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INTRODUCTION.
Very Short Answer Type Questions · j

1. Who is the father of Scientific Management? [MODEL QUESTION]

a) Frank Gilberth b) F. W. Taylor
c) Mark Parker Follet d) Max Weber
Answer: (b)

2. Which function of the management Is the basic of all other functions?

[MODEL QUESTION]
a) controlling b) staffing c) planning d) directing
Answer: (c)

3. The Wage Boards appointed by the Government and usually consist of number
of persons [MODEL QUESTION]
· a)5 b)7 c)10 d)12
Answer: (c)

4. Decision making helps in [MODEL QUESTION]

a) improving efficiency b) increasing profits
c)-achieving organizational goal d) implementing a policy
Answer: (c)
5. Planning Is [MODEL QUESTION]
a) looking ahead b) looking back
c) guiding people d) delegation of authority
Answer: (a)

6. Who is the father of Human Relation approach? . [MODEL QUESTION]

• a) Elton Mayo b) Henri Fayof·
c) F·.W. Taylor d) Mary Parker Foilet
Answer: (a).

7. Management is a art of [MODEL QUESTION]

a) profit making b) misleading customer
c) getting thing done by others d) satisfying the competitors
Answer: (c)

8. Management is [MODEL QUESTION ]

a) an art b) a science
c) both (a) & (b ) d) none of these
-Answer: (c)

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9. Basic objectlve of financial managomont Is (MODEL QUESTION]

a) profit maximization b) wealth mar.lmization
c) both of theso d) nono of thQse.
Answer: (b)

10. When authority flows from tho top executive to tho lower level of employees it
is known as [MODEL QUESTION]
a) Functlo!'al Organisation b) Staff Organisation
c) Formal Organisation d) Line organization
Answer: (c)'

11. Job satisfaction refers to [MODEL QUESTION]

a) attitude of an employee towards
· his
· work
b) work culture
c) relationship between superiors and subordihates
d) appraisal of the performance of employees
Answer: (a)

12. A ___ is a quantity that influences the output or behavior of a mathematical

object but is viewed as being· held constant. [MODEL QUESTION]
a) Parameter b) Function c) Input · d) Coefficient
Answer: (a)

13. Models that describe aspects of a domain or system can be characterized as

[MODEL QUESTION]
a) emphasizing static b) dynamic information
c) both of them d) either (a) & (b)
Answer: (d )

14. ·is the collective set of attitudes, emotions, and satisfaction exhibited
by employees [MODEL QUESTION]
a) morale b) Behavior c) Content d) Proactive
Answer: (a)

15. Something that makes people feel more confident and cheerful
·
[MODEL QUESTION]
a) moral booster b) satisfaction c) productivity d) motivation
Answer: (a)

16. In which year did factories act come into force? [MODEL QUESTION]
_
a) 23rd September, 1948 . b) 1st April, 1949
c) 4th April,· 1949 d) 12th September, 1948
Answer: (b)

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Answer:
Division ·of Labour means division of work into different part or piocesses which are
performed by one or group of\vorkers according to their ability and aptitude.
Division of labour is of four kinds:
(i) When there is complete division of jobs among different members of a community, it
is called simple division of labour.
(ii) When the work is divided into a number of processes in such a way that each worker
does one process only, it is called complex division of labour.
'(iii) When due to one reason or the other a particular area specialises in a type of labour,
is called territorial'division of labour.
(iv) When different countries produce things of their specialisation, is called international
division of labour.

Adva11tages:
I. Each worker specialises in a particular type of work, therefore, efficiency increases.
2. Since each worker performs the same work again.and again, therefore, there is im­
provement in skill.
3. It r(;sults in greater production.
4. It becomes possible to do work quickly and efficiently without putting much strain on
workers and industry.

Disadva11taKeS:
1 .. Since a worker is required to do the same work again and again, hence he becomes
dull.
2. It divides the responsibility for which there are more chances of shifting.
3. It hinders the mobility of labour.
4. If operations in one department are stopped, then whole of the industry suffers.
7. State how authority and responsibility are interrelated. [MODEL QUESTION]
Answer:
Delegation of Authority
The process by which authority passes from one managerial level to another is known as
delegation. As organizations grow in size and complexity, no one person can perform all
the tasks or exercise all.the authority that is need�d 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
efT�rt inust 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 himselfdoes not have.
Delegation is one of the most important skills a manager must possess. The overworke d
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 hims�lf.
But through delegation-through dividing his load and sharing his responsibilities with
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responsibility and authority. Accountability ·.is easy to establish if the standards and
measures of perfonnance arc predete•nnined:

s. State the concept of. 'Delegation of Authority'. [MODEL QUESTION)

Answer: . .
The process by \Vhich authority passes from one managerial level to another is known as
delegation. As organisations grow in size and complexity, no one person can p�rfonn all
the tasks or exercise all the authority that is needed to accomp!ish goals.
Delegation of authority· is not the same as division of work. As .Henry .Fayol says,
"Division of work pem1its reduction in the number of objects to which attention an d
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
. delegate an authority which he himself does not have.
subordinate.' No one can
Delegation is one of the most important skills a manager must· possess. The overworked
managers are tiften those who do !lOt know how to delegate. For they lack_ the skill to get
results through others, An _individual can perfonn limited work in a day, all by himself.
But through delegation-through dividing his-load and sharing.his responsibilities with
others�e can. a_ccomplish much more. No manager and no organisation can run
smoothly and effectively without delegation.

9. What is Organizational culture? What are the qualities needed for a great
organizational culture? [MODEL QUESTION]
Answer: ·
Organizational culture is the collection of values, expectations, and practices that guide
and inform the actions of all team members. A great culture involve a positive traits that
lead to improved perfonnance, while a functional company culture brings out qualities
that can hinder even the most successful organizations,

Qualities of a great organizational culture:

Every organ!zation's culture is different, and it's important to retain what makes your
company u�1que. �owever, _the cultures of high-performing organizations consistently
reflect certain quahlles that you should seek to cultivate:
• Align�ent con:ies when !he omp.any's objectives
_ � and_ its empl�ye·es' motivations are
all pulling in the same d1rect1on. Exceptional organizations wor
k to build contfnuous
alignment to their. vision, purpose, and goals.
• Appreciation can ta�e na y form : a public
! � � kudos, a· note of thanks, or a promotion,
A cult�r� of apprec1allon 1s one m which all team
members frequently provide
recogn_1tto? and thanks for the contributions of oth rs.
• "I:rust 1s vital to an organization. With e
a culture of trust, team members can expr ess
themselves an� rely on others to have their back
• Performance is key, as great compan when they try something new.
ies create a culture that means business.

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3. Each departmc:nt will be busy with their work instead of focusing on the overall
development of the organisation.

· Linc and Staff Organisation: Line and staff organisation is an improved version of the
line organisation. In line and stall' organisation, the functional specialists are added in
line. The staffis for assisting the line members in achieving the target effectively.
Advantages'of Linc and Staff organisation
I. Easy decision making as work is divided.
2. Greater coordination between line and staff workers.
3. Provides workers the opportunity for growth.
Disadvantages of Linc and Staff Organisation
. I. Conflict may arise between line and staff members due to the improper
distribution of authority.
2. Staff members provide suggestions to the line members and decision is taken by
line members, it ll)akes the staff members feel ignored.

Functional Organisation: Functional organisation structure is the type of organisation

where the task of managing and directing the employees is arranged as per the function
they specialise. In a functional organisation, there are three types of members, line
members, staff members·and functio'nal members.
. Advantages of Functional organisation
I. Manager has to perform a limited number of tasks which improves the accuracy
of the work.
2. Improvement in product quality due to involvement of-specialists.
Disadvantages of Functional organisation
I. It is difficult to achieve coordination among workers as there is no one to manage
them directly.
2. Conflicts may arise due to the members having equal positions.

Project Organisation: A project organisation is a temporary form of organisation

structure that is formed to manage projects for a specific period of time. This form of
organisation has specialists from different departments who are brought together for
developing a new product.
Advantages of Project organisation
I. The presence of many specialists from different departments increases· the
coordination among the members.
2. Each individual has a different set of responsibilities which improv_e s control of
the process.
Disadvantages of Project Organization
I. There can be a delay in completion of the project.
2. Project managers may find it difficult to judge the performance of differ ent
specialists.

