Examination Paper: Operation Management
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IIBM Institute of Business Management
IIBM Institute of Business Management
Examination Paper MM.100
Operations Research
Section A: Objective Type (30 marks)
•This section consists of Multiple
choices/Fill in the blanks/True-False & Short Answer type
questions.
•Answer all the questions.
•Part One questions carry 1 mark each &
Part Two questions carry 5 marks each.
Part One:
1. In case of (<=) inequality, to convert the inequality
to an equation, we used to add a slack
variable to the left hand side of the constraint, this slake
variable should be:
a. Negative
b. Positive
c. May be positive or negative
d. Zero
2. In a set of m Χ n equations (m<n) the maximum number
of corner points is given by……
……
3. According to penalty rule for artificial variables, the
objective coefficient of the artificial variable
represents an appropriate penalty, positive or negative
depending on the problem, but the
necessary condition required to hold this is, the value
should be:
a. ∞
b. 0
c. 1
d. None of the above
4. The cases of the Simplex method in which the value of the
variables may increased indefinitely
without change in the constraints is:
a. Degeneracy
b. Alternative optima
c. Unbounded solutions
d. Nonexisting solutions
5. An arc in network model is said to be ‘Directed’ if it
allows positive flow in one direction and
a. Negative flow in negative direction
b. Zero flow in negative direction
c. Negative flow in perpendicular direction
d. None of the above
6. PERT stands for……………………………………………………………………………………..
Examination Paper: Operation Management
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7. In preemptive method for goal programming , the optimum
value of a higher priority goal is
never degraded by a lower priority goal.(T/F)
8. The column dropping rule does not guarantee the non
degradation of higher priority goals.(T/F)
9. The additive algorithm developed by E Balas for solving
ILP problems was based on pure binary
variables.(T/F)
10. According to inventory model for commodity possession
for smooth business operation, Holding
cost represents:
a. Price per unit of an inventory item.
b. The fixed charge incurred when an order is placed
regardless of its size.
c. The cost of maintaining inventory in stock.
d. None of the above
Part Two:
1. What do you understand by ‘Degeneracy’ found in using
simplex method?
2. What do know about ‘The Balancing of Transportation
Model’? If unbalanced then remedy.
3. Explain ‘Vogel Approximation Model (VAM)’.
4. Explain ‘Dijkstra’s Algorithm’ for routing.
END OF SECTION A
Section B: Practical Problems (40 marks)
•This section consists of Practical
Problems.
•Answer all the questions.
•Each Practical Problem is of 10 marks.
1. The stock of WalMark Stores, Inc., trades on the New York
Stock Exchange under the symbol
WMS. Historically, the price of WMS goes up with the
increase in the Dow average 60% of the
time and goes down with the DOW 25% of the time. There is
also a 5% chance that WMS will go
up when the Dow goes and 10% that it will go down when the Dow
goes up.
a) Determine the probability that WMS will go up regardless
of the Dow.
b) Find the probability that probability that WMS goes up
given that the Dow is up?
c) What is the probability WMS goes down given that Dow is
down?
2. Prove that if the probability P {A/B} = P {A}, then A and
B must be independent.
Examination Paper: Operation Management
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IIBM Institute of Business Management
3. Tasco Oil owns a pipeline booster unit that that operates
continuously. The time between
breakdowns for each booster is exponential with a mean of 20
hours. The repair time is
exponential with mean 3 hours. In a particular station, two
repairpersons attend 10 boosters. The
hourly wage for each repairperson is $18. Pipeline losses
are estimated to be $30 per broken
booster per hour. Tasco is studying the possibility of
hiring an additional repairperson.
a) Will there be any cost savings in hiring a third
repairperson?
b) What is the schedule loss in dollars per breakdown when
the number of repairpersons on duty
is two? Three?
4. Cars arrive at a one-bay car wash facility the
interarrival time is exponential, with a mean of 10
minutes. Arriving cars line up in a single lane can
accommodate at most five waiting cars. If the
lane is full, newly arriving cars will go elsewhere. It
takes between 10 and 15 minutes, uniformly
distributed, to wash a car. Simulate the system for 960
minutes, and estimate the time a car spends
in the facility?
