Operations Management Question Paper Answers

Question Paper
Operations Management - II (MB242): July 2007
• Answer all questions.
• Marks are indicated against each question.

< Answer >
1. Which of the following could be the types of rules and regulations that global corporations face as a
hindrance to their expansion plans as framed by the respective national governments to monitor the
process of outsourcing?
I. Quantitative quotas.
II. Labor policies.
III. Tariffs and duties.
IV. Qualitative restrictions.
(a) Both (I) and (II) above
(b) Both (I) and (III) above
(c) (I), (II) and (III) above
(d) (I), (II) and (IV) above
(e) All (I), (II), (III) and (IV) above.
(1 mark)
< Answer >
2. Following are the means ( X ) and range (R) of ten samples each of size 6.

Sample 1 2 3 4 5 6 7 8 9 10
X 35 54 32 36 42 39 52 40 38 41
R 5 8 6 7 4 6 3 5 7 6
(Conversion factors for sample size 6 are given as A2 = 0.48, D3 = 0, D4 = 2.004)

What is the UCL for the X-chart?
(a) 46.60
(b) 43.64
(c) 31.06
(d) 12.08
(e) 14.43.
(2 marks)
< Answer >
3. MRP is a comprehensive system used for planning and scheduling materials requirement. Which of the
following is not an advantage of the MRP system?
(a) Low inventory levels
(b) Reduced tear-down costs
(c) Comprehensive material tracking
(d) Dependence on forecast values
(e) Better customer service.
(1
mark)
< Answer >
4. Transportation is one of the key drivers in the overall decision-making framework of the supply chain.
Which of the following are the key components in transportation decisions?
I. Selecting the mode of transportation.
II. Route.
III. Network.
IV. Processing times.
(b) Both (II) and (III) above
(d) (I), (III) and (IV) above

(1
mark)
< Answer >
5. Materials management involves making optimal use of materials and the reduction in the expenditure on
materials to improve the profits of the firm. In which of the following overheads would there be a cost
reduction?
I. Labor costs.
II. Administration expenses.
III. Material costs.
(a) Only (I) above
(b) Only (II) above
(c) Only (III) above
(d) Both (I) and (II) above
(e) Both (II) and (III) above.
(1
mark)
< Answer >
6. Which of the following SCM enablers’ best defines the objective to prepare an organization’s processes
in such a way that they are able to understand and react fast to customer requirements?
(a) Alignment
(b) Customer-supplier focus
(c) Design
(d) Measurement
(e) Periodic review.
(1 mark)
< Answer >
7. An MRP system generates many types of reports and planning information as outputs. Which of the
following does not constitute the primary reports generated by the system?
(a) Performance reports
(b) Order releases
(c) Planned orders
(d) Changes in due date
(e) Cancellation or suspension.
(1
mark)
< Answer >
8. ‘Nothing is produced until it is required’, is the concept of Just-In-Time. Just-in-time manufacturing
includes two important and mutually supporting components. Which of the following are those
components?
I. People involvement.
II. Total quality management.
III. Total quality control.
IV. Total production control.
(c) Both (I) and (IV) above
(d) Both (II) and (IV) above
(e) Both (III) and (IV) above.
(1 mark)
< Answer >
9. Which of the following functions is responsible for adhering to the dimension of quality that describes
the degree to which a product manufactured is to the agreed specification?
(a) Design
(b) Manufacturing
(c) Design and manufacturing
(d) Design and after sales service
(e) Marketing and design.

(1
mark)
< Answer >
10. Critical ratio method is a job sequencing technique, wherein the operations manager calculates the
critical ratio of a job. What are the components of the critical ratio?
I. Planned time remaining.
II. Actual time remaining.
III. Planned work remaining.
IV. Actual work remaining.
(b) Both (I) and (IV) above
(c) Both (II) and (III) above
(d) Both (II) and (IV) above
(e) Both (III) and (IV) above.
(1
mark)
< Answer >
11. The Master Production Schedule (MPS) file contains information about when and how many units of
finished products are required. It also contains information about the available cumulative lead-time for
various activities. Which of the following is not one of those activities?
(a) Purchasing
(b) Receiving
(c) Fabricating
(d) Allocating
(e) Assembling.
(1
mark)
< Answer >
12. Which of the following departments is involved in the activity of arranging for the replenishment of
stocks in liaison with the purchase department and auditing the raw materials periodically?
(a) Purchasing department
(b) Receiving department
(c) Raw materials inventory department
(d) Production department
(e) Warehousing department.
(1 mark)
< Answer >
13. The probability of rejecting a lot at Acceptable Quality Level (AQL) is referred to as which of the
following?
I. Type I error.
II. Type II error.
III. Producer’s risk.
IV. Consumer’s risk.
(a) Only (I) above
(c) Both (I) and (IV) above
(d) Both (II) and (III) above
(e) Both (II) and (IV) above.
(1 mark)
< Answer >
14. Which of the following provides a general overview of the operations of a business without going into
the technical details of the processes and systems?
(a) Business process reengineering
(b) Enterprise resource planning
(c) Business modeling
(d) Materials requirement planning
(e) Operations scheduling.
(1

