Examination Paper of Supply Chain Management 1 IIBM Institute of Business Management IIBM Institute of Business Management Examination Paper MM.100…

Examination Paper of Supply Chain Management


IIBM Institute of Business Management

IIBM Institute of Business Management

Examination Paper MM.100

Supply Chain Management

Section A: Objective Type & Short Questions (30 Marks)

 This section consists of Multiple Choi  ce & Short Notes type questions. 

 Answer all the questions. 

 Part One carries 1 mark each & Part Two carries 2 marks each.

Part One:

Multiple Choices:

1. When demand is steady, the cycle inventory for a given lot size (Q) is given by_____

a. Q/4

b. Q/8

c. Q/6

d. Q/2

2. There are two firms „x‟ and „y‟ located on a line of distance demand(0-1) at „a‟ and „b‟

respectively, the customers are uniformly located on the line, on keeping the fact of splitting of

market, the demand of firm „x‟ will be given by,

a. (a+b)/2

b. a+(1-b-a)/2

c. (1+b-a)/2

d. a+(a-b)/2

3. Push process in supply chain analysis is also called_______

a. Speculative process

b. Manufacturing process

c. Supplying process

d. Demand process

4. If the Throughput be „d‟ and the flow time be „t‟ then the Inventory „I‟ is given by______

a. I *d=t

b. I=t+d

c. d=I*t

d. I =d*t

5. Forecasting method is_______

a. Time series

b. causal

c. Qualitative

d. All the above

6. Component of order cost include:

a. Handling cost

Examination Paper of Supply Chain Management


IIBM Institute of Business Management

b. Occupancy cost

c. Receiving costs

d. Miscellaneous costs

7. How many distinct types of MRO inventory are there:

a. One

b. Four

c. Three

d. Two

8. Supply chain driver is________

a. Inventory

b. Return ability

c. Fulfillment

d. All of above

9. SRM stands for________

a. Strategic Relationship Management

b. Supply Return ability Management

c. Supplier Relationship Management

d. None of the above

10. Discount factor equals to, where k is the rate of return.

a. 1/1+k

b. 2/1+k

c. 1/1-k

d. 1/2+k

Part Two:

1. Explain “zone of strategic fit”.

2. Explain “scope of strategic fit”.

3. What do you understand by “stimulation forecasting method”?

4. Write on “obsolescence (or spoilage) cost”.

5. Define “square law” in safety inventory of supply chain management.

6. What does the word “postponement” signifies in supply chain?

7. What do you understand by the term “tailored sourcing”?

8. Explain the term “outsourcing”.

9. Write on “threshold contracts” for increasing agent efforts.

10. What is “dynamic pricing”?


Examination Paper of Supply Chain Management


IIBM Institute of Business Management

Section B: Caselets (40 marks)

  This section consists of Caselets. 

 Answer all the questions. 

  Each caselet carries 20 marks. 

 Detailed information should form the part of your answer.

Caselet 1

Orion is a global co. That sells copiers. Orion currently sells 10 variants of a copier, with all inventory

kept in finished-goods form. The primary component that differentiates the copiers is the printing

subassembly. An idea being discussed is to introduce commonality in the printing subassembly so

that final assembly can be postponed and inventories kept in component form. Currently, each copier

costs $1,000 in terms of components. Introducing commonality in the print subassembly will increase

component cost to$1.025.One of the 10 variants represents 80 percent of the total demand. Weekly

demand for this variant is normally distributed ,with a mean of 1,000 and a standard deviation of

200.Each of the remaining nine variants has a weekly demand of 28 with a standard deviation of

20.Orion aims to provide a 95per level of services .Replacement lead time for components is four

weeks. Copier assembly can be implemented in a matter of hours. Orion manages all inventories

using a continuous review policy and uses a holding cost of 20 percent.

1. How much safety inventory of each variant must Orion keep without component commonality?

What are the annual holding costs?

2. How much safety inventory must be kept in component form if Orion uses common components

for all variants? What is the annual holding cost? What is the increase in component cost using

commonality? Is commonality justified across all variants?

3. At what cost of commonality will complete commonality be justified?

4. At what cost of commonality will commonality across the low-volume variants be justified?

Caselet 2

An electronic manufacturer has outsourced production of its latest MP3 player to a contract

manufacturer in Asia. Demand for the players has exceeded all expectations whereas the contract

manufacturers sell three types of players- a 40-GB player, a 20-GB player, 6-GB player. For the

upcoming holiday season, the demand forecast for the 40-GB player is normally distributed, with a

mean of 20,000and a standard deviation Dard deviation of 11,000, and the demand forecast for the 6-

sGB player has a mean of 80,000 and a standard deviation of 16,000. The 40-GB player has a sale

price of $200, a production cost of $100, and a salvage value of $80 .The 20-GB player has a price of

$150, a production cost of $70, and a salvage value of $50.