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entrepr�neurs �vho 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.
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 arc as follow:
i) Memorandum of association
ii) Article of Association.
iii) Concept from the Directors to net as n director.
iv) Le.tter 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 \Vith prescribed fees to the Registrar of Companies, the Registrar wiII 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: Wiihin 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 h� been coll�ted and other
necessary condjtions have been complied. Then the Registrar will issue a certificate of
• commencement of business.

5. a) Define the concept of Industrial relation. [MODEL QUESTION)

b) State the factors affecting Industrial relations.
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", repr.esent the r�lationships that exist in a,n industrial organization
between the employer and employees as between employees .and employees. POOi'
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.

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b) factors Affecting Industrial Relations

1. Enlightened M_anagemen!: Enlightcned managc �ent ·who recognize rights of
wo.rkers and ut1hzes_ _ to appreciate the sincere efforts of the
every opportunity
employees.
z. Strong and Responsible Trade Unions: Strong and responsible trade unions who
promote welfare of workers without harming interests of management. A resporuible
union is one, which exhorts workers to produce more, persuades management to give
highe r 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 i�
management, suggestion schemes, grievance committee, etc. help to build good
industrial relationships.
5. On-The-Job Conditions: Good lighting, safety conditiOl!St provision of drinking
water, .management efforts to reduce noi.se/vibrations, shorter hours of work, 0exible
timings etc. gives the feeling to employees that managemen t thinks for them which
helps to improve industrial'relations.
6. Off-The-Job Conditions: Off the job conditions in the fonn of conditions at home
have influenced the industrial relations..
7. Literacy of Workers: Educated workers have greater sense of responsibility and arc
not misled b y outside trade union leaders.

c) Causes of Industrial· Disputes

I) Eco110111ic Causes:
It1dustrial disputes relate to eco11omic causes i11cl11des-
a) Demand for higher wages.
b) Demand for higher dearness allowance.
c) Demand for share in the profits of the Company.
d) Demand for better working conditions. ·
e) Rationalization and automation in Industry
t) Demand for facilities such as medical, education, housing etc.
2) Ma11age;ial Causes:
It includes the followings -
a) Attitude of employers' to.wards labour in respect of (i) not to re ognize 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, (111) Wrong tran.5fer 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.:
Q Layoff and retrenchment.
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.l?OPULAft r,uoblOA'(IONO,

,I) {)fller C1111,w

1
.,·:

It l11ul11de� •
I) ln'Cspo11slhlc trndll 11111011.
II) Polltlc11I 11fll1111tlo11.

Stc11M Tnkcn hy C:O\'C1·11111cnt to l'l'C\'Cnt lndustrlnl Disputes

The Oovcrn111c111 or l11dl11 hns t11kc11 followl11u measures to prevent industrial disputes:
11) Wnucs Uonrds hnvc been set up by the Oovernment of India for various industries
�uch M Jute, cotton, lllxtlle, suunr, cement iron & steel etc., whose main function is to
llx wngcs In the respective Industries.
b) The pnymcnt of Uo11us ,\ct 1965, which wns introduced in the year I 965 provides for
puy111c111 ol' ·1111nl111urn bonus ut 8.33% of annual income for employees drawing
ll\OJ1lhly sutnry or Rs. 15000 or less.
c) The tndustrlnl l!mploymcnt (stunding Order) Act, I 946 requires each employer to
mnke their st1111dlng orders covering conditions of employment and get them certified
1'1'0111 the cc11lfylnu ol'Occr nnd mnkc them k,nown to all workers.
d) Works co1111nlttcll, under the tndustriul Dispute Act, 1947, every industrial unit
cmployl11u 100 (one hundred) or more workers is required to set up a work
committee co11slstinu of rcprescntntives of employer and employees, to 111aintain a
uood rclntlon between employer nnd employee.
o) Joint M1111oucmcnt Councils were suggested by the Government in its industrial
resolution 1956 to lnl1l11to the process of labour participation in management but
unfortu11utcly the mcnsurc hus not found much roots.
I) Notlo1111I Arbltrution Promotion Boord set up in I 967, comprising representatives of
employers' ond employees' orgonizotions, public undertakings and central and state
13overnmcnt to promote voluntary orbitrution to settle industrial disputes. Industrial
disputes referred to volu111nry orbitrution if concilintion elTorts fail.

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2.Detennine equitable wage differentials between different jobs in the organization.

3,Eliminate wagl! inequalities.
4.Ensure that like wages are paid to all qualified employees for like work.
5.Fonn a basis for fixing incentives and different bonus plans.
6.Serve as a useful reference for selling individual grievances regarding wage rate.
. 7.Provide infonnation for work organization, employees' selection, placement, training
and numerous other similar problems.
8. Provide benchmark for career planning for the employees in the organization.

c) Adva11tages:
I. 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 tum, helps in
promoting hannonious relations between them.
3. Job evaluation simplifies wage administration by establishing unifonnity 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 modem times of mechanization, perfonnance depends much on the machines
than on the worker himse!V,herself. In such cases, job evaluation provides the realistic
basis for detennination of wages.
7. The infonnation 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 help� in rating all
these hobs and determining the wages and salary and also removing ambiguity in
them.

LimitaJio11s:
·1. In spite of many advantages, job evaluation suffers form the following
drawbacks/limitations:
2. Job evaluation is susceptible because of human error al\d 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 forc es.
Say Kerr and Fis�er , the jobs which tend to rate high as compared with the market
9

are those of junior, nurse and typist, .while craft rates are relatively low. W eaker
groups are better served by an evaluation plan than by the market, the former places
the emphasis not on force but on equity".

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Orgnnl�atlon wilh wide span,

Advantnge Disadvanlagc
• Superiors are forced to delegolc • Tendency of overloaded superiors to become
• Clear policies must be made decision bottlenecks
•·Subordinates must be carefully sclecled • Danger of superior's loss of control
• Requires exceptional quality of managers

s. Explain the factors affecting employee morale. [MODEL QUESTION)

Discus!> how to overcome these In an organizational context.
Answer:
Employee morale is defined as the attitude, satisfaction and overall outlook of employees
during their association with an organization or a business. An employee that is satisfied
and motivated at workplace. usually tend to have a higher morale than their counterparts.
Employee engagement and employee satisfaction play an important ro.le for employe es to
be happy in their workplace.
' On the contrary, employees who are not happy in their workplace, who constantly
complain and crib about the various attributes 1n an organization, like employee
policies, workplace culture, facilities a·t·work etc. tend to have a low employee morale.
Th_is is quite evident in their be�aviour. ·Employee morale is a complex concept bec ause it
involves a lot of factors that affect their morale.
Employee morale is a complex phenomenon and depends on var.ious factors. Here is the
different criterion that affects employee morale:
1. Organiza t ion Itself: While it may sound surprising, but the organization itself is one
of the biggest a'nd most important factors that affect employee morale. An organization
influences an employee's attitude towards �is/her work. The reputation of an organization
can certainly build up for better or worse, their attitude towards it.
.2. Type of work: The nature of work an employee is performing at his/her workplace
also is greatly responsible to determine the morale. If the employee is expe cted to
perform the same task day in and out, there is going to b9redom associa ted with it soo? er
or later. It can make situations worse fqr an employee. Unorganized organi� tt�n
structure also affects employees, if the employee feels that he/she is just a cog machi ne in
a factory line, instead of a real person, this too may adversely affect their morale. . .
3. Personal attributes: Mental and physical health play an important role in determtnt?g
employee morale. If the employee is not physically or mentally fit, this can be� potent
tal

obstacle in their progress and learning at their workplace. There are also other 1mpo
rtanl

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because they arc open to feedback. If your employees know their voice is being heard and
they arc considered ns an integral part of the organization, this will reflect in their
confidence.
If the employees feel they cnnnot share information with you, there are greater chances
that the infonnation will never be conveyed to you rather will just make rounds within
the team and you will be alienated from whatever is happening in your own team. Instead
be receptive to feedback, transparency is the need of the hour for most organizations and
so it should be.
Finally, employee morale is not just the employee's responsibility or attitude. ft is a
· collective responsibility of the employees and the organization to provide a conducive
working environment and a workplace culture that exudes positivity and goodwill. Work
culture is because of the employees and they should know the importance of values and
morale. To achieve the best, it is important to first be the best Employee morale is vital
to organization culture- a positive collective attitude will create a positive working
environment for everyone. If your organization has a poor mo.rale or a culture of
suffering then there is a possibility that in your organization employees have a low or
negative morale that can adversely affect the productivity of the organization. It can most
certainly lead to greater employee attrition, just to begin with.