mark)
< Answer >
15. Productivity can be defined as which of the following?
I. Relation of output to input.
II. Faculty to produce.
III. Quotient obtained by dividing output by one of the factors of production.
(a) Only (I) above
(b) Only (III) above
(c) Both (I) and (II) above
(d) Both (I) and (III) above
(e) All (I), (II) and (III) above.
(1 mark)
< Answer >
16. Maintenance management ensures the optimum efficiency of the systems that are working. Which of
the following is/are the major area(s) of maintenance in a firm?
I. Mechanical maintenance.
II. Logistics maintenance.
III. Civil maintenance.
IV. Electrical maintenance.
(a) Only (II) above
(c) (I), (II) and (IV) above
(1 mark)
< Answer >
17. Managing globalization is a task requiring the coordinating efforts of managers of various international
subsidiaries of a multinational organization. Organizations adopt various approaches to manage
globalization. Which of the following approaches is/are considered to slow down the pace of
globalization?
I. Changing the organization’s structure.
II. Changing managers’ attitude.
III. Developing core competencies for global learning.
(a) Only (I) above
(b) Only (II) above
(1 mark)
< Answer >
18. Part-time work is advantageous to both firms as well as the employees. Which of the following is/are
the advantage(s) to firms in this regard?
I. Reduced personnel costs.
II. Availability of highly skilled personnel.
III. Improved performance of the firm.
(a) Only (I) above
(b) Both (I) and (II) above
(c) Both (I) and (III) above
(1
mark)
< Answer >
19. Universal Industries Ltd. uses the ‘bathtub curve’ to predict when the probability of equipment failure
will be highest. Which of the following is/are the stage(s) where the probability of failure is very high
attributed to improper design and installation.
I. Infant mortality.

II. Burn in stage.
III. Wear out stage.
(a) Only (I) above
(b) Only (II) above
(e) Both (I) and (III) above.
(1 mark)
< Answer >
20. Routing can be described as the specifications of the work flow. What are the important considerations
for drawing up routing sheets?
I. Processes of production.
II. Production requirements.
III. Layout structure.
IV. Lead time.
(c) Both (II) and (IV) above
(d) (I), (II) and (III) above
(e) (I), (III) and (IV) above.
(1
mark)
< Answer >
21. Verizon Ltd. provides its employees an option to choose their work timings, provided the number of
hours worked by them in a week satisfies the number of working hours specified by the organization per
week. This personnel-related scheduling approach is called as
(a) Flextime
(b) Flextour
(c) Staggered times
(d) Compressed workweek
(e) Part time.
(1
mark)
< Answer >
22. Organizations intending to globalize their operations need to consider the changes in several key
strategic operational decisions in relation to the approach adopted by the domestic and global markets.
Which of the following describe(s) the differences in each of these approaches?
I. Selection of markets.
II. Product development and technology choice.
III. Allocation of resources.
(a) Only (I) above
(b) Only (II) above
(1 mark)
< Answer >
23. A firm with a net turnover of Rs.50 lakh is contemplating a proposal to implement JIT system in its
organization from the next financial year. The possible operational benefits the firm can derive by using
JIT are
I. Reduced investment in inventory.
II. Zero inventory storage and maintenance costs.
III. Higher involvement of employees.
IV. Increased materials management.

(1 mark)
< Answer >
24. Anoop Industries Ltd. has started four jobs A, B, C and D respectively, requiring 32, 26, 41 and 37 days
to complete, respectively. The work on these jobs has begun 20 days ago by 4 teams comprising of 6
members each.
After continuous supervision of the jobs, it is estimated that the jobs would require 10, 5, 18 and 14
days respectively to be completed. The critical ratios of the jobs A, B, C and D respectively are
(a) 1.20, 1.20, 1.17, 1.21
(b) 0.50, 0.25, 0.90, 0.70
(c) 1.60, 1.30, 2.05, 1.85
(d) 0.83, 0.83, 0.86, 0.82
(e) 2.0, 1.0, 3.0, 3.0.
(2 marks)
< Answer >
25. Operations managers generally use several techniques to schedule jobs in the various departments.
Which of the following represents a graphic display of the duration of a set of activities?
(a) Gantt charts
(b) Job sequencing rules
(c) Queuing theory
(d) Critical ratio method
(e) Johnson’s rule for three stage production.
(1
mark)
< Answer >
26. Which of the following are some of the methods adopted by service firms in order to meet customer
demand under situations of limited availability of service facilities?
I. Appointment systems.
II. Reservation systems.
III. Strategic product pricing.
IV. Distribution systems.
(a) Only (III) above
(1
mark)
< Answer >
27. An MRP system, like any other management information system, can be expanded to support other
functions like engineering, production, finance, marketing and purchasing. Which of the following
function(s) of the MRP II system are carried out by the upper level management?
I. Product planning functions.
II. Operations planning functions.
III. Operations control functions.
(a) Only (I) above
(b) Only (II) above
(1
mark)
< Answer >
28. TQM principles aim at overall improvement in quality standards. Which of the following best describe
(s) the philosophy of TQM involving identifying and managing the relationships between various
processes and systems to achieve organizational objectives?

I. Systematic improvement.
II. Customer focused.
III. Continuous improvement.
IV. Universal responsibility.
(a) Only (I) above
(b) Only (II) above
(d) Only (IV) above
(1 mark)
< Answer >
29. The following is the information relating to the number of defects noted from a grinding process after
observing a sample of 10 items.
Sample Number 1 2 3 4 5 6 7 8 9 10
Number of Defects 2 5 0 6 3 4 1 3 2 7
Find LCL for the defects chart from the given data.
(a) 2.15
(b) 2.00
(c) Zero
(d) – 2.00
(e) – 2.15.
(2 marks)
< Answer >
30. Macaulay Pvt. Ltd. is trying to create a niche in the fast growing FMCG sector. To attract and retain
business, the organization should have a competitive advantage. ERP enables the organization to
optimize and organize different qualifiers and order-winners so as to gain competitive advantage in the
market. Which of the following is not one of the order-winners that apply to most companies?
(a) Price
(b) Delivery reliability and speed
(c) Quality
(d) ISO standards
(e) Product range.
(1
mark)
< Answer >
31. Calculate the activity variance of a project for the activities (1 – 2) and (2 – 4) from the following:
Activity to tm tp
1–2 5 7 8
1–3 8 9 10
2–4 10 12 14
3–4 4 6 7

(a) 0.25, 0.67
(b) 0.50, 0.67
(c) 0.25, 0.44
(d) 0.50, 0.66
(e) 0.50, 0.25.
(2 marks)
< Answer >
32. Robotics is an automation technology that has received considerable attention. It is based on two related
technologies. Which of the following are the activities that are performed by robots in processing
operations?
I. Spot welding.
II. Continuous arc welding.
III. Loading and unloading materials.
IV. Spray painting.