1. How many units of each type of player should the electronics manufacturer order if there are no

capacity constraints?

2. How many times of each type of player should the electronics manufacturer order if the available

is 140,000? What is the expected profit?


Examination Paper of Supply Chain Management


IIBM Institute of Business Management

Section C: Applied Theory (30 marks)

 This section  consists of Long Questions. 

 Answer all the questions. 

 Each question carries 15 marks. 

 Detailed information should form the part of your answer

1. Consider two products with the same margin carried by a retail store. Any leftover units of one

product are worthless. Leftover units of the other product can be sold to outlet stores. Which

product should have a higher level of availability? Why?

2. McMaster-Carr sells maintenance, repair, and operations equipment from five warehouses in the

United States. W.W. Grainger sells products from more than 350 retail locations, supported by

several warehouses. In both cases, customers place orders using the Web or on the phone. Discuss

the pros and cons of the two strategies.


Examination Paper of Supply Chain Management


IIBM Institute of Business Management

IIBM Institute of Business Management

Examination Paper MM.100

Statistical Quality Control

Section A: Objective Type & Short Questions (30 Marks)

 This section consists of Multiple c  hoice & Short Note type questions. 

 Answer all the questions. 

 Part One carries 1 mark each & Part Two carries 4 marks each.

Part One:

Multiple choices:

1. If in a hall there are 18 persons then how many handshakes are possible.

a. 18*18

b. 18*17/2

c. 18*17

d. None

2. If the number of trials be „n‟ and the probability of occurrence be „p‟ then the standard

deviation with respect to np, is given by?

a. (np)


b. (np(1-p))


c. (np)


d. (np(1-p))


3. For a biased coin the probability of occurrence of head is 0.4 ,if the coin is tossed twice then

the probability of occurrence of at least one head will be:

a. 0.76

b. 0.48

c. 0.64

d. 0.16

4. Factorial of 5 equals__________

a. 60

b. 120

c. 24

d. 5

5. Combinatory of (4,2) equals_______

a. 12

b. 8

c. 6

d. None

6. “Economic Control of Quality of Manufactured Product‟, a book by Walter A Shewhart in

a. 1931

Examination Paper of Supply Chain Management


IIBM Institute of Business Management

b. 1941

c. 1930

d. 1956

7. Quality is judged by___________

a. Retailer

b. Government

c. Customer

d. Hole seller

8. A run chart is a special chart of______

a. Pie chart

b. Line chart

c. R chart

d. C chart

9. Universes may differ_____

a. In average

b. In above average

c. At higher level

d. All of the above

10. ASQC and ANSI began in

a. 1956

b. 1976

c. 1978

d. 1960

Part Two:

1. Differentiate between „defect‟ and „defective‟.

2. Explain the need of „short method‟.

3. What does „Tchebycheff‟s inequality theorem‟ say?

4. Explain the usability of „stochastic limit‟.

5. Write on „Cause and Effect‟ diagram.


Section B: Caselets (40 marks)

 This section consists of Caselets. 

 Answer all the questions. 

 Each caselet carries 20 marks. 

 Detailed information should form the part of your answer

Examination Paper of Supply Chain Management


IIBM Institute of Business Management

Caselet 1


Rajasthan Synthetics Ltd. (RSL) was established in the year 1994 at Bhilwara, Rajasthan to

manufacture synthetic yarn with a licensed capacity of 29,000 spindles. Manish Kumar, a Harvard

Business School graduate, established RSL with 8% equity participation from Itochu Corporation

Japan to manufacture synthetic yarn for shirting, a promising business at that time. The demise of the

NTC textile mills was fresh in the minds of the promoters and therefore, state of the art technology

imported from U.K., Germany, Japan and France was used in the manufacturing facility. By the time

the company started manufacturing yarn the competition in shirting yarn had become fierce and the

returns had diminished. The company incurred losses in the first four years of its operations and the

management was looking for opportunities to turn things around. The manufacturing plant started

functioning with an installed capacity of 26,000 spindles, a small unit considering yarnmanufacturing

industry, in the year 1996 to manufacture synthetic yarn for shirting only. Initially, the

major fabric manufactures of India such as Raymonds, Donear, Grasim, Amartex, Siyaram, Pantaloon

and Arviva were the main customers of the company and the total produce of the company was sold

within the domestic market. These fabric manufactures used to import the premium quality yarn

before RSL started supplying the yarn to them. The company in the first year of its operations

realized that shirting yarn was one of the fiercely competitive products and the company with its high

interest liability was unlikely to earn the desired profits. Also, the company had a narrow product mix

limited to only two more blow room lines were installed in the first quarter of 1997. The addition of

two blow room lines helped RSL to manufacture four different types of yarns at the same time.

