June 2006

Paper 13 Operations and Project Management & Control June 2006

F-13(OPM) Revised Syllabus Full Marks : 100

Time Allowed : 3 Hours

The figures in the margin on the right side indicate full marks Answer Question No. 1 & Question No. 7, which are compulsory and any two other questions from Section I and any two other from Section II. Please answer all the bits of a question at one place. Section I

Marks 1. (a) Choose the correct answer from the alternatives given and indicate your answer as (a) or (b) or (c) or (d); (i) Relaxation Allowances are considered in: Time Method Ergonomic Feasibility (a) (b) (c) (d) Study Study Study Study. (ii) ABC Analysis is normally used in: (a) Statistical Quality Control (b) Production Planning & Control (c) Value analysis (d) Inventory Control. (iii) Continuous Improvement Programme in Japan is known as: (a) Jishu Kanri (b) Kaizen (c) Kanban (d) 5 S. (iv) Cost Reduction can be achieved through: (a) Work Sampling (b) Value Analysis (c) Quality Assurance (d) Supply Chain Management. (v) Linear Programming is a technique used for determining: (a) Production Programme (b) Plant Layout (c) Product Mix (d) Manufacturing Sequence. (b) Match each item in the left hand column with an appropriate item in the right hand column: (A) Productivity (i) Means for customers delight (B) Life Time Value (ii) Maintenance System (C) Economic Utility (iii) Open Health System (D) Failure Analysis (iv) Selection of Equipment (E) Steel Plant (v) Work Study (c) Fill in the blanks with appropriate words: (i) Installed capacity should be based on number of ________ (ii) Surface treating process can be either ________ or chemical;

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(iii) Metal powders are obtained by ________ of metals to powder; Organic coatings are commonly used to improve resistance to (iv) ________ (v) Standard time is always more than ________ time. (d) Define the following terms under (i), (ii) & (iii) in just a sentence/two: (i) Efficiency; (ii) effectiveness; (iii) Economy; Just name three "New Technologies" available for Intermittent (iv) Production Processes. Just name three "New Technologies" available for continuous Flow (v) Production Process.

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Please turn over (2) F-13(OPM) Marks Revised syllabus 2. (a) What are the advantages of "Diversification"? 5 (b) Should the following industries "Simplify" or "Diversify" and why? 5x2 (i) Automobile; (ii) Cosmetic. 3. (a) Draw a comparison between "Type Grouping" and "Sequence Grouping" of 6 machines in a factory. (b) A warehouse handles 60,00,000 cases each of inbound and outbound 9 shipments per year, operating two shifts a day, five days a week. (Each shift is of 8 hours durations). 70% of inbound shipments and 90% of outbound shipments are by trucks. the truck loading rate is 175 outbound cases per worker-hour while the unloading rate is 200 inbound cases per worker-hour. A truck carries 500 cases for both inbound and outbound shipments. A 25% safety factor is desired since flow of the trucks throughout the month is not uniform. The trucks stand at the entry to the warehouse while being loaded or unloaded. The warehouse manager wants to design a new warehouse with sufficient number of truck entries to the warehouse to handle the operations mentioned above. Please calculate the number of truck-entries the warehouse should have, from the data given above, assuming that the width of the entry permits only one truck entries to the warehouse to handle the operations Please calculate the number of truck-entries the warehouse should have, from the data given above, assuming that the width of the entry permits only

one truck to be loaded or unloaded at a time. 4. (a) A Media company proposes to build a new office in one of the three locations. Using the data below, determine the best location. Please assume the following values: Excellent = 10, V. Good = 8, Good = 6, Fair = 4 and Poor = 2. Rating Location Location Location Weight Factor 1 2 3 Living Standard Labour (A) Relations Excellent Good Fair 30 (B) Govt. aid Good Fair Excellent 10 (C) Schooling V. Good Good Poor 5 (D) System Fair Excellent Good 15 (E) Distance to V. Good Poor Excellent 10 (F) Customers Poor Good V. Good 10 (G) Distance to V. Good Excellent Good 20 Suppliers Revenue Contribution (b) A crane wheel assembly is made of cast steel wheel and two gun metal bushes. Find the cost of the assembly assuming no special tooling are required and using the details given below: Cast Gun Metal Bush Wheel (i) Weight of each raw casting 25 Kg. 3 Kg. (ii) Material Cost/Kg. 20 Rs. 60 Rs. (iii Sale Price of Scrap/Kg. 4 Rs. 40 Rs. ) Finished weight/unit after 20 Kg. 2 kg. (iv) machining (v) Machine hours required per unit: 6 hrs. — (a) Boring M/c — 1.5 hrs. (b)Lathe Machine Hour Rates are Rs. 40/hour for Boring. Machine Hour Rates are Rs. 20/hour for Turning. Assembly takes ½ hr. costs Rs. 10/hour and consumes hardware worth Rs. 5/-.