(1 mark)
< Answer >
33. In Material Requirement Planning (MRP), which of the following reports contain information about
errors, late or overdue orders, or any other deviations from the normal planned objectives?
(a) Planning reports
(b) Performance reports
(c) Exception reports
(d) Cancellation or suspension reports
(e) Order releases.
(1
mark)
< Answer >
34. Which of the following is not among the various stages in the ERP implementation methodology?
(a) Identifying the needs for the ERP package
(b) Evaluating the “as-is” situation of the business
(c) Decisions about the desired “would-be” situation for the business
(d) Improve relationship with the suppliers
(e) Reengineering of business processes to achieve the desired results.
(1
mark)
< Answer >
35. Reducing the total maintenance cost is the objective of the operations manager of a firm. Which of the
following is/are the costs used in the calculation of total maintenance cost?
I. Preventive maintenance costs.
II. Training costs.
III. Remedial maintenance costs.
(a) Only (I) above
(b) Only (II) above
(1 mark)
< Answer >
36. Organizations hold some components and parts as end products that are supplied to the customers but
are not included in the MPS, as they have no role in the production process. Which of the following
identifies those products?
(a) Raw materials
(b) Spare parts
(c) Subassemblies
(d) Complementary parts
(e) Substitute parts.
(1
mark)
< Answer >
37. Project management is the process of planning, directing and controlling resources to meet the
technical, cost and time constraints of a project. Project management techniques are employed to
determine which of the following?
I. Market demand.
II. Schedule of activities.
III. Project duration.
(a) Only (I) above
(b) Only (II) above

(1 mark)
< Answer >
38. Which of the following services are considered to be important in manufacturing organizations with
heavy machinery and equipment under facilities management?
I. Preventive maintenance services.
II. Safety and security services.
III. Janitorial services.
(a) Only (I) above
(1 mark)
Automated Storage and Retrieval Systems (AS/AR) are computer-controlled and mechanically- < Answer >
39.
operated materials handling systems. Which of the following are those semi-automatic systems that
can be specifically used to store and retrieve inventory items from stock?
(a) Straddle trucks
(b) Physically operated robots
(c) Hydraulics
(d) Hand pallet trucks
(e) Automated guided vehicles.
(1
mark)
< Answer >
40. Successful implementation of a JIT program in a firm requires three essential elements in its people,
supplier involvement being one of them. Building effective partnerships between the firms and the
suppliers depends on four elements. Which of the following are those elements?
I. Trust.
II. Communication.
III. Linearity of production.
IV. Time to make changes.
V. Marketing strategies.
(a) (I), (II), (III) and (IV) above
(b) (I), (II), (III) and (V) above
(c) (I), (II), (IV) and (V) above
(d) (I), (III), (IV) and (V) above
(e) (II), (III), (IV) and (V) above.
(1 mark)
< Answer >
41. Improving relationships with the suppliers is one of the important principles of supply chain
management. Which of the following is/are the various approache(s) a manufacturer can adopt to
maintain a relationship with the suppliers?
I. Invite competitive biddings.
II. Enter into long-term contracts.
III. Make strategic alliances.
IV. In-house manufacturing.
(a) Only (I) above
(1
mark)
< Answer >
42. Operational planning defines the operational requirements for maintaining a supply chain. Which of the
following is not a function of operational planning?

(a) Commodity planning
(b) Supplier capacity planning
(c) Customer credibility
(d) Planning for supplier evaluation
(e) Certification processes.
(1 mark)
< Answer >
43. Productivity is independently influenced by different factors/components in different ways. Which of
the following is not a component of productivity?
(a) Price efficiency
(b) Allocative efficiency
(c) Product efficiency
(d) Technical efficiency
(e) Scale efficiency.
(1 mark)
< Answer >
44. The effectiveness of a supply chain is influenced by various business and economic forces. Which of
the following is not one of the forces shaping the supply chain management?
(a) Consumer demand
(b) Globalization
(c) Competition
(d) Workstations
(e) Government regulation.
(1 mark)
< Answer >
45. Which of the following is a priority rule used by firms when they want to maximize the number of
completed jobs?
(a) Earliest due date
(b) Longest processing time
(c) Shortest processing time
(d) First in, first serve
(e) Slack time remaining.
(1
mark)
< Answer >
46. Supply Chain Management (SCM) integrates procurement, operations and logistics to provide value
added products or services to customers. It can provide both tangible and intangible benefits to an
organization. Which of the following is not an intangible benefit to an organization?
(a) Improvement in quality
(b) Improvement in customer satisfaction
(c) Improved facility utilization
(d) Enhanced customer relationships
(e) Enhanced supplier relationships.
(1
mark)
< Answer >
47. Inventory control and production control vary on certain aspects inspite of the tasks of inventory control
in the raw materials storage and production departments being the same as that in the production control
department. Which of the following is/are the area(s) in which the focus of the two functions conflict?
I. Cost minimization.
II. Materials availability.
III. Materials allocation.
(a) Only (I) above
(b) Only (II) above
(1