END OF SECTION B
Section C: Applied Theory (30 marks)
•This section consists of Applied Theory
questions.
•Answer all the questions.
•Each Question carries 15 marks.
•Detailed information should form the part
of your answer (Word limit 200 to 250 words)
1. Define Transportation Model and its variant in brief.
2. Explain in detail Game Theory. Support you answer
examples.
END OF SECTION C
Examination Paper: Operation Management
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IIBM Institute of Business Management
IIBM Institute of Business Management
Examination Paper MM.100
Logistics Engineering and Management
Section A: Objective Type (30 marks)
•This section consists of Multiple choices
& Short Answer type questions.
•Answer all the questions.
•Part One questions carry 1 mark each &
Part Two questions carry 5 marks each.
Part One:
Multiple Choices:
1. Analysis method in which evaluation of alternative design
configuration using multiple criteria is:
a. Level of repair analysis
b. Maintenance task analysis
c. Evaluation of design alternatives
d. None of the above
2. Orientation of Logistic are:
a. Product among organization
b. Total benefits among organization
c. Towards managing of labour
d. Towards managing the physical flow of material &
product among organization
3. LMI stands for:
a. Logistics Management Information
b. Legal Management Information
c. Logistics Managerial Information
d. None of the above
4. Technical performance measures (TPMs) is applied for:
a. Evaluation of prime mission related system & elements
for expenses
b. Evaluation of prime mission related system & elements
for labour
c. Evaluation of prime mission related system & elements
for support
d. None of the above
5. System structure should facilitate:
a. Design on an evolutionary basis
b. Design a system within a minimum cost
c. Design on an evolutionary basis & with minimum cost
d. Both (a) & (b)
6. Conceptual design is initiated in response of:
a. Identification of customer need
b. Identification of consumer demand
c. Identification of Industry demand
Examination Paper: Operation Management
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IIBM Institute of Business Management
d. None of the above
7. Industrial engineering refers to:
a. Design & development of a product
b. Design & development of industrial tools
c. Design & development of expenses
d. Design & development of production capability
8. Contractor logistic support (CLS) refers to:
a. System maintenance activities
b. System evaluation activities
c. Both (a) & (b)
d. None of the above
9. Discounting refers to:
a. Application of selected rate of interest
b. Application of selected difference measure
c. Application of selected of interest & measure
differences
d. None of the above
10. A plan which is directed towards covering of logistic
support for a system is:
a. System Retirement Plan
b. Post production Support plan
c. Facilities plan
d. Computer Resource plan
Part Two:
1. Personal training requirement are based on what factors?
2. What is meant by Design criteria? Provide some examples.
3. Briefly describe evaluation of logistic’s elements.
4. What are the advantages & disadvantages of functional
organization?
END OF SECTION A
Examination Paper: Operation Management
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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 (Word limit 150 to 200 words).
Caselet 1
Company Profile
Indian Steels Limited (ISL) is a Rs 6000 crore company
established in the year 1986. The company
envisaged being a continuously growing top class company to
deliver superior quality and cost effective
products for infrastructure development. The company
performed with a mission to attain 7 million ton
liquid steel capacity through technological up-gradation,
operational efficiency and expansion; to produce
steel with the international standards of cost and quality;
to meet the aspirations of the stakeholders. The
production started in the year 1988 and initially, it
manufactured Angles, Pig Irons, Beams and Wire Rods
that were mainly used for constructing roads, dams and
bridge. The products were mainly supplied to
Public Sector Undertaking such as Railway ,Public Work
Department (PWD), Central Public Work
Department (CPWD), Rashtriya Setu Nigam, Audyogik Kendrya
Vikas Nigam Ltd.and various foundry
units. The company had its headquarters at Raipur with three
stockyards
The company has establish itself well and is said to be
considering its expansion plan and proposed
merger with another steel making giant in the country. The
company was awarded ISO 9001, ISO 14001
and ISO 18001 certifications. The temperature in the plant
premises is reportedly about 6 degrees Celsius
lesser than that of the township, thanks to the greenery
being maintained therein.