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F-13(OPM) Revised syllabus Marks (a) "Giving instructions is an Art". Justify the statement by discussing the 8 characteristics of good instructions. (b) A company has sales of Rs. 100 lakhs of which 70% represents variable 7 costs. Fixed costs are Rs. 20 lakhs. If sales are now increased by 10%, what will be the improvement in profit? On the other hand, if due to improved productivity, variable costs are decreased by 10%, what will be the profit? Compare the present profit with those under the cases as cited above. What is your recommendation? Write short notes on any three out of the following: 5x3 Six Sigma Quality Job Process Route (i) (ii) (iii) (iv) programme. Enrichment. Planning. Card. (v) Standardization. Section II (a) Expand the following acronyms: 1x5 (i) LD (ii) BOLT (iii) COD (iv) PG (v) BCWS. (b) Match the following 1x5 (A) Supplier's Credit (i) PERT Network (B) Early Start Schedule (ii) Consumption level Method (C) Risk Analysis (iii) Project Management Software (D) Demand Forecasting (iv) Raw Material Stores (E) Success Planned (v) Project viability (c) Mention whether the following statements are "True" or "False": 1x5 (i) Brown Field Project means revamping or renovating a running plant. (ii) Employer provides the design in an EPC Contract. (iii) Independent Float of an Activity is the difference between the Total Float of the Activity and its Head Slack. (iv) In a Matrix Organization, authority is shared between the Project Manager and the Functional Managers. Pre-operative expenses are those which are incurred till the date of (v) commencement of the Project. (d) Distinguish between: 2+2+1 CAT & RAT Sensitivity Analysis & BOO & BOT (i) (ii) (iii) Schedules Risk Analysis Projects A Project has nine activities with their durations as given below: 15 SI. No. Activity Estimated Duration in Days Optimistic Most Likely Pessimistic (i) 1—2 3 6 15 (ii) 1—3 2 5 8 (iii) 1—4 2 5 14

(iv) 2—5 6 12 30 (v) 3—7 3 6 15 (vi) 4—6 3 9 27 (vii) 5—7 5 11 17 (viii) 7—8 1 4 7 (ix) 6—8 4 19 28 (a) What is the probability that the project will be completed in 41 days? What is the expected duration of the project, if it has to be completed with a (b) probability of 80%? What is the expected duration of completing the activity 6—8 with a (c) probability of 65%? (d) What is the probability of completing the activity 2—5 in 16 days?

Please turn over (4) F-13(OPM) Marks Revised syllabus The cumulative value of probability, G(z) (areas of the cumulative standard normal distribution—cumulated from the negative tail) at some values of 'z' in the normal probability distribution table are given below: 'z': 0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.90 1.00 0.10 G(z): 0.50 0.54 0.58 0.62 0.65 0.69 0.73 0.76 0.79 0.81 0.84 0.86 9. (a) Enumerate the factors that can lead to wrong results while conducting a 6 market survey using a Questionnaire. (b) A carpet stores has kept the following record of sales of carpets vis-à-vis 9 the housing permits that the municipality of the town gave in each of the past nine years: Year No. of Housing Carpet Sales (Sq. Yards.) Permits 199 18 13,000 7 15 12,000 199 12 11,000 8 10 10,000 199 20 14,000 9 28 16,000 200 35 19,000 0 30 17,000 200 20 13,000 1 200 2

200 3 200 4 200 5 The Store Manager feels that the sales of carpets have a linear relationship with the number of housing permits issued by the municipality. Forecast the carpet sales in the Year 2006, if the number of housing permits is estimated to be 25 in 2006. 10. Superior Engineering proposes a Project with the following data: Total Outlay: Rs. 450 Lakhs (Rs. 250 Lakhs of Fixed Assets and Rs. 200 (i) Lakhs of Current Assets). (ii) Scheme of Financing: Rs. 100 Lakhs, Equity, Rs. 200 Lakhs Term Loan, Rs. 100 Lakhs Working Capital Advance and Rs. 50 Lakhs Trade Creditors. Interest rates: Term Loan—12% p.a. and Working Capital Advance: 15% (iii) p.a. (iv) Term Loan is repayable in 5 equal installments, commencing from 3rd year of operations. (Assume that installment for each year is paid on the last day of the year). (v) Depreciation: 30% on Written Down Value. (vi) Production is expected to reach 60% of capacity in the 1st year of operations, 70% in the 2nd year and 80% from 3rd year onwards. (vii) Expected revenue from the project will be Rs. 500 Lakhs p.a. on 100% capacity utilization and corresponding Direct Costs are Rs. 200 Lakhs. Fixed Costs are Rs. 100 Lakhs p.a. Working Capital advance of Rs. 100 Lakhs is on 80% capacity and proportionately reduced in the first two years. (viii) Tax Rate applicable is 50%. Assuming that each year's production is sold away in the same year, draw the projected Profit & Loss Account for each year of operation and the operational cash flow. Also calculate the Debt Service Coverage Ratio. 11. (a) Draw a schematic diagram showing various activities involved in the feasibility study of a project. (b) A new project is being set up by ABC Ltd. The company plans to achieve 80% capacity in the third year of operation, when the expected sales will be 64,000 units and the selling price Rs. 15/- per unit. The corresponding variable costs and fixed costs are estimated at Rs. 5,76,000 and Rs. 3,00,000 respectively. Calculate the following from the given data: (i) P/V Ratio; Break-Even Point in terms of Sales Volume, % Capacity & Sales (ii) Revenue; and (iii) Margin of Safety. 12. Write short notes on any three out of the following:

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(i) Taxonomy of Projects; (ii) Zero Date of a Project; (iii) Keyman Insurance; (iv) Retention Money; (v) Resource Optimization. __________