mark)
< Answer >
48. Which of the following is not a characteristic of a Just-In-Time inventory management system?
(a) Uniform workstation loads
(b) Small lot sizes
(c) Remedial maintenance
(d) Flexible facilities and multi-skilled workforce
(e) Continuous improvement.
(1 mark)
< Answer >
49. ABC analysis is used by firms to serve the purpose of altering the expenses associated with controlling
the materials, according to their usage value. Which of the following is/are the area(s) it does not
consider?
I. Importance of a material.
II. Cost of materials.
III. Availability of materials.
(a) Only (I) above
(b) Only (II) above
(1
mark)
< Answer >
50. Business reengineering is the fundamental rethinking and radical redesign of business processes to
achieve dramatic improvements in certain critical or contemporary measures of performance. Which of
the following are those performance measures?
I. Cost.
II. Quality.
III. Market share.
IV. Service.
(1
mark)
< Answer >
51. Facilities management encompasses a range of activities. Which of the following activities includes
developing long-term and short-term plans, space forecasting and financial forecasting?
(a) Space planning and forecasting
(b) Facilities planning and forecasting
(c) Operations, maintenance and repair
(d) Workplace planning, allocation and management
(e) Alteration, renovation and workplace installation.
(1 mark)
< Answer >
52. Which of the following operational issues in the process of globalization deal with decisions concerning
the flow of materials from one facility to another or from one location to another, the cost of
transportation and the availability of distribution channel?
(a) Facilities
(b) Procedures and planning
(c) Capacity
(d) Integration
(e) Management and organization.
(1 mark)
< Answer >
53. Scheduling refers to the setting up of operations processing times for the completion of jobs by the time

they are due. It can be either a medium-range or a short-range planning activity. Which of the following
decisions are the bases for scheduling?
I. Strategic decisions.
II. Tactical decisions.
III. Operational decisions.
(a) Only (II) above
(1
mark)
< Answer >
54. Many organizations outsource their maintenance activities, in order to reduce the costs incurred in
maintenance. Which of the following statements is/are true with respect to contract maintenance?
I. It’s a process of outsourcing where activities are outsourced to external vendors.
II. It is useful for seasonal maintenance activities.
III. It warrants the involvement of in-house maintenance department.
(a) Only (I) above
(b) Only (II) above
(1 mark)
< Answer >
55. Calculate the number of Kanbans (N) required by Ventura Appliances Ltd. from the following
information.
Average demand per unit time(D) – 2500 units
Lead time to produce a part(L) – 5 days
Safety Stock(S) – 2500 units
Container size(C) – 5000 units.
(a) 3
(b) 4
(c) 6
(d) 7
(e) 11.
(2
marks)
< Answer >
(t o + 4t m + t p )
56. Which of the following is represented by the equation, t e = 6 ?

(a) Earliest start time
(b) Expected start time
(c) Expected time
(d) Expected finish time
(e) Critical path.
(1 mark)
< Answer >
57. Gap analysis helps identify the areas that are not handled by the standard system. For which of the
following gaps can the steering committee take action?
I. Gaps that can be eliminated with minimal programming.
II. Gaps that require extensive rework and additional resources.
III. Gaps that cannot be handled by the system.
(a) Only (I) above
(b) Only (II) above

(1
mark)
< Answer >
58. Calculate the total elapsed time for the given information.
Machines
Job
P Q R S
A 12 7 5 8
B 10 4 3 6
C 8 3 2 7
D 14 5 4 9

(a) 42 hours
(b) 48 hours
(c) 57 hours
(d) 62 hours
(e) 72 hours.
(3 marks)
< Answer >
59. Consider the following network (duration in weeks):

4 12

3
4 5
5
3
5 6

The critical path of this network is
(a) 1–2–6
(b) 1–2–3–4–6
(c) 1–2–3–4–5–6
(d) 1–3–4–6
(e) 1 – 3 – 4 – 5 – 6.
(2 marks)
< Answer >
60. Which of the following objective of the Materials Requirement Planning (MRP) system assists the
production department in identifying the quantity, timing and availability of components and parts, and
simultaneously placing orders to satisfy the requirements on time?
(a) Reduced investment in inventory
(b) Improved customer service
(c) Faster response to market changes
(d) Improved operating efficiency
(e) Reduced prices of products.
(1
mark)
< Answer >
61. Which of the following is/are true regarding Electronic Data Interchange (EDI)?
I. Tracks sales or product usage rates.
II. Enables planning better production and shipment schedules.
III. Increases inventory levels.
(a) Only (I) above

(b) Only (II) above
(1 mark)
< Answer >
62. Cost of failure is one of the categories of cost of quality which relates to non-conforming and non-
performing products. Which of the following costs is not an internal failure cost?
(a) Retesting of repaired products
(b) Scrap
(c) Costs of concessions made to customers
(d) Downtime
(e) Losses due to process variability.
(1 mark)
< Answer >
63. From the information given below, calculate time cost ratio for the activities 1 – 2, 2 – 3 and
2 – 4.
Activity Normal Time Crash Time Normal Cost Crash Cost
1–2 2 1 1200 1400
1–3 5 3 2500 3000
2–3 3 2 4200 5500
2–4 4 2 3200 6200
3–4 3 3 1800 2700

(a) 200, 1300, 1500
(b) 200, 1500, 1300
(c) 100, 1300, 1500
(d) 1300, 200, 1500
(e) 1300, 1500, 200.
(3 marks)
< Answer >
64. Which of the following is/are the key aim(s) of World Trade Organization (WTO)?
I. Increasing awareness about the trade rules and regulations of different countries.
II. Providing a forum for discussion relating to trade issues and concerns.
III. To act as a dispute settlement body for trade related disputes.
(a) Only (I) above
(b) Only (II) above

(1 mark)
< Answer >
65. Outsourcing and out-tasking are the tools used by facilities managers to carry out the various tasks in
facilities management. Which of the following services is/are most commonly outsourced?
I. Furniture movement.
II. Landscape maintenance.
III. Architectural design.
IV. Core activities.
(a) Only (III) above
(b) Both (II) and (IV) above
(1 mark)
< Answer >
66. An electronics giant which has a major order to be delivered in a fortnight’s time wishes to reduce the
scheduled time of some of the activities to deliver the order on time. Project planning is accomplished
by which of the following?