9. Discuss behaviour of system's. in industrial context. 1 • [MODEL QUESTION]

Answer:·
Systems have a number of behavioural traites. Knowledge of t!tese greatly inform the
business design process, enbling us to understand and predict the behaviour of the system
over time; particularly how to affect change and the likely effects of any interventions -
both desirable and undesirable.
• Emergent Properties
• Simple and Complex Systems
• Stability and Leverage
• Side Effects
• Feedback Loops
• Cause and Effect
• Open and Closed Systems
• Limiting Complexity
• System Paradoxes

Emerge11t Properties: Systems are rnore than the sum of their parts. Systems function as
a whole, so they have properties above and beyond the properties of their parts, called
'Emergent Properties'. If you take the system apart, you will not find its essential
properties. These only arise when the system is operating. ·
Simple a11d Complex Systems: A system maintains itself through the interaction of its
parts. It is the relationship between these parts that is important, rather than the number
· or size of the parts. These relationships, and therefore the systems, can be simple or
dynamically complex. Dynamic complexity is where_the elements can relate to each oth er.
in many different ways.
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reduce the difference between where a system is and where it 'should' be. Whilst there is
a difterencc betwe�n the present state of the i.ystem and its desired state, bal�ncing
feedback will move the system in the direction of the desired state. The closer the system
is to the desired state, the smaller the dilTerence represented by the feedback, and so the
less the system moves.
A system needs a way of measuring, otherwise it could not tell the difference between
where it is and where it should be.It needs to measure accurately. If it does not then it
can trigger feedback loops where none are needed. Secondly, the measuring system needs
·
to measure at the right level of precision for the system to work. .
Most of the time, feedback gives chains of cause and effect. Each action influences what
follows. Cause and effect goes in circles; and what was the cause from one point of view
becomes the effect from the other.
Feed-forward describes a slightly different effect: It comes from our ability to anticipate
the future. An anticipated effect in the .future triggers the cause in the present, which
would othenvise not have happened. Feed-forward creates self-fulfilling, or self­
defeating prophecies.
There is frequently a ·time delay between cause and effect. We will often not see the
result of a change immediately. The more dynamically complex the system, the longer
the feedback takes to travel around the network of connections. The time the feedback
takes to go through the system is referred to as its 'memory'.
Cause find Effect; When considering what' causes a particular effect, we tend to genera_te
a list of factors and weight these in terms of importance.This is sometimes referred to as
'laundry list thinking'.
This approach assumes a line?r relationship between cause and effect, with each factor
having a fixed relative importance.If only life was that simple. Unfortunately, causes are
more often dynamic, rather than static. The relative importance cif any one factor may
change over time, depending on the feedback loops that exist. It is better to think in tenns
of influencing factors, rather than causes. This is an· important point to remember next
time you find yourself using an Ishikawa or fishbone diagram, as part of a quality
improvement initiative.
Systems Thinking highlights three fallacies surrounding how we traditionally view
questions of cause and effect: ·
Cause and Effect are separate, and the cause precedes the effect Feedback tells use
that the effect of a cause can be the cau.se of an effect. Does the shortage cause the
hoarding, or the hoarding cause the shortage? Which one comes first depends on whe re
you start;
Effect follows cause closely_ in time and space. This is a common expectation. But in
systeins there is always a delay and the effect may appear in a completely different part
of t�e system. This means that when we are examining cause and effect chains, we ne �d
to extend our time horizon and focus. If you see a repeated pattern, look for the cause 111
the pattern, not the different circumstances or explanations for each event. Repetition is a
clue that the cause lies within the underlying structure of the system; ..
The effect is proportional to the cause. This may be true for physical objects, but tt is
not necessarily the case for systems. Some actions may lead to big responses, or �o
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response at all. Systems have thresholds. Only if the threshold is reached do you get a
response.
Ope11 and c_1osed �ystems: Conventional physics deals with closed systems, those "that
can be considered isolated from their environment. In a closed �ystem, the final state is
completely determined by the initial conditions - a thermostat is an example of a closed
system.
Social and living systems are open syst�ms· - they maintain themselves from moment to
moment, by taking in and giving out to the surrounding environment. They change
constan tly, just to stay t�e same.
Open systems are extremely sensitive to their starting conditions. This is what makes
them so unpredictable. A very small difference in ·starting conditions can lead to a very
different result, under exactly the same stimulus. This· is the starting point for chaos
theory and the study of highly complex systems. Fortunately, business organisations are
complex, but not that complex!
Limiting Complexity: There are two kinds of complexity: inherent and apparent.
Inherent complexity is the real thing. The SY.stem is so complex, the feedback loops form
such" a tangle, that their study is a task best left to chaos theorists and their super
computers. Fortunately, business organisations do not full 'into this category.
Apparent complexity looks complicated, but there is order to be found within. Aspects of
an organisation, or problem, can seem very complex and unfathomable, but as a systems.
thinker we need to be looking for patterns in this apparent.complexity.
There ar.e two ideas that help 10· limit complexity in a system. The wider you cast the net,
the more complexity there will be. So rule one - establish useful boundaries.
The other idea is that complex systems have a strong tendency to revert to a stable state.
Order seems to arise spontaneously in complex systems. These ordered states, or
'attractors', happen because of the way feedback is o(ganised within the system.
Business organisations-settle into stable states. Organisational change therefore involves
first destabilising the system in its present state and then creating another attractor state..
This is in affect what happened at Toyota in the 1950s; and started their journey towards
becoming the leading car manufac turer that they are today, through the creation of the
. Toyota Production System (TPS).
System Paradoxes: Systems create some strange, seemingly illogical paradoxes. A good
illustrat ion of this is traffic congestion. The logical answer to traffic congestion is to add
more roads. Unfortunately, very often it is not the road space that is the problem, but the
number of junctions, or congestion points. More roads create more junctions. This is
known as the 'Briiss paradox'. It has implications in many areas, including the flow of
information in organisations - more is not necessarily be�er.
Adding new roads to a congested network can also create a second problem, exemplified
by the M25 London orbital motorway. It was build to attract traffic away from London,
providi ng a route around London, rather than through it. It worked well - too well. As
Well as attracting traffic from London, it created more traffic, creating more wear and
tear, resulting in frequent roadworks, leading to a reinforcing feedback loop of more
cong estion.

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The M25 is an example of a basic system· pattern known as the 'tragedy of the
comm0ns'. When there is an attractive common resource more and more people tend to
use it. The more people who use it, the less attractive it becomes, until it loses its value
to everyone. In the case of the M25, a balancing loop has set in. Certain sections of the
road have become so congested that people.avoid.them and use other routes or forms of
transport. A balance has been reached. Worth noting that the response has been to add
more lanes. This is a good example of trying to solve a problem with the same thinking
that created it.

10. a) Write distinguish between organizational culture and climate.

b) Discuss decentralization and centralization In organizational context
c) Explain factors affecting organizational climate and culture. [MODEL QUESTION]
Answer:
a) Organizational culture is defined as the underlying beliefs, assumptions, valY.es and
ways of interacting that contribute to the unique social and psychological environment of
an organization. Organizational culture includes an organi�tion's expectations,
experiences; philosophy, as wen as. the values that guide member behavior, and is
expressed in member self-image, ·inner workings, interactions with the outside world, and
future expectations. Culture is based on shared attitudes, beliefs, customs, and written and
unwritten rules that have been developed over time and are considered valid. Culture also
includes the organization's vision, values, norms, systems, symbols, language,
assumptions, beliefs, and habits.
Organisational climate can be defined as a set of attributes specific to a particular
organisation that may be induced from the way that organisation deals with its members
and its envi!onment: For the individual members within the organisation, climate takes
the form of a set of attitudes and experiences which describe the organisation in terms of
both static characteristics (such as degree of autonomy) and behaviour outcome· and
outcome- outcome contingencies.

b) -
Basis for
Centralization Decentralization
Comnarison •
Meaning The retention of powers and The dissemination of authority,
authority with respect to planning responsibility and accountability
and decisions, with the top to the various manag eme nt
,
management,
Centralization.
is known as levels, · is
Decentralizatio'n.
knQWn
.
as

