process requiring specialized technical
personnel to undertake it and, thus, is likely to be costly also.
7. Job evaluation is not found suitable for establishing the relative worth of the
managerial jobs which are skill-oriented. But, these skills cannot be measured in
quantitative terms.
8. Given the changes in job contents and work conditions, frequent evaluation of
jobs is essential. This is not always so easy and simple.
9. Job evaluation leads to frequent and substantial changes in wage and salary
structures. This, in turn, creates financial burden on organization.
2. a) What do you mean by Forecasting? [WBUT 2009]
Answer:
Forecasting is an act of predicting the future on the basis of past and present information.
It is a projection of future on the basis of present trend. The success of a business unit is
fully depend on accurate forecasting. According to HENRI FAYOL. Forecasting is an
import function of business Administration. According his opinion, entire planning in
business is made up of a series of separate plans called forecasting.
According to NETER AND WASSERMAN Business forecasting refer to the
statistical analysis of the past and current movement in the movements C.E.SULTON
has defined business forecasting as a calculation of probable events against the
future.
Hence, forecasting is a technique to determine economic, social and financial forces
effecting the business.
b) State the main objectives and functions of Forecasting. [WBUT 2009]
Answer:
Functions of Forecasting are as follows:
1. Promotion of a new business: Forecasting is very much essential in case of
setting up a new business. To launch a new business involves risk and uncertainties
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and entire success of a new business depends upon the soundness of forecasting.
Hence, a successful promoters, after ascertaining business opportunities, can
assemble various factors i.e. men, machine, materials and money, etc. Proper
forecasting helps to minimize the possibilities of uncertainties.
2. Formulation of plan: Forecasting is a tool for formulation of effective plan.
Planning decides the future course of action which takes place in certain conditions.
Planning under all circumstances involves a good deal of forecasting. Forecasting
provides the knowledge about the knowledge of future conditions which is the key
factor of planning.
3. Managerial decisions: The extent of correctness of managerial decisions is fully
dependant on accurate forecasting. Administration is essentially a decision making
process. Authority has responsibility for making decisions and for ascertaining that
the decisions made are properly carried out.
4. Continuous flow of work: Forecasting ensures smooth and continuous working,
specially in case of newly established company. With the help of proper forecasting,
a newly established company can estimate its future earnings or profits.
5. Success in business: Success of a business, special in case of a newly
established business, fully dependant on accurate forecasting by the various
departments. Managers can save their business and face the unfortunate happenings if
they know in advance what is going to happen.
6. Estimation of financial requirements: Forecasting plays a vital role for
estimation of financial requirement. Finance is the life blood of business enterprise.
A business cannot survive long without adequate capital i.e. Fixed and Working
Capital. But adequacy of capital both fixed and working, entirely depends on sound
financial forecasting. How much capital is required for investment in fixed assets, for
expansion, for introduction of a new product, for investment in current assets fully
depends on effective financial forecasting.
7. Increase the co-operation and co-ordination: Forecasting is not achieved with
one man. It requires proper co-ordination of the views and opinions of all the
departmental heads of the organization. All the units of an organization are involved
in the process of forecasting. Hence, process of forecasting increases team sprit as
well as co-ordination of all levels.
c) Mention the limitation of it. [WBUT 2009]
Answer:
1. Based on future assumption: Forecasting is the future assumption on the basis
of present and past activities. The assumption may not hold good as future is
uncertain. There are practically various factors which go into determining the
occurrence of an event. The behavior of all those factors may not be similar. A
change in a particular factor may be so unpredictable and important that it may affect
the total business situations.
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2. Time and cost involvement: Time and cost factor is also an important factor of
forecasting. For forecasting of any event, certain information and data are required.
The collection of date and information and conversion qualitative data into
quantitative ones involves lot of time and money. Managers, therefore, have to trade
off between cost involved in forecasting and benefit obtained for this reason, small
concerns do not go for formal forecasting.
PLANT MAINTENANCE AND MATERIAL
HANDLING
Multiple Choice Type Questions
1. A device to move materials along a definite path and used for moving bulk
materials over long distance is known as [WBUT 2011]
a) Fork lift truck b) Elevator
c) Hoists d) Conveyor
Answer: (d)
Long Answer Type Questions
1. Explain briefly relative merits and demerits of breakdown maintenance, preventive
maintenance and TPM. [WBUT 2011]
Answer:
Merits of Breakdown maintenance
1) The important thing in breakdown maintenance is after attending and repairing
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the equipment, the maintenance engineer attended to the machine only when another
failure occurs.