I. Subcontracting.
II. Extra shifts.
III. Additional capacity installation.
(a) Only (I) above
(b) Only (II) above
(1
mark)
< Answer >
67. The Bills of Material file consists of the complete list of which of the following?
I. Subassemblies.
II. Parts.
III. Raw materials.
IV. End products.
(1
mark)
< Answer >
68. Total quality control programs require sophisticated computer systems and databases. Which of the
following are the computer dependent systems that help improve the quality of processes and products?
I. Robots.
II. Numerically controlled machines.
III. Automated assembly systems.
(a) Only (I) above
(b) Only (II) above
(1 mark)
< Answer >
69. Purchasing department which is set up to purchase materials in large quantities by grouping orders from
all the departments of a firm performs various important tasks. Which of the following is not one of
those tasks?
(a) Processing the requisitions for materials and supplies from all departments
(b) Negotiating with the departmental heads in relation to quality discounts
(c) Identifying and selecting the vendors
(d) Evaluating the suppliers in terms of their quality and promptness in delivery
(e) Inviting bids to acquire certain materials.
(1
mark)
< Answer >
70. Acceptance plans are used to verify the quality of both incoming raw materials and outgoing finished
materials. Acceptance sampling is based on average outgoing quality and operating characteristics.
Average outgoing quality is indicated by
(a) Total defects in the lot
(b) Average defects in the lot
(c) Total number of items removed from the lot
(d) Total quality items in the lot
(e) Average replacements in the lot.
(1 mark)
< Answer >
71. A small manufacturing house involved in making screws for a large manufacturing company dealing in

heavy machinery received 3 job orders - P, Q, R, to prepare screws of varying sizes, for 3 different
machines.
From the following information, develop the order in which jobs are to be processed using the
dispatching rule – Slack Time Remaining (STR).
Job (in order of arrival) Processing times (days) Due date (days hence)
P 2 6
Q 7 9
R 3 7

(a) P–Q–R
(b) P–R–Q
(c) Q–P–R
(d) Q–R–P
(e) R – Q – P.
(2 marks)
< Answer >
72. Improper maintenance of a firm’s machines and equipment will affect the organization in many ways.
Which of the following could be stated as impact of poor maintenance?
I. Increase in production costs.
II. Customer dissatisfaction.
III. Unmatched product specifications.
(a) Only (I) above
(b) Only (II) above
(1 mark)
< Answer >
73. Benefits such as increase in productivity and improvement in the quality of product or process design
accrue to which of the following?
(a) CAD
(b) CAM
(c) FMS
(d) CIM
(e) AI.
(1 mark)
< Answer >
74. Which of the following is not a problem encountered during a typical ERP implementation process?
(a) Rushed deadlines
(b) Wrong team members
(c) Several major milestones
(d) Unmotivated teams
(e) Communication breakdown.
(1
mark)
< Answer >
75. Prabha Pharmaceuticals Ltd. is a company which uses the PERT networking technique in planning and
scheduling projects. Which of the following statement(s) is/are true relating to the advantages of
PERT?
I. Provides a graphical display of project activities.
II. Effective in planning more than one interrelated project activities.
III. Ideal for tactical level planning.
IV. Ideal for strategic level planning.
(a) Only (I) above

(e) (I), (II) and (IV) above.
(1 mark)
< Answer >
76. Netting is a step in the MRP information processing which calculates the net product requirements by
first identifying the gross product requirements from the MPS.
Net requirement is calculated as
(a) Net Requirement = Gross Requirement – Quantity on order
(b) Net Requirement = Gross Requirement – On hand space inventory – Quantity on order
(c) Net Requirement = Gross Requirement – On hand space inventory
(d) Net Requirement = Gross Requirement
(e) Net Requirement = Gross Requirement – Order received.
(1
mark)
< Answer >
77. Which of the following could be the possible problem that resulted in a failure in the implementation of
JIT system by Ford?
(a) Cost
(b) Flexibility
(c) Quality
(d) Unwilling suppliers
(e) Time.
(1 mark)
< Answer >
78. Which of the following help robots to respond to stimuli such as touch and light, so that they can be
effectively used to mix chemicals in laboratories and to handle radioactive materials?
(a) Sensors
(b) Grippers
(c) Specialized devices
(d) Programs
(e) Machine tools.
(1
mark)
< Answer >
79. Electronic Supply Chain Management (ESCM) requires transforming the way companies deal with each
other. They should be willing to exchange information relating to which of the following?
I. Inventory levels.
II. Pricing strategies.
III. Promotion plans.
IV. Forecasts.
(b) Both (I) and (IV) above
(1 mark)
< Answer >
80. If the manager of an automobile service station needs to ensure effective material flow, he needs to
maintain which of the following?
I. Accessories.
II. Spare parts.
III. Lubricant oil.
(a) Only (I) above
(b) Only (II) above
(1
mark)

< Answer >
81. Praja Tools Ltd. has 35 identical machines, on which 100 people work per day in 3 different shifts. The
following is the failure pattern of these machines, observed for the last one year.
Elapsed time
after last
maintenance 1 2 3 4 5 6 7 8 9 10 11 12
in months
Probability of
failure 0.10 0.05 0.10 0.10 0.10 0.10 0.10 0.05 0.10 0.10 0.05 0.05

Calculate the number of breakdowns per year from the above data.
(a) 1.864
(b) 1.762
(c) 1.365
(d) 1.951
(e) 1.563.
(2 marks)
< Answer >
82. Automation is defined as technology that performs a task or set of tasks based on programmed
commands and has several advantages, inspite of the high costs involved in it. Which of the following is
not an advantage of automation?
(a) Efficient use of materials
(b) Improvement in productivity
(c) Higher level of maintenance
(d) Improvement in the quality of the product
(e) Reduced factory lead-time.
(1 mark)
< Answer >
83 The scheduling of service operations is very different from the scheduling of manufacturing activities.
What is the principle that is generally adopted in service operations?
(a) Shortest processing time
(b) Slack time remaining
(c) Earliest due date
(d) First in, first serve
(e) Longest processing time.
(1
mark)
< Answer >
84. Enterprise Resource Planning packages provide one-stop solutions to all business process requirements.
Which of the following is/are not constraint(s) in the process of integrating different business entities by
ERP?
I. Geographical differences.
II. Managerial differences.
III. Functional differences.
(a) Only (I) above
(b) Only (II) above