Involves Systematic . and consistent Systematic dispersal of authority .

reservation ot authoritv.
Communication Vertical Open and Fre_e
Flow
Decision Making Slow Comparatively faster
Advantage Proper
,
co·ordination and Sharing of burde n and
Leadershio responsibility -
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customers, take risks and learn from their mistakes, llftd have capability and experience at
· ·
creating change. .
Consistency Trait Consistency is the organization's core values an·d the internal systems
that sui,port problem solving, efficiency, and effectiveness at every level and across
organizational boundaries. Organizations also tend to be effective because they have
"strong" cultures that are highly consistent, well coordinated, and well integrated.
Employee satisfaction, also known as job satisfaction, is the extent to which an
individual is happy with their job and the role it plays ill their life. "Employee
satisfaction" describes employee perceptions of whether their desires are being met in the
workplace. In many cases, perceptions ·o f overall_ happiness are the main drivers of
whether an employee feels satisfied. If an employee_ feels happy on an hourly basis
throughout the day, they are likely to feel content with their job overall. Employees who
are only happy for part· of the day may feel happy as well if they have had negative
experiences with other employers. .
i nvolvement Trait [nvolvement is the degree to which individuals at all levels of the
organization are engaged in pursuit of the mission and work in a collaborative manner to
fulfil organizational objectives. This trait consists of building human capability,
ownership and responsibilitY: Organisations empower their people, build their
organizations around teams, and develop human capability at all levels
Mission Trait Mission is the degree to which the organization and its members know
where ihey are going, how they intend to get there, and how each individual can
contribute to the organization's success. Successful organizations have a clear sense of
purpose and direction that defines organizational go�Js and· strategic objectives. They
express the vision of how the organizations will look in the future.

11. How can we describe the.concept of job satisfaction? Why is satisfaction of

employees so important to an organization? Mention few factors.which can affect
the satisfaction of employees regarding their job. [MODEL QUESTION]
Answer:
Job satisfaction is the feeling and per�eption of a worker regarding his/her work and how
he Qr she feels well in an organization. rt indicates the extent·of employees' positive or
negative feelings towards their Jobs and organizational behavior tried to improve it.
Effective job satisfaction is a person's emotional feeling about the job as a whole.
Cognitive job satisfaction is how satisfied employees feel concerning some aspect of their
job, such as pay, hours, or benefits.
Job satisfaction has been linked to many variables, including productivity, absenteeism,
turnover, etc. It is significant because a person's _attitude and beliefs may affect his or h er
behaviour.
Importance of job satisfaction are:
• Lower Turnover.
• Higher Productivity.
• Increased Customer Satisfaction.
• Employee Absenteeism.
• Helps to Earn Higher Revenues.
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CPM AND PERT

Very Short Answer Typo Questions

1. Which typo of organization lo tomporary by naluro? [WBUT 2022)

Answer:
A project is n tcmpornry orgu11iz11tion designed to deliver a specific set of change
objectives. /\ programme is II framework to provide strategic direction to· a group of
projects so thnt they can combine to provide higher order strategic or developmental
change for the organiz.1tio11.
2. What Is the symbol for activity In a network diagram? [WBUT 2022)
Answer:
Arrows arc used to represent activity in a network diagram.
3. What is PERT Analysis? [WBUT 2022)
Answer: °
Program Evaluation and Review Technique (PERT) is a method used to examine the
tasks in a schedule and determine a Critical Path Method variation (CPM). It
analyzes the time required to complete each task and its associated dependencies to
determine the minimum time to complete a project.

4. The proportion of profit to be retained for growth and to be distributed among

shareholders is decided through [MODEL QUESTION]
a) Financing Decision b) Investment Decision
c) 'Dividend Decision �� d) None of these
Answer: (c)

5. Planning is [MODEL QUESTION]

a) Looking ahead b) Looking back
· c) 'Guiding people .d) Qelegation of authority.
Answer: (a)

6. "slack" refers to the difference between [MODEL QUESTION]

a) optimistic and pessimistic time
b) early start time and early finished time
c) late start time and early start time
d) early start time and late finish time
Answer: (c)

7. Which of the following Is referred to as crash time? [MODEL QUESTION]

a) normal time allowed for a project activity
b) time beyond which cost reduction Is not possible
c) time beyond which cost reduction is .possible
d) no float time
Answer: (b)

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 INTRODUCTION TO INDUSfRIAL MANAGEMENT

,,..-- time target or estimation of percent

.. ..
off as mmm11zmg cost IS more
completion is more important. imnortant.
's. It is appropriate for high precision time
estimation.
It is appropriate for reasonable time
estimation.
. .
�6 It has Non-repetitive nature of job.
. It has repetitive nature ofiob.
�7. There is no chance of crashing as there There may be crashing because of
is no certainty of time· .
-s. It doesn't use any dummy activities.
certain time boundation.
It uses ·dummy activities for
representing seauence of activities.
-9.
research and development. -
It is suitable for projects which required It is suitable for construction projects.

3. Write down the terms CPM and PERT. [MODEL QUESTION]

Answer:
CPM [CriticalPath Method]:
In 1957, DuPont developed a project ma_nagement method designed to address. the
challenge of shutting down c�emical 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.

Step s in CP� Project Planning

l. 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)
as
6. Updat� the CPM diagram the project progresses.

PERT
The Program Evaluation and Review Technique (PERT) .is a netwo�k model that allows_
for randomness in activity completion times. PERT was developed 10 the late 1950'.s for
th e U.S. Navy's Polaris project having thousands of c�ntractors. It has the _potential to
reduce both the time and cost required to complete a proJect.
In a project, an a�tivity is a task that mu�t-_ be performed and _ a� event is � milesto?e
re an act1v1ty can beg1�, �I I of its
rnarking the completion of one or more act1v1fies. Befo _
r ed mus t be com plete d. Proj ect networ� mod els represent acttv1t1es and
P ecessor activities
. ITM-39
 INTRODUCflON TO JNQU$T1 UAtMANA(iHl4J£; [l

3. PERTs become very complex very quickly, so the key to usage is lo plan and manage
small chunks of work
In conclusion it is presented as:
WBS Charts aids the team to visualize the plan·
• Reduces inconsistendes in the project plan
• Reduces duplicated t�ks
• Intuitive
• PERT Charts reinforce sequencing (bi-directional)
• Locates orphan tasks·
• Promotes fixing obvious missing predecessors and successors
• Identifies wrong owners & process group�
• Opportu�ities to shorten limelines

6. In a network of project_what does crashing and updating mean?

· [MODEL QUESTION]
Answer:
Crashi11g an activity (Crashing the network): Reducing the time required to complete
an activity (in hopes that this will reduce the completion tiine of the entire project) by
assigning additional resources to that activity but reducing the d\lJ"ation time of the
activ{ties on ·the critical path may change the critical path. The main reason for which
project crashing is chosen is precisely to speed up its conclusion. If the end date:of the
project needs to be anticipated, the crashing allows. you to get the most compression of
the planning with the least impact and the lowest cost
Network Updating may be defined as any adjustment to the arrow diagram which
becomes necessary owing to departure from the project schedule and laid down earlier. It
is the process of incorporating in the networ� the changes which have occurred due to
replanning and reschedu ling. Updating can ·be undertaken at regular intervals depending
upon the progress of the project. The frequency of updating is more in case of small_•
projects as compared to large projects, because little problems here and there can easily
delay a small project. Large projects also need updating but generally near their
completion stage.

Long Answer Typ e Questions

1. A iimall project Is composed of 7 activities whose time estimates ar! listed

below. Activities are being Identified by their beginning (I) and ending 0) node
numbers.
Activities Time In weeks
I j to ti tp
1 2 1 1 7

1 3 1 4 7

1 4 2 � 8

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 ll'lfRODUCTION TO INDUSTRIAL MANAGEMENT

Float at T4= LST-EST=3- 3=0 days

The two critical paths of the project are:
J. Start-TI-T2-T3-T5 = 10 Days
2. Start-Tl-T4-T5=10 Days
As both the paths takes IO days, both arc critical, so slack at any activity is zero and all
activities are considered to be critical.