Utilizing this added flexibility, RSL began manufacturing yarn for suitings.Since the suiting yarn was

providing better returns, the company was keen to increase manufacturing of suiting yarn but was

hampered by the two for one doubling (TFO) facility, which was limited to only 40% of the total

produce. To remove this bottleneck, 12 more TFO machines were added to the existing 8 TFO

machines. The addition of these machines increased the doubling capacity to 70% of the production

providing additional product mix flexibility to the company. This enabled the company to

manufacture yarn to cater to the requirements of suiting, industrial fabric and carpet manufacturers. In

the initial years of its operations, RSL realized that the promises made by the Government of

Rajasthan to provide uninterrupted power supply of the required quality (stable voltage and

frequency) and ample quantity of water were unlikely to be met through the public distribution

system. The voltage and frequency of electric power provided through the public distribution system

were erratic and frequent announced and unannounced power cuts stopped production on a regular

basis. In these circumstances, meeting quality requirements of the customers and adhering to delivery

schedules was a herculean task. To ensure smooth and uninterrupted operations RSL installed inhouse

power generation facility of 4 megawatts capacity and dug 10 tube-wells.RSL faced stiff

competition in the domestic market from Gujarat Spinning and Weaving Mills, Surat, Rajasthan

Textile Mills, Bhawani Mandi, Charan Spinning Mills, Salem and Indorama Synthetics Ltd.,

Pithampur in all their product categories and the returns were low. In order to combat stiff

competition in the domestic market and improve returns the company started developing export

markets for their products in the year 1998. Initially, RSL started exporting carpet yarn to Belgium

and till 2001; carpet yarn formed the major component of their exports. A trade agreement was signed

with Fibratex Corporation, Switzerland to share profits equally for expanding their overseas

operations. During the same period, RSL continued to scout for new export markets and was

successful in entering top-of-the-line fancy for premium fashion fabric manufactures of international

repute like Mango and Zara. Rajasthan Synthetics Ltd. also exported fancy yarn to a number of fabric

manufacturers located in Italy, France, England, Spain and Portugal. Yarn manufacturers from

Indonesia, Korea and Taiwan gave stiff competition to RSL when it entered the international market.

The companies from South Asian countries had a major cost advantage over RSL because of cheap,

uninterrupted availability of power and high labour productivity. Currencies had been sharply

devalued during the South Asian financial crisis, which rendered the products manufactured by these

Examination Paper of Supply Chain Management


IIBM Institute of Business Management

companies still cheaper in international markets. Despite all these disadvantages, RSL was able to

gain a foothold through constant adaption of their products according to the customer requirements in

the highly quality conscious international yarn market and was exporting 95% of its total produce by

the beginning of the year 2002.

Rajasthan Synthetics Ltd. had fine-tuned its distribution channels according to the type of markets

and size of orders from the customers. In line with this policy the export to Middle East, Far East and

Turkey was carried out through agents. Similarly, low volume export of fancy yarn requirements was

also catered through agents. While dealing with importers directly, RSL strictly followed the policy

of exports against confirmed Letter of Credits only. The company directly exported to important

clients in Belgium, England and France. The domestic market was also served through an agency

system. Rajasthan Synthetics Ltd. considered inventories as an unnecessary waste and kept minimum

possible inventories while ensuring required level of service. To ensure that the inventories were held

to a minimum, the manufacturing plan consisted of 60 to 70% against customer orders, 30 to 40%

against anticipated sales and 2% capacity was reserved for new product development. A Strategic

Management Committee (SMC) consisting of MD, CEO, GM (marketing) and GM (technical)

reviewed the production plan of the manufacturing plant on quarterly basis. The SMC also developed

the plans for profitability, product mix and cost minimization. Delivering high-quality products and

meeting delivery commitments for every shipment were essential pre-requisites to be successful in the

global market place. The company had understood this very early and to ensure that the products

manufactured by RSL met the stringent quality requirements of its international customers, the

company had developed a full-fledged testing laboratory equipped with ultra modern testing

machines like User Tester-3 and Classifault. The company had stringent quality testing checks at

every stage of tarn production right from mixing of fiber to packing of finished cones. Its in-house