(1 mark)
< Answer >
85. Reducing the setup time is one of the characteristics of JIT systems. Firms adopt a procedure to reduce
setup times. Which of the following does not form a part of the procedure to reduce setup times?
(a) Analyze existing setup procedures
(b) Separation of internal and external setup activities
(c) Conversion of external setup activities into internal setup activities
(d) Cleaning

(e) Streamline work.
(1 mark)
< Answer >
86. A strong human resources management component is required for the successful implementation of a
JIT manufacturing system. Which of the following elements is/are essential in the workforce of an
organization for successful implementation of JIT system?
I. Teamwork.
II. Supplier involvement.
III. Discipline.
(a) Only (I) above
(1 mark)
< Answer >
87. In Supply Chain Management, the focus of all the supply chain partners in a demand chain will be on
(a) Suppliers
(b) Retailers
(c) End users
(d) Manufacturers
(e) Wholesalers.
(1 mark)
< Answer >
88. Which of the following is/are the key issue(s) that define supply chain integration?
I. Information integration.
II. Coordination.
III. Organizational linkage.
(a) Only (I) above
(b) Only (II) above
(1 mark)

Suggested Answers
Operations Management - II (MB242): July 2007

1 Answer : (c) < TO
Reason : Some of the types of rules and regulations that could be framed by governments to hinder the expansion
of global corporations are:
• Tariffs and duties, which may limit the benefits achieved by economies of scale in production
• Quantitative quotas and other similar restrictions
• Preferential procurement from local organizations by government and quasi-government entities
• Governmental pressure to use locally produced components or to engage in local R & D
• Preferential tax treatment and labor policies
• Corporate laws, tax laws, or other policies of the local government.
2 Answer : (b) < TO

Reason : UCL = X + A2 R

X =
∑X =
409
= 40.9
n 10

∑ R = 57 = 5.7
R= n 10

∴UCL = 40.9 + (0.48 × 5.7) = 40.9 + 2.736 = 43.64
3 Answer : (d) < TO
Reason : Dependence on forecast values and estimated lead-time can sometimes be misleading, making it a
disadvantage of the MRP system.
4 Answer : (c) < TO
Reason : Key components in transportation decisions are: selecting the mode of transportation, route and network.
Processing times is not a key component in transportation decisions.
5 Answer : (c) < TO
Reason : Overheads other than material costs like labor costs and administration expenses are relatively fixed and
do not offer much scope for reduction, material is only the major area for cost reduction.
6 Answer : (b) < TO
Reason : The basic objective of the customer-supplier focus is to prepare an organization’s processes in such a way
that they are able to understand and react to customer requirements fast.
7 Answer : (a) < TO
Reason : The primary reports generated by the MRP system include, planned orders, order releases, changes in due
date, and cancellation or suspension reports.
Performance reports are generated as optional reports or secondary reports by the MRP system.
8 Answer : (b) < TO
Reason : Just-in-time manufacturing is based on the concept of continuous improvement, which includes two
important and mutually supporting components:
• People involvement
• Total quality control
9 Answer : (b) < TO
Reason : The manufacturing function is responsible for the provision of conformance, a dimension of quality
describing the degree to which a product is manufactured to the agreed specification.
10 Answer : (b) < TO
Reason : Critical ratio is the ratio of the actual time remaining to complete the job and the scheduled time

remaining to complete the job.
So, the components of a critical ratio include actual work remaining and planned time remaining.
11 Answer : (d) < TO
Reason : The MPS file, in addition to information about when and how many units of finished products are
required, contains information about the available cumulative lead-time for purchasing, receiving,
fabricating, and assembling.
12 Answer : (c) < TO
Reason : The main tasks of the raw materials inventory department include arranging for the replenishment of
stocks in liaison with the purchasing department and auditing the raw materials periodically.
Reason : The probability of rejecting the lot at AQL is called a producer’s risk, and is also called Type I error.
Reason : Business modeling is a precursor to business process reengineering with a purpose to provide a general
overview of the operations of a business without going into the technical details of the processes and
systems.
15 Answer : (e) < TO
Reason : Productivity can be defined in different ways. French mathematician Quesnay defined productivity as the
relation of output to input. Another Frenchman Littre defined productivity as the “faculty to produce”.
The Organization of European Economic Cooperation formally defined productivity as “the quotient
obtained by dividing output by one of the factors of production”.
Reason : The major areas of maintenance in a firm are:
Mechanical maintenance
Civil maintenance
Electrical maintenance.
Reason : Changing managers’ attitude is an approach adopted by organizations to manage globalization. This
approach slows down the pace of globalization but organizations prefer this approach because they feel
that any sudden change in an organization may lead to a situation where managers are not able to perform
their tasks effectively.
Reason : Part time workers provide the following benefits to firms:
Reduced personnel costs as part-time workers do not get any fringe benefits.
Improved performance of the firm as part-time workers are less likely to find their jobs monotonous.
Reason : In the first stage of infant mortality, the probability of failure is very high but it decreases rapidly. The
reason for these failures can be attributed to improper design and installation. This stage is also known as
‘burn in’ stage where the functional defects in the products come to fore.
Reason : Routing explains the sequence of operations and processes to be followed in order to produce a product.
The production requirements of a product and the layout structure are the important considerations for
drawing up routing sheets.
21 Answer : (a) < TO
Reason : Flextime is a scheduling approach where employees are given the option of choosing their work timings,
provided that a specified number of hours are completed in a week.
Reason : The difference in approaches between national and global goals and management necessitates changes in
several key strategic operational decisions. The following are the areas that describe the differences in
each of these approaches.
Selection of markets
Product development and technology choice
Allocation of resources