Gan tt chart
\

41 I 5 61 71 8 9 10
Tl I I I I
I I I
I I I
I I I
I I I
I
I
T3 I
I
I
T4 I I
I I
I
T5 ,.I
I
I
I
CP
Critical Aclivily

-'· The foIIowma table shows the ac t'1v1'f1es, sequences and the three time esb·mates
Time (Davs}
Activity Optimistic Most Likely Pessimistic
Immediate Predecessor {to ) (t., ) (tp )
A ... 14 16 16
B A 15 17 25
C A 14 18 22
D B 15 20 25
E B 10 18 26
F C 8 9 16
G E 4 8, 12
H ·D, F 11 15 19
I G,H 16 17 18
a) Draw the network diagram.
(t,} ( 0" )tor all activities and find the
2
b) Calc ulat e the estim ated time and variance
critical path.
�) How completion p�obability ls estimated? [MODEL QUESTION]

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is estimated from the normal distributer curve.

From that probability of completion
releva_nt information have be en
s. Various 3ct1vltles of 'll small project and other
shown In the table below Most likely time Most pessimistic
Most optimistic
Activity Time In da s to in da s tm time in da s t
4 8 12
1-2 7
1 4
2-3
8 12 16
2-4
3 5 7
3-5
0 0 0
4-5
3 6 9
4-6
5-7 3 6· 9
5-S 4" 6 8
7-S 4 8 12
8-9. 2 5 8
9-10 4 10 16
6-10 4 6 8
calculate:
i) e.xpected task times and variances
ii) earliest and latest times for each event
iii) draw the network and the critical path
iv) The probability of an event occurring at the proposed
· completion date if the
original contract time of completion is_ 48 days. · [MODEL QUESTION]
Answer·.
Activity t. tm fp Expected time Variance
0 ={1/6(t,-t.)
2 2l
T.=116
(t.+4t-+t�)
1-2 4 8 12 8 1.78
2-3 I 4 7 4 1
2-4 8 12 16 12 1.78
3-5 3 5 7 5 . 0.44
4-5 0 0 0 0 0
4-6 3 6 9 6 1
5-7 3 6 9 6 1
5-8 ,I'
7-9
\.\ .. 4
4
6
8
8
12
6
8
0.44
1.78
8-9 2 8 5 1
9-10 4 10 16 10 4
6-10 4 6 8 6 0.44

IJ'M-48
 JNTilODUCrION TO INDUSTRIAL MANAGEMENT

10

It may be observed from the fig. that critical path 1-2-4-5-7-9-10

E.xpected length of the project is T.=8+ l 2+o+6+8+ I 0=44days
Variance (02)= l.78+1.78+o+l+l.78+4=10.34
Therefore n= 3.216
Probability that the project will be completed within 48days is
P ={X :S 48} = P{Z < (48-44)/3.216}
= 0.S+P {0 :S Z :S 1.24} = 0.5 + 0.3925 = 0.8925 Ans.

6. A construction company is preparing a PERT network for laying the foundation

of a new art museum. Given the following set of activities and their timelines (in
days) ,---,-...,....,---.--=--�---.,.....,,......,,.....,.....,.,..--,-,,,....------�
Activity Predecessors Optimistic Pessimistic Most likely
time� time time�
A 2 4 3
8 - 8
7
8
11
8
9
C A
D 8 6 6 . 6
E· C 9 11 10
F C 10 18 14
G C,D 11 11 11
H F,G 6 14 10
I E 4 6 5
J I 3 5 4
K H 1 1 1
i) draw PERT network
Ii) compute activity slack and determine the critical path .
iii) the contract specifies a Rs.5000 per day penalty for each day of the proJect
extends beyond 37 days. What is the probability that the company will have to pay
a maxim um penalty of Rs.15000? [MODEL QUESTION}

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a. Tho followin tablo shows tho dotalls of a ro ect

Activity Predecessor Nonnal Nonnal cost .crash tlmo Crash cost
timo wks Rs. 000 wks Rs. 000
A 10 20 7 30
B 8 15 6 20
C B 5 8 4 14
D B 6 11 4 15
E B 8 9 5 15
F E 5 6 4 8
G ADC 12 3 8 4
Indirect cost Is R�.400 per day. Find the optimal duration and associated minim um
cost. [MODEL QUESTION]
Answer:
The network with the nonnal time of the project activities is

Critical path is 1-2-3-4-6 and nonnal project duration is 26wks

ge.nce, r�,cieted cost is Total cost= Total direct cost+ Indirect cost for 26wks
= 71000+400•26•7 = Rs. 1,43,800
Indirect cost- Rs.400 per day or Rs.2800 per week. .
For finding the optimal duration, we will have to crash the project
step by step using· cost
sl•of�h�i�� .

;;,�ashing cost per day = [crashing cost- normal cost]/ [normal

time- crashing time]
For variou
· s act1v1
· · t1es
· eras h'mg costs are:
Activitv A B C D E F G
cost/day (in Rs.000) 3.33 2.5 6 2 2 3 0.25

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INTRODUCTION TO INDUSTRIAL MANAGEMENT

crashin, sche d uI e fior t ,e oroiect 1s:

-project Ci;-ashing Normal Direct cost (Rs.) Tc,tal Indirect cost Total
duration activity (a) (b) (a+b) (Rs.) cost
&weeks (lh,)
-
(wks)
26 4 -6(4) 71,000 71,000 26•2800=72,800 1,43,800
22 2-3(1) 71,000 4*250=1000 72,000 22*2800=61,600 1,33,600
21 1-2(2) 71,000 1000+2000=3000 74,000 21 *2800=58,800 1,32,800
19 2-4(1) 71,000 3000+5000=8000 79,000 I 9*2800=53,200 1,32,200*
18 2-3(1) 7 1,000 8000+ I 0,000= 18,000 89,000 18*2800=50,400 1,39,400
2-5(1)
.. .
Hence we can observe that the m1mmum cost associated with the optimal proJect duration
of I 9wks is Rs. l ,32,200. Ans.

9. The normal and crash duration (days) and cost (Rs.) supervision with direct cost
for various activities involved in a reoair work is given below.
Activity Normal Crash Normal Crash Expediting
time time cost cost cost/dav
1-2 6 2 4000 12000 2000
1-3 8 3 3000 6000 600
2-4 7 4 2800. 4000 400
3-4 12 8 3000 11000 500
4-6 3 1 10000 13000 1500
5-6 5 2 4900 7000 700
3:5 7 3 1800 5000 800
5-7 11 5 6600 12000 900
6-7 10 6 4000 8400 1100
46100 78400
. total
!he indirect cost of the project Is Rs. 2000 per·day.
1) draw a network diagram for these activities Indicating the earliest start and latest
�nishing time at each node? · .
h) what is the normal and ultimate crash duration of the project 7
iii) considering the effect of direct and Indirect cost, find the optimum project cost.
[MODEL QUESTION]
Answer:

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The critical path is 1-3-4-6-7. Nomial duration is 33days

. Nonna] cost of completing the project �ithin 33days
= direct cost+ indirect cost= Rs. (46100+33•2-000) • P.J. 1121<1)
The crashin schedule is
Crashing Options l'osslblc Cost Decision ProJ«t CrUia1
stage · cnsh (days) ( duratitin
First (i),1-3 5 600
(ii) 3.4 4 .500 Crash 3-4 by 3 days 30
(iii) 4-6 2 1,500
(iv) 6-7 4 1,100
Second (i) 1-3 5 600 Crash 1-3 by 4 day, 1-3-447
1.3,y,.7
1-2-447
Third (i) 2-4, 1-3_ 1,000 Crash 2-4, 1-3 l-3-4J►7 1
by 1 day 25 1,3-547
l-2-4-"►7
Fourth (i) 6-7 4 1,100 Crash 6-7 by 4 days 21 J.3-4,i:,.7
1-3->6-7
1-2-447
J.3-5.7
Fifth (i) 2-4, 3-4, .Crash 2-4, 3-4
3.5 2 1,700 3.5 by I day 20 1-3-46-7
(ii) 3-5, 4-6 2 2,300 1-3-5-6-7
(iii) 5-7, 5-6
4-6 2 3,100 1-2-4-6-7
1-3-S-7
Sixth (i) 5-6, 4-6
5.7 2 3,100 1-3-4-6-7
..
(ii) 3-5, 4-6 2 2,300 Crash 3-5, 4-6 by 2 days 1-3-5-6-7
1-2-4-6-7
1-3-S-7

Project Duration Direct cost Indirect cost Total COSl

(day$) Nonnal Crashing Total
33 46100 0 46100 33•2000:06000 112100
30 46100 1500 47600 60000 107600
26 46100 3900 50000 52000 102000
25 46100 4900 51000 5000 101000
21 46100 9300 55400 42000 97400
20 46100 11000 57100 40000 97100
18 46100 15600 61700 36000 97700

Since the crashing cost can be further reduced till 20 day beyond which the cost will
11,

rise, the ultimate duration of the ·project is 20days and the optimal project cost is Rs.
97100.
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INTRODUCTION TO INDUSTRIAL MANAGEMENT

1 o. Write short notes oi:t the following: [MODEL QUESTION]

a) Gant Chart
b) PERT and_CPM
.,\nswer:
a) 9ant Chart:
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 o,f 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 independentl y. 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 Gan tt chart reflects the
entire schedule of work which might include duration, recourses milestones, etc. A Gantt
chart can also provide perfonnance and efficiency information that directly impacts
reward system�
.
of monetary
.
compensation and promotion.