Logistics Outsourcing
Outbound logistics, which basically connects the source of
the supply with the sources of demand with an
objective of bridging the gap between the market demand and
capabilities of the supply sources, was
always a problem for companies operating in this industry.
Consisting of components like warehousing
network, transportation network, inventory control system
and supporting information systems, outbound
logistics was always playing a key role in making the right
product available at the right place, at the right
time at the least possible cost. In 1996, owing to the cut
throat competition in the emerging dynamic
global markets, ISL emphasized on both effectiveness and
efficiency. The company strongly believed in
focusing on its core competency and outsourcing the rest to
its reliable partners. Outsourcing of its
outbound logistics was one such move in the direction.
Recognizing the growing demand for its products from the
big, diversified and geographically dispersed
customers, the company started expanding the number of
warehousing stockyards. From a humble
beginning, the company today has 26 stock yards; most of
them is outsourced. Each of the outsourced
stockyards was managed by the third party, which the company
referred to sa Consignment Agent in the
area. The CA was selected on the annual basis through
competitive bidding process. The performance of
CA was closely monitored by a company representative. The CA
was responsible for the entire
distribution of the products within the geographical limits
of the allotted market segments and was paid
by the company according to the loads of transaction dealt
by him. Based on the sales turnover, CAs were
trifurcated into A, B, and C categories. The CAs with a
monthly turnover of Rs 150-200 crore fell under
A category, whereas those with Rs 100-150 crore were B and
less than Rs 100 crore were C category.
In addition to the company representative, a team of
marketing division operated in the town where the
site of CA was located. This department was responsible for
estimating the-future demand, translating it
into orders and sending to the manufacturing plant. Material
dispatch was done using either one or a
Examination Paper: Operation Management
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IIBM Institute of Business Management
combination of the two modes: rail, road. While rail as the
mode of transportation, the company had a
choice to book a Normal Rake or a Jumbo Rake. At times, the
company was engaging the services of the
CONCOR (Container Cooperation of India) where a train of 62
to 70 wagons, each wagon with about
26tonnes capacity was used for transportation. Instead, if
the company decided to send the material by
road, the company had a choice between Trailer (25 to 30
tones) and Truck (52 to 20 tones). The choice
of transportation mode was majorly based on the quantity of
dispatch.
As soon as the material was dispatched from the
manufacturing plant, the respective CA used to get a
Stock Transfer Chalaan electronically through Virtual
Private Network, which was develop by a
professional software service provider. In-transit,
monitoring was generally done with the help of Indian
railways, if the mode was Rail. Otherwise, truck/trailer
drivers were contact through mobile phones.
Transit generally took 5-6 days, providing time for CA took
plan for receiving material. The CA use to
utilize this time for arranging material handling devices
like: Heavy cranes and required labour. The
material thus unloaded was reaching the warehousing stock
yard where CA was responsible for arranging
the material as per the warehousing norms of ISL.
The company broadly classified materials into Long Products
and Rounds. Products following into each
category were further classified by their size, shape and utility
and the company used a distinct colour
code for this purpose. Each sub category of material had a
specific place for down loading. The company
used Bin System for this purpose. While downloading the
material in stockyard, the company norms
insisted that CA arrange for providing Dunnage Material.
This unable the CA to store material without a
direct contact with land surface and thus reduced the
probability of material deterioration. Material was
stored in the stockyard until an authorized representative
of the customer used to come and collect it.
While dispatching material to the customer, a Loading Slip
was generated against the Delivery Order. The
company also belived in maintaining long-term relationships
with the suppliers as well as the buyers. It
always prioritized the needs of its regular and important
customers over others and this worked out to be a
win-win strategy.