Reason : Some of the operational benefits that firms can derive from the use of JIT systems are:
Increased utilization of machinery and equipment
Reduced investment in inventory
Improvement in the quality of product or service
Reduction in space requirements of the firm
Reduction in production cycle time
Zero inventory storage and maintenance costs
Closer relationship with suppliers
Reduction in formal paper work
Higher involvement of employees as they are responsible for the quality of goods that they produce.
Reason : Critical ratio = Planned time remaining / Actual work remaining.
Planned time remaining = Originally scheduled time (-) Time elapsed since beginning the work.
Jobs Planned time remaining Actual work remaining Critical Ratio
A 32 – 20 = 12 10 12 / 10 = 1.2
B 26 – 20 = 6 5 6 / 5 = 1.2
C 41 – 20 = 21 18 21 / 18 = 1.167
D 37 – 20 = 17 14 17 / 14 = 1.214
Reason : Gantt chart is a graphic display of the duration of a set of activities. Gantt charts are simple bar charts that
can be used to schedule any type of operation.
Reason : Some of the methods that service firms can adopt in order to meet customer demand under situations of
limited availability of service facilities are – appointment systems, reservation systems and strategic
product pricing.
Reason : Managers at the upper-management level generally carry out product planning operations. Middle level
managers perform operational planning functions, and manufacturing line workers and staff supervisors
carry out operations control functions.
Reason : Systematic improvement involves identifying and managing the relationships between various processes
and systems to achieve organizational objectives.

Reason : The LCL for a number of defects chart or C-Chart is c − 3 c

c=
∑ c = 33 = 3.3
n 10
∴ LCL = 3.3 − 3 3.3 = 3.3 − 5.45 = −2.15
In a C-Chart, if the LCL value is negative then it is taken as zero, because the number of defects cannot be
negative.
The LCL value for the C-Chart from the given data is taken as zero.
Reason : Some of the order-winners that apply to most companies are: price; delivery reliability and speed; quality,
and product range. An ISO standard is not an order winner but an order qualifier.
2
 tp - to 
 
Reason : Activity variance =  6 

2 2
8 - 5  3 
  =   = 0.25
Activity variance for the activity (1 - 2) =  6  6 
2 2
14 - 10   4 
  =   = 0.44
Activity variance for the activity (2 - 4) =  6  6 
Reason : Processing operations include activities such as spot welding, continuous arc welding, spray painting etc.
these operations involve the manipulation of a tool by a robot to perform a particular action. For instance,
spray painting involves pre-programmed movements of the spray painting gun over the area to be painted.
Reason : Exception reports contain information about errors, late or overdue orders, or any other deviations from
the normal planned objectives. They are automatically generated whenever actual delivery of parts, sub-
assemblies, etc. differs from the planned schedule.
Reason : Improve the relationship with suppliers is a principle of Supply Chain Management. The various stages
that a typical ERP implementation program goes through are:
• Identify the needs for the ERP package.
• Evaluating the “as-is” situation of the business.
• Decisions about the desired “would-be” situation for the business.
• Reengineering of business processes to achieve the desired results.
• Evaluation of available ERP packages.
Reason : The objective of the operation manager is to reduce the total maintenance cost, which is the sum of
preventive and remedial maintenance costs.
Reason : The components and parts as end products that are supplied to customers are spare parts or replacement
parts.
Reason : Project management techniques are employed to determine the project duration, critical activities of the
project, the schedule of activities etc. Market demand is not determined using project management.
Reason : The presence of heavy machinery and equipment in manufacturing companies’ calls for preventive
maintenance services and safety & security services, while service oriented companies like banks and
BPOs may see janitorial services as the prime service under facilities management.
Reason : AS/AR systems are computer-controlled and mechanically-operated materials handling systems which
can also perform complex operations of loading and unloading the inventory with their dozens of
automated pallet movers. Automated Guided Vehicles (AGVs) are the systems that can be used
specifically to store and retrieve inventory items from stock. The semi-automatic AGVs (a combination of
computer and human control) can move independently on their guided paths to a specific workstation and
then signal (using built-in horns or lights) to the operator to perform the required operation.
Reason : Building effective partnerships depends on four elements: trust, communication, linearity of production,
and time to make changes.
Reason : On the basis of market positions and industry structure, manufacturers can decide how to approach
suppliers – invite competitive biddings, enter into long-term contracts, make strategic alliances, outsource
etc.
Reason : The functions listed in operations planning include commodity planning, supplier capacity planning,

planning for supplier evaluation, certification processes etc. Customer credibility is not one of the functions of
operations planning.
Reason : The components of productivity include price efficiency, allocative efficiency, technical efficiency and
scale efficiency. Product efficiency is not a component of productivity.
Reason : The various business and economic forces influencing the effectiveness of a supply chain include
consumer demand, globalization, competition, information and communication, government regulation
and environmental concerns.
Reason : Firms use the ‘shortest processing time’ rule when they want to maximize the number of completed jobs
and keep a lower number of jobs in waiting.
Reason : Improved facility utilization is a tangible benefit of supply chain management. All others are intangible
benefits of supply chain management.
Reason : Inventory control emphasizes cost minimization, whereas production control focuses on material
availability. Materials allocation is not one of those areas of conflict.
Reason : Preventive maintenance is a characteristic of a JIT system, but not remedial maintenance.
Reason : ABC analysis does not consider the aspect of availability of materials. The importance of a material is
another aspect that is not considered in ABC analysis.
Reason : According to Dr. Michael Hammer, who introduced the concept of reengineering, “Business
reengineering is the fundamental rethinking and radical redesign of business processes to achieve
dramatic improvements in critical, contemporary measures of performance such as cost, quality, service
and speed.” Market share is not one of the contemporary performance measures.
Reason : Facilities planning and forecasting includes developing long-term and short-term plans, space forecasting,
and financial forecasting.
Reason : Integration decisions are concerned with the flow of materials from one facility to another or from one
location to another, the cost of transportation, and the availability of distribution channel.
Reason : Scheduling can be either a medium-range or a short-range planning activity on the basis of the strategic
and tactical decisions made in an organization.
Reason : The process of outsourcing an organization’s maintenance activities to external vendors is known as
contract maintenance. Contract maintenance is useful for seasonal or irregular maintenance activities,
which do not warrant the involvement of the in-house maintenance department.
(DL + S) (2500 × 5 + 2500)
= = 3.
Reason : N = C 5000
(t o + 4t m + t p )
Reason : Expected time ( t e ) = 6 where t o = optimistic time, t m = most likely time, t p =
pessimistic time.
Reason : For the first category of gaps, the project team can take action, while for the second and third categories,
the steering committee should take action such as allocating extra resources if required.