Gantt cltart i11for111atio11

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.

b) PERT and CPM:

PERT (Project Evaluation and Review Technique)
• Another derivative of the GANTT chart
• Multiple time estimates wer.e used for each activity that allowed for variation in.
activity times
• Activity ti�es are assumed to be random, with assumed probability distrib_ution
("probabilistic" ) . .
• Activities are represe nted by arrowe d lines bet\'!'een the nodes or circles.

CPM (Critical Path Method) ·. .

• Tool to analyze project and determine duration, based on identification of "critical
path" through an activity network.
• Knowledge of the critical path can permit management of the project to change
duration
• A single estimate for activity time was used that did not allow for variation in activity
times
• Activity times are assumed to be _known or predictable.("deterministic")
• Activities are represented as nodes or circles.
POPULAR PVBLIQAIIQNS

MATERIALS MANACEMENT
l Very Short Answer Type Que�tlons !

1. Ecortomic Ort/er O"'mfit11 (EOO) Is docldod on the basis of ordering cost and
carrying cost. [WBUT 2022]

2. Which colour Is usod to lllustrato actual progress In bar charts? [WBUT 2022]
Answer:
In bar charts, different colours arc sometimes filled in the bars for showing various
control infonnation. For actual progress, green colour is used.

3. Minimum Stock Level shows minimum stock to be maintained. [WBUT.2022]

4. Which method of analysis is used for determ_ ining criticality of items?

a) VED Analysis b) ABC analysis c) FSN analysis
d) A combination of FSN and ABC analysis [MODEL QUESTION]
Answer: (a)

5. Under Selective Inventory Control, VED analysis defines VED as

[MODEL QUESTION]
a) Value, Engineering and Design b) Vital, ·Essential and Desirable
c) Volume, 'Economy and Demand d) None of these
Answer: (b)

6. EOQ is a particular order size at which [MODEL QU,ESTION]

a) carrying costs become minimum b) ordering costs become minimum
c) total inventory costs become minimum d) all of these costs are minimum
Answer: (c)

7. FSN analysis is required to control '. [MODEL QUESTION]

a) Quality of the product b) Inventory
c) Industrial disputes d) All of these
Answer: (b)

8. If the order quantity Is Increased, the annual cost of carrying inventory

· [MODEL QUESTION]
a) increases b) remains the.same
c) decreases d) not affected
Answer: (a)
,
9. The basis for 'ABC' Analysis is [MODEL QUESTION]
a) interests of Materials Manager b) Interests of Top Management
c) Parelo's 80-20 Rule d) none of these
Answer: (c)

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18. The purchase order form Is designed by [MODEL QUESTION]

a) Matorials Manager b) Purchase Manager
c) Marketing Manager d) None of them
Answer: (b)

19. The objectlve(s) of forward purchasing Is/ are [MODEL QU ESTION]

a) To guard against Interruption in supply
b) To economize the use of storage space
c) To guard against the future rise In price
d) All of these
Answer: (a)

Short Answer Type Questions

1. Calculate minimum stock level, maximum stock level;and re-ordering level:

(a) Maximum Consumption= 300 units 'per day
(b) Minimum Consumption= 180 units per day
(c) Normal Consumption =190 units per day
(d) Reorder period= 10-15 days
(e) Reorder quantity= 2,000.units
(f) Normal reorder period= 13 days. [WBUT 2022]
Answer:
Re-order Quantity=2000· units.
Considering normal consumption as general case, then normal consumption would be
190 units per day and normal re-order paid 13 days.
Lead time (considerfog normal consumption)=· 13 days.
Lead time consumption = [lead time x consumption rate (per day) considering normal
consumption]
.=[13x l90] =2470
Minimum stock or safety stock= (Maximum lead time - normal lead time) x consumption rate
=(15-13)x190=2xl90 =380
Reorder level (ROI)= Safety stock+ lead time consumption
=380+2470=2850 · .
Maximum level has been reached, when the consumption level is minimum then, lead
time consumption
= IS days x 1 80 units per day
=
. 2700
So, maximum level of inventory=(380+2700) =3080

2. Derive an expression for computation of Economic Order Quantity stating the

assumptions made. [MODEL QUESTION]

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 INTRODUCTION TO INDUSTRIAL MANAGEMENT

An swer:
EOQ can be detennined by the following fom1ula-
✓2Co0
0
EOQ =
Cc
Co= Consumption pc( annum (i.e. usage) In Units.
O = Ordering Cost for placing one order.
Cc = Carrying Cost (Including interest) of one Unit for one year (usually expressed as a
percentage ofd1e cost per unit.)
Assumptions:
i) All cost are known and constant (i.e.-Ordcring Costs, Unit Costs etc.).
ii) Rate of interest (component of Carrying Cost) is fixed.
iii) Consumption or usage rate is constant through out the year.

3 . What do you understand by materials management? Explain different functions

of materials Management. [MODEL QUESTION]
Answer:
Materials management is a body of knowledge which helps th� manager to improve the
productivity of capital by reducing the material cost, prevents large amount from capital
turnover ratio.
Mr. Dean S. Ammer defines "Materials Management". as the "total control and thus
combines tltose managerial arts connected witll co11trol of goods at all stages in a
fum's operations".
Materials management 111ainly concerns with all the planning, programming, controlling
and decision making process related with materials procured for the organisation. It is
mainly relevant with manufacturing industries but; as service industries explore it needs
concept of materials management to use its resources (materials and machines) optimally
and get increased profit. [n the following line the functions of materials management are
elucidated:

Function of material managements includes followings:

i) Materials Planning.
ii) Purchasing.
iii) Inventory control.
iv) Store-Keeping.
v) Store-accounting.
vi) Transportation both internal i.e. (material handling) and external i.e., (traffic,
shipping etc.)
vii) Disposal of scrap, surplus and obsolete materials.
viii) Material economics.
ix) Waste Management.

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6, Wh at Is MRP? Explaln Its charactorlstlcs. [MODEL QUESTION]

Answer:
Mnt erinl requirements planning (MRP) Is n production planning, scheduling,• and·
invento ry control system used to mnnugc manufacturing processes. Materials
Requirement Planning (MRP) wns introduced in 1970 as a computerized inventory
control system. It helps in knowing the need of raw mulerials and helps, to calculate the
dcmnnd for n particular item. It tokes inlo account the lead time required to order
automatically wi1li the help of sollware. It helps in tracking the records of the raw
mntcrinls especially when the materials like raw materials or components parts are
required. Basically MRP is an information system which generates automatic results in
the area of systematic planning of materials requirement. Jt is known as computerized
ordering and scheduling system for manufacturing. It uses three important input data: bill
of materials data, inventory data, and master production schedule to calculate the demand
for 3 particular items'like raw materials or components parts. Joseph Orlicky, George
Ploss! and Oliver Wight introduced MRP and popularized this programme. They
fmparted training for this programme for many years. Many upgraded versions are made
available till now. The benefits of MRP are remarkable as it generates work orders and
purchase orders automatically. Now in these days MRP-11 is available, which is known as
Manufacturing Resource Planning. .

The following arc the.Characteristics ofMRP:

i) MRP calc4lates the demand for' components, subassemblies, raw-materials, spare parts.
ii) MRP helps in systematic planning
iii) MRP takes into account the lead time required for orders.
iv) MRP helps in purchase orders planning and tracking
v) MRP is helpful in preparing production schedules
vi) MRP ensures materials are available for production and products are available for
delivery to· customers. .
vii) MRP maintains the lowest possible material and product levels in store.
viii: .MRP is helpful in planning manufacturing activities, delivery schedufes and
purchasin·g activities.