Operational problems were majorly because of uncertainties
in transportation, fluctuations in supply of
electricity and the load bearing capacity of the soil in the
stockyard. Some more problems were
encountered whenever there was a change in CA and these were
overcome by training the employees of
the new CA and keeping the old CA responsible for the
material in his stockyard for six months after the
contract as well. Observations reveal that, at times there
were situations wherin CAs had to do those
things which they were not legally supposed to do because of
the pressures mounted by political leaders
with selfish interests.
Conclusions
Despite these problems, this model of outsourcing logistics
was working out very well for the company.
The practices, which were started in the year 1996 have
sustained major changes in the environment and
are being practiced even in 2006. It has enhanced the supply
chain competency of the company by
enabling it leverage more on its core competency, which
leads to increased productivity.
Questions:
1. Analyze the case in view of the logistics outsourcing
practices of the ISL.
2. Discuss the importance of logistics outsourcing with
reference to Supply Chain Management.
Examination Paper: Operation Management
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Caselet 2
Introduction
S.K Das established ABC Pharma in 1961 in New Delhi,
marketed antibiotics and became brand leaders
in Amphicilin and Cephalexin orals. The company went public
in the year 1973. In 1983, ABC
established a plant in Mandideep (MP, India) with various
dosage form facilities. In 2004, it became
India’s largest pharmaceutical company, manufacturing and
marketing world-class generics, branded
generic pharmaceuticals and active pharmaceutical
ingredients. It was ranked amongst the top 10 generic
companies worldwide. The company’s products were sold in
over 100 countries with manufacturing
operations in 7 countries and ground presence in 44. The
company had an expanding international
portfolio of affiliates, joint ventures and representative
offices across the globe with joint venture/
subsidiaries in US, UK, Germany, France, Spain, Ireland,
Netherlands, India, China, Brazil, South Africa,
etc.While ABC aggressively pursued the internationalization
of its business, the growth strategy equally
focused on enhancing market share n India. The company had a
strong brand marketing team and
distribution network in India.
Milestones
By the end of December 31, 2004, global sales had reached US
$ 1178 million and registered a growth of
21%. Overseas market accounted for 78% of the global sales.
US accounted for 36%, while Europe and
BRIC (Brazil, Russia, India and China) countries contributed
16% and 26% to global sales, with a
combined turnover of US $924 million. The company’s vision
was to achieve significant business in
proprietary prescription products with a strong presence in
developed markets. It also aspired to be
amongst the top 5 generic players with a US $5 billion sale
by next decade. To translate these objectives
into reality and to optimize value creation, the Company had
adopted a multi-pronged strategy. The major
thrust areas for future were acquisition of brands overseas,
emphasis on brand marketing in the US and
Europe and entering high potential new marets with value
added product offerings.
The company had established state-of-the-art
multi-disciplinary R&D facilities at Gurgaon, India. ABC
was one of the largest investor on R&D in the Indian
pharmaceutical industry, with 7% of its sales during
2004. The company’s major research focus was in the areas of
Urology, Anti-invectives, Respiratory,
Anti-inflammatory and Metabolic disorders segments. ABC’s
continued focus on R&D had resulted in
several approvals in developed markets and significant
progress in New Drug Delivery Response
(NDDR).
Fourth Party Logistics (4PL)
The company believes in building strong and long term
relationships with limited number of logistics
service providers. They also focoused on outsourcing the
activities like warehouse management, packing
and custom clearance through Freight Forwarders. They always
believed in their core competencies. The
logistics service providers took care of storage and
inventory management and ensured the availability of
the right product at the right place and at right time.
Through outsourcing, they achieved focus on the core
competencies, cost saving, effective supply chain
management, cross-pollination of better available
practices and wider and effective geographical coverage. The
company practiced Fourth Party Logistics
(4PL) services by providing ERP as a backbone system for the
third party logistics service providers. The
palette packing services were outsourced from a local
company including the packing material. The
responsibility of complete documentation and custom
clearance for import and export of goods had also
been outsourced through Custom House Agents (CHA) and
Freights Forwarders (FF) under the
supervision of GM – Global Supply Chain.