Reason : Here, minimum time on P = 8, maximum time on Q and R are 7 and 5 respectively.
The problem can be continued only if the minimum time on P is greater than or equal to maximum time
on Q and R.
In this problem, the minimum time on P is greater than the maximum time on Q and R.
Assuming two fictitious machines, M and N, whose processing times are as follows:
Job M=P+Q+R N=Q+R+S
A 12 + 7 + 5 = 24 7 + 5 + 8 = 20
B 10 + 4 + 3 = 17 4 + 3 + 6 = 13
C 8 + 3 + 2 = 13 3 + 2 + 7 = 12
D 14 + 5 + 4 = 23 5 + 4 + 9 = 18
Least processing time is 12 hours for Job C on Machine N, assigned first and performed last.
Least processing time for Job B is 13 hours.
Least processing time for Job D is 18 hours.
Least processing time for Job A is 20 hours.
The optimum sequence is obtained as:
A D B C
The calculation of total elapsed time is shown as:
Machine P Q R S
Job A 0 – 12 12 – 19 19 – 24 24 – 32
Job D 12 – 26 26 – 31 31 – 35 35 – 44
Job B 26 – 36 36 – 40 40 – 43 44 – 50
Job C 36 – 44 44 – 47 47 – 49 50 – 57
The total elapsed time = 57 hours.
Reason :
Path Duration
1–2–6 4 + 12 = 16 weeks
1–2–3–4–6 4 + 3 + 4 + 5 = 16 weeks
1–2–3–4–5–6 4 + 3 + 4 + 3 + 6 = 20 weeks
1–2–3–5–6 4 + 3 + 5 + 6 = 18 weeks
1–3–5–6 5 + 5 + 6 = 16 weeks
1–3–4–5–6 5 + 4 + 3 + 6 = 18 weeks
1–3–4–6 5 + 4 + 5 = 14 weeks
Critical path has the maximum time estimate. So, 1 – 2 – 3 – 4 – 5 – 6 is the critical path.
Reason : To improve customer service, organizations need to fulfill delivery promises. MRP assists the production
department in doing that by identifying the quantity, timing and availability of components and parts, and
by simultaneously placing orders to satisfy the requirements on time.
Reason: Increase in inventory levels is not an advantage of EDI. EDI helps in reducing the inventory levels.
Reason : Costs of concessions made to customers is an external failure cost.
 Crash cost - Normal cost 
 
Reason : Time Cost Ratio =  Normal time - Crash time 
∴ Time Cost Ratio for the activities 1 - 2, 2 – 3, 2 – 4 respectively are calculated as:
 1400 - 1200 
  = 200
1 – 2:  2-1 

 5500 - 4200 
  = 1300
2 – 3:  3-2 
 6200 - 3200 
  = 1500
2 – 4:  4-2 
∴ The answer is (a); 200, 1300, 1500.
Reason : The three key aims of WTO are:
To increase awareness about the trade rules and regulations of different countries and ensure that these rules
and regulations are not repealed or modified suddenly.
To provide a forum for discussion where member countries can come together to discuss trade related
issues and concerns.
To act as dispute settlement body for trade related disputes among member countries.
Reason : Services that are most commonly outsourced are architectural design, trash and waste removal from the
premises, housekeeping, landscape maintenance, property appraisals, hazardous material removal,
furniture movement, and food and refreshment services.
Core activities of the organization are not outsourced.
Reason : Project crashing can be accomplished by subcontracting, overtime, extra shifts, increasing the number of
workers, additional capacity installation etc.
Reason : The Bills of Material (BOM) file consists of the complete list of all end products, the structure
(subassemblies, parts, and raw materials which constitute the product assembly) of the products, and the
quantity of each item required for producing each higher-level item in the product hierarchy.
Reason : Robots, numerically controlled machines, flexible manufacturing systems, automated assemble systems,
and automated storage and retrieval systems are computer dependent systems that help improve the
quality of processes and products.
Reason : The important tasks performed by a purchasing department are: processing the requisitions for materials
and supplies from all departments of the organization; identifying and selecting suppliers (or vendors) to
obtain the materials required; negotiating with suppliers in relation to purchasing contracts and quantity
discounts; inviting bids to acquire certain materials; and evaluating suppliers in terms of their quality and
promptness in delivery.
Reason : Average outgoing quality indicates the average defects in the lot that is assumed to have been inspected
completely and all the defects or defective items have been removed or replaced.
Reason : Slack Time = Due Date (–) Processing Times.
Slack times for the three jobs are:
P: 6 – 2 = 4
Q: 9 – 7 = 2
R: 7 – 3 = 4.
As the slack times for the jobs P and R are same, these jobs are planned based on their processing times
i.e., the job with the smallest processing time is planned first.
Therefore, the order of the jobs according to their slack time remaining is Q – P – R.
Reason : Poor or improper maintenance of a firm’s machines and equipment will affect the following:
Production capacity – Inability to operate machines at optimum efficiency resulting in delays in meeting
delivery schedules and ultimately leading to customer dissatisfaction.

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