Research and Development and Statistical Quality Control (SQC) divisions ensured consistent

technical specifications with the help of sophisticated state-of-the-art machines. A team of

professionally qualified and experienced personnel to ensure that the yarn manufactured by the

company was in line with international standards backed the company. The company continuously

upgraded its product mix and at the same time, new products developed by in-house research and

development department were added to the product mix form time to time. RSL‟s management was

quick to analyze the potential of these in-house developments and followed a flexible approach in

determining the level of value addition. The company had developed a new yarn recently and was

selling it under the Rajtang brand name. This new yarn was stretchable in three dimensions, absorbed

moisture quickly, was soft and silky and fitted the body. This yarn was extracted from natural

products and being body-friendly, was in great demand in international markets. Looking at the

higher value addition possibilities RSL decided to forward integrate and started manufacturing fabric,

using Rajtang and provided ready-made garments like swimming suit, tracksuit, undergarments, tops,

slacks and kids dresses. The ready-made dresses from the fabric were being manufactured on the

specifications and designs of RSL. The management decided to market these products under the

brand name “Wear-it” through Wearwell Garments Pvt. Ltd., an associate company of RSL, to ensure

that RSL did not lose its focus. The Managing Director of RSL felt that continuous adaptability to

market requirements through a flexible approach, cost cutting in every sphere of operations and team

approach to management had taken them ahead. However, RSL had become highly dependent on the

volatile export market and if it was not able to retain the international market it would have to reestablish

itself in the domestic market, which was not an easy task.

1. What marketing strategy should RSL adopt to remain competitive in the international market?

2. Has the company taken the right decision to forward integrate and enter into the highly volatile

garment market?

Caselet 2

Examination Paper of Supply Chain Management


IIBM Institute of Business Management

Popular mythology in the United States likes to refer to pre-World War II Japan as a somewhat

backward industrial power that produced and exported mostly trinkets and small items of dubious

quality bought by Americans impoverished by the Great Depression. Few bring up the fact that, prior

to the Pearl Harbor attack, Japan had conquered what are now Korea, Manchuria, Taiwan, and a large

portion of China, Vietnam, and Thailand; and by the end of 1942 Japan had extended its empire to

include Burma, the Philippines, Indonesia, Malaysia, Thailand, Cambodia, New Guinea, plus many

strings of islands in the eastern Pacific Ocean. Its navy had moved a large armada of worships 4,000

miles across the Pacific Ocean, in secret and in silence, to attack Pearl Harbor and then returned

safely home. Manufacturers capable of producing only low-grade goods don‟t accomplish such feats.

High-quality standards for military hardware, however, did not extend to civilian and export goods,

which received very low priority during the war years. Thus the perception in the United States for a

long time before and then immediately after the war had nothing to do with some inherent character

flaw in Japanese culture or industrial capability. It had everything to do with Japan‟s national

priorities and the availability of funds and material. Following Japan‟s surrender in 1945, General

MacArthur was given the task of rebuilding the Japanese economy on a peaceful footing. As part of

that effort an assessment of damage was to be conducted and a national census was planned for 1950.

Deming was asked in 1947 to go to Japan and assist in that effort. As a result of his association with

Shewhart and quality training, he was contacted by representatives from the Union of Japanese

Scientists and Engineers (JUSE), and in 1950, Deming delivered his now famous series of lectures on

quality control. His message to top industry leaders, whom he demanded to attend, and to JUSE was

that Japan had to change its image in the United States and throughout the world. He declared that it

could not succeed as an exporter of poor quality and argued that the tools of statistical quality control

could help solve many quality problems. Having seen their country devastated by the war, industry

and government leaders were eager to learn the new methods and to speed economic recovery.

Experience was to prove to Deming and others that, without the understanding, respect, and support

of management, no group of tools alone could sustain a long-term quality improvement effort.

1. How could have the SQC approach, been useful in solving the immediate problems of Japan?

2. If you were among one of the management members, what would have been your first insight?


Section C: Practical Problems (30 marks)

 This  section consists of Long Questions. 

 Answer all the questions. 

 Each question carries 15 marks.

1. A sample of 30 is to be selected from a lot of 200 articles. How many different samples are


2. In Dodge‟s CSP-1, it is desired to apply sampling inspection to 1 piece out of every 15 and to

maintain an AOQL of 2%. What should be the value of i?