6. What Is the importance of Inventory Control System? [MODEL QUESTION]

Answer:
Inventory control system is essential for any organization implementing it. Here are few
reaso�s for companie$ for effectively running their business:
• It is difficult for a large retail store to have a track of a proper inventory control
as otherwise it might have· items going out of stock. So re-_order time can be
calculated with auto alerts given by ttie JCS.
• To track large shipments automatically, Inventory control is important otherwise
shortage of materi_als will be visible.
• Risks of errors are minimized through an automated inventory control system.
A ·
nicely developed JCS, in retail stores, helps to track theft of retail merchandise.

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• Determines cco110111lc11l lol siZll/1 for orden110 he plnccd

Accumtc eomputntlon or qunntltlcs for Rnfct.y stock

r
•
•
•
Properly nllocntinu production tl!no 11111onu vnrlous products
Adequate plnnninu for fliturc cnpnclty needs. ,,.,,,,,,_
V""J
,
l)rnwbncks or MUP:
• An MRI' system must hnvc nn nccurutc nnd efiectivc master production schedule,
good lend time cstimotcs, nnd current inventory records in order to function
efiectivcly nnd produce useful information. If any one of them ·fails at any point
the overall production of the orgnniz..ation may sufier a lot.
• lnfonnation used as an input to the MRP system must be fairly accurate. If the
infdrmation is inaccurate, it might lead to overstock, misplanning,
· understock, or
tack of appropriate resources.
• MRP optimizes the inventory level but not the acquisition cost of the materials 10
be ordered. Inventory needs to be kept lower hence it is required to purchase
materials more frequently, preferably in smaller quantities. This results in
increasing the ordering costs.
• . MRP syste ll)S can be costly and time-consuming to set up.
• It is difficult to implement an effective MRP s-ystem as strong resistance from
employees may be expected, especially those who do not wish to shift from the
comfort zone of the manual system,

8. Explain briefly what you understand by MRP1 and MRP2. Discuss briefly.
[MODEL QUESTION]
Answer:
MRP-1 (Materinls Requirement Planning)
Materials requirement Planning is an ordering and scheduling system for manufacturing
and fabrication industries, it uses bill of materials data, inventory data, and master
production schedule· to project what material is required, when, and in. what quantity.
MRP phases orders for dependent-demand items (such as raw materials, components,
etc.) over a period to synchronize flow of materials and in in-process inventories wi!h
production schedules. It also computes and tracks effect of hundreds of variables such as
new orders, changes in various capacities, overloaded · production centers, shortages,
and delays by suppliers, and feeds financial data into the accounting system. In contrast
to just in time inventory (a demand-pull production system), MRP is a plan-push system,
and in contrast to advanced planning system (a forward scheduling system) it is a
backward-scheduling system.

MJU•-JI - Ma"nufacturing Resource Planning:

Man ufacturing organizations can be broadly divided into sales, logistics, production,
engineeri ng and supporting functions. The development of Manufacturing Resource
Plan ning (MRP II) links up. all these functions together with a coverage much greater
than what is being focus_ed by traditional MRP I (Material Requirements Planning). MRP

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II can be defined as 'a method for the effective pla1111i11g of all resources of a
mat1ufact11ri11g compa11y'
It is made up of a variety of functions, each linked together; Business Planning,
Production Planning, Master Scheduling, Material Requirement �lanning and Capacity
Requirement Planning. Output from �hcse systems arc integrated with financial reports
such as the business plan, purchase commitment report, shipping budget, inventory
projection in dollars, etc.
Functions ofMRPll:
I. TopManagement Planning,
2. Operation Planning and
3. Execution

9. State the objective of materials management. [MODEL QUESTION]

Answer:
Needs and Objectives ofM?terials Management
Primary Needs/ Objective:
I) Low price: It means that the materials purchased by the company should be at the
!owes( possible cost but highest quality. So, that they can provide end product in
lowest price.
2) High iflver,tory tur11over: It means that the average inventory locked up is low
�mpared to sales. Inventory means idle and therefore, the tower it is, the better
. will
be profitability.
3) Low cost acquisitior, ar,d possessior,: This means the materials are acquired and kept
in stores at a low cost. .
-I) Cor,tifluity of supply:
· Regular continuity of supply is the must to run uninterrupted
production.
5) Co1tsiste1tcy of quality: Quality should be up to the.level and consistent.
6) Low pay roll cost: the materials department should be run at the lowest possible cost.
7) Favorable supplier relatio11: to ensure ·continuity. of supply and cons-istency of
quality, it is necessary to have a favorable supplier/ buyer relation.
8) Devel�pme11t �f p�rso1111el: development and training of personnel engaged in
matenals functions 1s necessary to make them seasoned with the present technology
and trend.
9) Mai11ter,ar,ce of records: Record maintenance is one of the major functions which
materials department has to perfo rmance for efficiency.

Seco11dary Needs I objectives:

· ·
J) Favorable reciprocal relationship with supplier dealer and department.
2) l'{ew materials a11d products: materials manager acts as an information centre about
latest modification of product, ingredients, supplier information, etc.
3) Make or buy decisior, a11d a11alysis: he/ she should decide whether a product is to be
made by company or, procured from_ some other company.
4) Sta11dardizatior,: the required materials which are bought from outside should be
.
standardi::::: so as to have fewer nos. of materials. This will help the total inventory
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1. ES1'ABLlSHlNG THE NEED FOR PROCUREMENT

l. Recognising the need for procurement
2. Calculate the requirements
3. Jotting down the specifications
4. lnfom1ing.requiremcnts to purchase
(i) Purchase indents/ Bill•of-mnterial

2. SCRUTINY OF PURCHASE INDENT

I. Completeness
2. Appropriateness
3. Passing the indent through stores
4. Logging of indents into indent register

3. MARKET RESEARCH
I. Source selection & source development
2. AdvertisemenL
3. Telephonic quotations
4. Written quotations

4. ORDER PREPARATION
I. Scrutiny or quotations
2. Negotiations
3. Placing orders to suppliers
4. Obtaining suppliers' acceptance.

S. FOLLOW UP
I. Pre-delivery follow U(l
2. Shortage chasing
(a) Reminders
(b) Personal visits
(c) Telephones
(d) emails
(e) Faxes/·Telexes
(t) Post.ing of personnel at suppliers' works

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·
7. Storage a,u/ record keeping ,
► After inspection the goods are segregated in to accepted and rejected categories.
► Only fully accepted quantity is forwarded to the stores. The quantity is physically
verified and entered into the ledger or bin cards and only thereafter the issue is
allowed.

8. I1111oicil1g & Pay111e11t

Receipt ofsupplier's invoice: ·
\Vhen the supplier supplies goods, he immediately prepares invoices. Sometimes, both
buyer and supplier have discussion and supplier agrees to raise invoices after the receipt
of goods-receipt-reports.

12. Distinguish between Bjn card and $tores Ledger. [MODEL QUESTION]
Answer:
For proper control over material, it is necessary to record the physical move_ment of
materials regularly. The main function of store - keeper is to maintain proper records
regularly regarding receipts, issue and balance of various items of materials. Bin Card
and store - ledger are the main tools to maintain proper record of stores.
Bio Card
Bin Card is a record maintained in respect of each item of materials to show the quantity
in,'the quantity out and quantity in stock after each transaction. The stock at any time as
shown in Bin Card, may be verified with actual stock taking/ verification.
The bin cards provide a continuous record of stock of-each item and assist the stores­
keeper to control the store. For each material the maximum stock to be held are noted on
the Card. Where the materials are of a kind requiring advance ordering, an ordering level
is also indicated there in so that fresh.supplies·may be ordered before minimum level is
reached. These cards also provide· an independent check on the stores ledgers.

St.ores Ledger
Store ledger is a document kept by the cost department for each hem of material. The
ledger is generally.maintain under loose - leaf or Card type form. In the stores ledger
every movement of material, either· inward or outward, is recorded in quantity, rate and
value and the balance _of material, after each movement, is simultaneously struck out in
quantity rate and valve. It is therefore, a dupijcate of Bin Card so far as the quantity is
concerned and is also a step forward so far as the rate and valve are concerned.

o·IS rmerIOD bctween 13"ID Card and store Lcde:er

BIN CARD STORES LEDGER
I. Bin Card is maintained by store Department. I. Store Ledger is maintained by cost
2. It records the Quantity of inward and outward department.
movements and extract the balance after each 2. It records bcith quantity and Valve of
transaction. the material in case of each inward and
outward and extract the balance both
lauantitv and Valve after each transaction.