The warehouse management was done with the help of Bar-code
Technology, which facilitied in tracing
of materials on a single click of a mouse resulting into
smooth inward and outward flow of materials. In
future, ABC was planning to have Radio Frequency
Identification (RFID) Technology to manage the
warehouse activities in a more effective and efficient
manner. The company had divided its global
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IIBM Institute of Business Management
operations into four regions viz., R1-Middle East with
headquarter at India; R2-CIS, Africa and Europe
with headquarter at London; R3-Far East ad Latin America
with headquarter at Singapore; R4-US with
headquarters at New York on the basis of convenience, market
potential and market share.
Collaborative Relationship
The company established its global supply chain hub at
Mandideep (near Bhopal, India). They managed
their operations with one GM-Supply Chain, one Senior
Manager Commercial and four Shipment
Officers. Each Shipment Officer had four support employees
outsourced through freight forwarders.
These people were responsible for the day-to-day activities
under the administrative control of ABC. GMSupply
Chain was responsible for managing the relations with Supply
Chain Partners, Freight forwarders
and Custom House Agents (CHA). The company had been a
pioneer in launching the genetic versions of
products on the same day at which the product to get off
patent, which helped them in getting an edge
over competitors. They managed to maintain the dignity,
discipline and business ethics without violating
the laws of patent. This was possible because of the strong
and long term relationship with logistic service
providers. There was a strong level of belonging, faith and
trust amongst the supply chain partners. To
maintain the good relations, the company practiced making
timely payments to the service providers.
They also opened the account in the same bank in which the
service providers had their account so that
prompt money transfer could take place. As a result of this,
service providers were so concerned about the
shipments of the company that they dedicated 25 refrigerated
cargos each equipped with location tracking
facility to track the status of the shipments.
The relationship and commitments of service providers was
endorsed on January 10, 2003 when Ramipril
was going off patents in Europe. ABC having strong presence
n Germany wanted to encash the
oppournity by making its Rampril available in Germany right
on January 11, 2003, so as to take lead in
available generic market. However, ABC did not know the
number and size of competition they would be
facing. The underlying fear of getting the shipment late and
therby losing the advantage of being first was
very clear on the faces of ABCs top managers. The task was
urgent and important; any delay in
availability was to cost heavily. The D-day was January 10,
2003 and the shipment was to be airlifted
from Mumbai so as to reach Germany after midnight of January
10, 2003 but before dawn of January 11,
2003. Two Boeing were chartered to lift the goods from
Mumbai Airport, but the task was not simple, as
the goods were to be surface transported from Mandideep to
Mumbai in a carvan of 70 cargos. To worsen
the things, the transporters had announced strike during
that period.
The urgency was briefed to freight forwarder, who was caught
between relationship with ABC and
membership of the Transporters’ Association. He had the
option of pleasing any one of them. The long
association and the relationship with ABC got priority and
the freight forwarder assured ABC’s Senior
Commercial Manager to carry out the assigned responsibility.
Going against the directives of association,
the freight forwarder contacted the police authorities and
obtained a security cover throughout
Maharastra. The freight owner consider himself as one of the
responsible members of ABC and was
personally receiving the cargo and getting it loaded at
Mumbai airport. The scheduled departure had a
lead-time of two days. However, he freight forwarder
insisted and stayed at Mumbai at his own cost to
see the goods leaving India successfully. It was a mission
for ABC and the freight forwarder in which
collaborative relationship surpassed all limitations and the
goods landed in Germany-just-in-time.
Questions:
1. What modification would you suggest in enhancing the
existing logistics system?
2. Critically analyze the efforts of ABC in launching
generic versions of products going off
patents.
END OF SECTION B
Examination Paper: Operation Management
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IIBM Institute of Business Management
Section C: Applied Theory (30 marks)
•This section consists of Applied Theory
Questions.
•Answer all the questions.
•Each question carries 15 marks.
•Detailed information should form the part
of your answer (Word limit 200 to 250 words).
1. Define Logistic support in the context of the production
/construction phase. What are the
elements of Logistic support?
2. Define reliability & maintainability. What are their
major characteristics?
END OF SECTION C
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