2) This type of maintenance can be well justified in small factories, where
scheduling techniques are a final burden and occasional demand exceeds normal
operating capacity.
3) It is affordable, practicable and economical for critical items whose downtime
and repair cost are less.
Demerits of Breakdown Maintenance:
1) It is not economical for non critical items whose downtime and repair cost is
high.
2) It is complexity in administrative work and record keeping involve in breakdown
maintenance is less that in preventive maintenance.
Merit of Preventive maintenance:
1) The State of the equipment can reveal what changes need to be brought about in
the equipment.
2) Every equipment has a breakdown curve; working lower on the curve adds
predictability and reliability.
3) It damage is known and recognized at an earlier stage one gets more time to plan
and secure parts.
4) Early prediction shifts maintenance work load form emergency fire-fighting to an
orderly, scheduled system.
5) Decreased user problems translate into increased satisfaction.
Demerits of Preventive Maintenance
1) It is very costly. Hence one should be careful weather to go in for preventive
maintenance or not by considering the cost of using preventive maintenance and the
cost of not using it.
2) Application of Preventive Maintenance to all the items in the plant/industries
may be uneconomical.
Merits of Total Productive Maintenance:
1) Maximum overall equipment effectiveness
2) Establish a share system of preventive maintenance for the equipments, complete
life.
Demerit of Total Productive Maintenance:
1) Process defects due to scraps & quality defects to be repaired. Quality problems
are not tolerated. Deep analysis is undertaken until these lose approach Zero.
2) Reduced filled from start-up to suitable productions. The production process is
traced and watched for start-up problems. Stable production should follows start-up
very closely.
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MISCELLANEOUS
1. Write down the terms CPM and PERT. [WBUT 2011]
Answer:
CPM [Critical Path Method]:
In 1957, DuPont developed a project management method designed to address the
challenge of shutting down chemical plants for maintenance and then restarting the plants
once the maintenance had been completed. Given the complexity of the process, they
developed the Critical Path Method (CPM) for managing such projects.
CPM provides the following benefits:
Provides a graphical view of the project.
Predicts the time required to complete the project.
Shows which activities are critical to maintaining the schedule and which are not.
CPM models the activities and events of a project as a network. Activities are depicted as
nodes on the network and events that signify the beginning or ending of activities are
depicted as arcs or lines between the nodes.
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Steps in CPM Project Planning
1. Specify the individual activities.
2. Determine the sequence of those activities.
3. Draw a network diagram.
4. Estimate the completion time for each activity.
5. Identify the critical path (longest path through the network)
6. Update the CPM diagram as the project progresses.
PERT
The Program Evaluation and Review Technique (PERT) is a network model that allows
for randomness in activity completion times. PERT was developed in the late 1950's for
the U.S. Navy's Polaris project having thousands of contractors. It has the potential to
reduce both the time and cost required to complete a project.
In a project, an activity is a task that must be performed and an event is a milestone
marking the completion of one or more activities. Before an activity can begin, all of its
predecessor activities must be completed. Project network models represent activities and
milestones by arcs and nodes. PERT originally was an activity on arc network, in which
the activities are represented on the lines and milestones on the nodes. Over time, some
people began to use PERT as an activity on node network. For this discussion, we will
use the original form of activity on arc.
2. Write Short Notes on Gant Chart [WBUT 2011]
What is a Gantt chart?
Answer:
A Gantt chart, similar to a bar chart, lists tasks down the left side and elapsed time is
marked off across the top. This graphical depiction of the schedule will track the planning
and coordination of work that must be completed to produce the defined product. Major
task groupings are entered as general areas of work (summary tasks), and then broken
down into bodies of work that can be completed independently. Project detail can be
added to the smallest increment of definable tasks. As work is completed, the project
manager receives updates from each person or resource working, and the plan is updated
frequently and then progress is measured against the plan. The Gantt chart reflects the
entire schedule of work which might include duration, recourses milestones, etc. A Gantt
chart can also provide performance and efficiency information that directly impacts
reward systems of monetary compensation and promotion.
Gantt chart information
The Gantt chart is versatile and timeless for use in every kind of project from building a
house to constructing the tallest building and overhauling a computer system. The time
required to build detail into the original plan and keep the plan updated throughout the
project will provide all the information necessary keep the project on track.
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