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e) Safety and security of materials.

f) To arrange for collection, acceptance o( scrap & other discarded .material s for
disposal.

2) Secondary functi1:m:
a) Quantity inspection and acceptance.
b) Stores accounting.
c) Stock control.
d) Feedback infonn·ation to material control section.
e) Help in standardization and variety reduction.
f) Service infonnation such as:
1. Demand for materials and its specification quantity, etc.
11. Notification when stocks are running low.
111. Details of deliveries rejected on inspection.
iv. Certification of invoices for quantity and quality.
v. Particulars of anticipated change in consumption.
vi. Warning of items urgently required for breakdown.
vii. Listing of obsolete, surplus and scrap materials for disposal.
. .
15. What is centralized and decentralized storing? . [MODEL QUESTION]
Answer:
A centralized store is that store which receives materials for and issues them to alt
departments, divisions and productioi:i floors of the company. Such ·a store is only one in
the company which receives materials for and issues to alt who need them. The materials
• required for all the departments and branches are stored and issued by only one store.

Advantages of Centralized Stores

The followings are the main advantages of centralized stores.
l . A better supervision of store is possible because the store is located -under a single
supervision.
2. A better layout ofstore and its control are possible.
3. Less space is occupied.
4. Investment in stock is minimized.
5. It is economical for storing materials.
6. Safety of materials is possible according to the nature of materials.
7. Trained and specialized persons can be appointed.
8. Wastage of materials can be minimized.

Disadvantages of Centralized Store

The followings are the main disadvantages of centralized stores.
I . Delay in sending materials to the departments and branches.
2. Increase in material handling cost.
3. Greater risk ofloss by fire.
4. Not suitable for a large company.

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The worki11g oftire lystem

To begin with, the stock from the first bin is consumed. The emptying of first ·bin
indicates that the stock has reached R.0.L. and the replenishment action is initiated.
The quantity in the second bin are lhus consumed during the replenishment period.
This system reduces the work involved in record keeping and entering (clerical) errors.
Adva11tages
I. Simple and cheaper to operate.
2. Stock control will be accurate as the replenishment action is' initiated soon after
the stock reaches R.0.L.
3. Suitable for low value items.
4. ApprQpriate for variety of inventory maintained within the organization.
Li111itatio11s
(i) In this inventory system, there will be·a load on the re- ordering system if many items
reach R.0.L. at the same time.
(ii) The stock levels records and usage rate data are to be maintained.
Re-order Poi11t (ROP):
It is. the point where purchase order win be placed for replenishment 01 , 02 indicates the
re-order points.
It can be calculated in the following way.
This equals the su,m of safety stock and lead time consumption.
R.0.P. = m + L x C
where, m = is the minimum or safety stock.
L - Lead time (days/weeks/months)
C - consumption rate (per day/per week/per Month)
The system is represented graphically as in the following figure.

T
t Q

1
Lend-time
u consumption

' . .,. i.-

Sn fety stock

Fixed order quantity system ,Time-

17. Differentiate between P-system and Q-system of lnven'tory management.

[MODEL QUESTION]
Answer:·
Fixed Order Quantity System
r
This is also called perpetual inventory system or Q-system. In . thi� system, the orde
ion 1s demand.
quantity is �xed and ordering time varies according to _the fluctuat
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To compute the annual requirement:

24,000 units are ordered semiannually, thereforo:
Annual requirement= 24000units x 2 = 48000units .
•
2. a) What do you mean by Economic Ordor Quantity (EOQ)? (MODEL QUEOTIONJ
Answer:
EOQ represents is the quantity of material (items) to be ordered at the re-order level.
Normally this quantity equals the economic order qu·antity.
There are two major costs associated with inventory. Procurement cost (orderinB con t)
and inventory ca'rrying cost. Annual procurement cost varies with the number or. order.
This implies that the procurement cost will be high, if the item is procured frequently in
small lots. The procurement cost is expressed as Rs.lcirdcr.
The annual inventory carrying cost (Products of average inventory x CarryinB cost) is
directly proportional to the qu!lntity in stock. The inventory carrying cost decreases, if the
quantity ordered per order is small. 'The two costs arc diametrically opposite to each
other. The right quantity to be ordered is one that strikes a balance between the two
opposing costs. This quantity is referred to as "Economic order quantity" (l!OQ). The
cost relationships are shown in the following figure.

Annual total cost

�
�
Annual inventory
carrying cost

t
Annual ordering cost

I
Q• (Economic Order Quantity
Order Quantity �
Fig: Inventory carrying cost
b) Mention with at least two examples, the costs that aro sought to bo optimlzod In
the EOQ model . [MODEL QUESTION]
Answer:
1. Or<!cring Cost
(i) Purchasing: The clerical and administrative cost associated with the purcha 5ing, the
cost of requisitioning material, placing the order, follow-up, receiving and evaluating
quotations.
(ii) Inspection: The cost of checking material after they are received by the supplier for
quantity and quality and maintaining records of the receipts.

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Central Purcltase Orgn11isatio11

A large firm in thl! public or private sector may have section-wise stores at c:ifferent
places. The requirements of· these stores can be satisfied by either of the following two
methods: .
. i) Each store to make its own purchases,
ii) A central stores to make purchases and supply material in turn to section y;ise stores.

The advantages of central. stores purchases are:

i) The central purchase organisation (CPO) can obtain quantity d iscounts, lower rate
and better contract tenns due to large purchases made possible due to consolidating
the requirements of individual stores.
ii) Malpractices by individual purchase officers by some kind of understanding with the
·
local dealers which can result in purchase at higher prices are avoided.
iii) The Central Purchase Organization can exercise strict control on consumption
thereby minimizing the risk of malpractices.
iv) The central purchase organisation can contract directly with the manufacturers and
obtain items as per specifications. Individual section stores may not be able to do
this.

Examples:
Reserve Bank oflndia;State Bank of India, etc.
Directorate General Suppliers & Disposal (l)GS & DJ
The DGS and D is the Central Purchasing Organisation for the. various government
departments. It enters into contract with various firms for the s4pply of certain mateijals
to the government departments during the year at the agreed rate. A formal document
raised for the purpose is calleo "rate contract".

Centralized alid Decentralized P11rchasing

Centralized Purchasing:
When the purchasing function is entrusted to a single person, it is said to be centralized
· purchasing. It mea_ns all purchases are made by the Purchasing Officer. Generally large
and medium size organisations accept centralized purchasing.

Merits of Centralized Purchasing:

• Centraiized purchasing avoids duplication, so buying cost will be less.
• , Departments other than purchasing are relieved from the burden of purchasing. As a
result of which employees concentrate their mind in own work.
• Transportation cost and carrying cost become economical, because all purchases are
made in bulk quantities.
• . More trade discount can be availed due to bl.Ilk purchase.
• . All the records with regard to purchase are kept in one place urider the supervision of
the purchase officer. It results economy in record management.

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 IN rRQQ\JS:lJQNJOINPUSJ:RJALMANAGfili!JiNJ

6. S-l-,\-S-t t-12 •-1-N+l:!+-'i+l • 30 \\/ks

7. S-:!-S-6-7-ll-ll •4+3+2+8+8+2•27 \Vk�
S. S-2-S-6-9-l1-12•4+3+2+18+8+2 •37 \Vks
9. S-l-S-6-8-ll-12•4+3+2+12+8+2•31 \\/ks
11'c path '8' is the longest p.,th of the project i.e. the criticnl pnth of the project. Total
durati on along the critic.,1 p.'lth is 37 weeks. It starts nt 12/03/10 and will finish at

-- -- . -
25/11/10.
As pcr' MS project the critical puth lilt\)' be deriV1..--d as per the diagram below:
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The Gantt chart of the Project is

fcbnlary 01 April 21 May II July· 01 �btt 21 0..--.obe,
28-02 21-03 II� 02.05 23.0S 13-06 04-07 25-07 IS-OS 0S-09 26-09 17-10 07-11

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