Q.1 A. Multiple Choice Questions.
1. Zero stock purchasing is also known as _____purchasing.
a) Free
b) Frequent
c) Stockless
d) One
2. Which cost is associated with holding or storing inventory?
a) Ordering cost
b) Carrying cost
c) Out-of-stock cost
d) Handling equipment cost
3. _____ goods are those tangible goods that normally survive many uses.
a) FMCG
b) Durable
c) Convenience
d) Non-durable
4. In ABC Analysis, Category A items are:
a) High-value, low-quantity
b) Low-value, high-quantity
c) Moderate-value, moderate-quantity
d) Seasonal items
5. Total cost =?
a) Fixed cost +Operational Cost
b) Variable cost +Operational Cost
c) Fixed cost +Variable Cost
d) None of these
6. What does EOQ stand for?
a) Economic Order Quantity
b) Efficient Order Quality
c) Estimated Order Quantity
d) Essential Order Quality
7. Which production method uses assembly lines for identical products?
a) Batch production
b) Job production
c) Mass production
d) Continuous production
8. Which cost is incurred due to running out of stock?
a) Ordering cost
b) Carrying cost
c) Out-of-stock cost
d) Capacity cost
9. "Idea screening" in product development refers to:
a) Generating new ideas
b) Evaluating feasibility and market demand of ideas
c) Marketing the product
d) Finalizing the design
10. Zero stock purchasing is also known as _____purchasing.
a) Free
b) Frequent
c) Stockless
d) One
Q.1 B. True or False.
1. The Production and Operations are synonymous words. F
2. Feedback has power to keep your organization live. T
3. Material flow systems aim to minimize delays in production processes. T
4. Category C items in ABC analysis have high monetary value. F
5. There are only three types of Plant Layout. F
6. High demand variability is categorized under Category Z in XYZ analysis. T
7. There are only three types of Plant Layout. F
8. Batch production allows for variety and some customization. T
9. A market launch is the first stage in the product life cycle. F
10. Continuous production is another term for job production. F
Q.2 Answer in one sentence:
1. Name the 3 levels of products.
2. Define safety stocks?
3. What is inventory management?
4. Define Ordering Cost.
5. What is make or buy decision.
6. Define EOQ.
7. What is make or buy decision.
8. Define product management.
9. What is the goal of Capacity Management?
10. Name the types of production system.
Answers
1. The three levels of products are core product, actual product, and
augmented product.
2. Safety stocks are extra inventory kept to prevent stockouts due to
demand or supply variability.
3. Inventory management involves planning, controlling, and overseeing
stock to meet customer demand efficiently.
4. Ordering cost refers to the expenses incurred in placing and receiving
inventory orders.
5. Make or buy decision is the process of choosing between
manufacturing a product in-house or purchasing it from an external
supplier.
6. EOQ (Economic Order Quantity) is the optimal order quantity that
minimizes total inventory costs, including ordering and holding costs.
7. Make or buy decision involves determining whether to produce a
product internally or outsource it.
8. Product management involves overseeing the lifecycle of a product,
from development to market introduction and eventual phase-out.
9. The goal of capacity management is to ensure that production capacity
meets current and future demand efficiently.
10. The types of production systems are job production, batch production,
mass production, and continuous production.
Short notes:
1. Explain stages of product development.
Ans. Idea Generation:
Brainstorming new product ideas from customer feedback, market research, or
internal sources.
Idea Screening:
Evaluating ideas to select the most feasible and profitable ones.
Concept Development & Testing:
Developing detailed product concepts and testing them with target customers.
Business Analysis:
Assessing the market potential, costs, pricing, and profitability.
Product Development:
Creating prototypes and testing for functionality and design refinement.
Market Testing:
Launching the product on a limited scale to gather market feedback.
Commercialization:
Full-scale production, marketing, and distribution.
Post-Launch Evaluation:
Monitoring product performance and gathering customer feedback for improvements.
2. Explain functions of inventory
Ans. Meet Customer Demand:
Ensures timely product availability to fulfill customer orders.
Smooth Production Process:
Provides continuous supply of raw materials for uninterrupted production.
Buffer Against Uncertainty:
Protects against supply chain disruptions and demand fluctuations.
Economies of Scale:
Enables bulk purchasing and production, reducing per-unit costs.
Seasonal Demand Management:
Stores products to meet demand during peak or seasonal periods.
Speculative Buying:
Allows businesses to purchase and store inventory in anticipation of price hikes.
Minimize Lead Time:
Reduces delays between order placement and product availability.
Support Distribution Efficiency:
Helps maintain inventory at multiple locations for faster delivery to customers.
Improved Customer Service:
Ensures product availability, enhancing customer satisfaction
3. Describe the objectives of purchase management.
Ans. Ensure Timely Availability:
Procure materials and goods on time to avoid production delays.
Cost Control:
Minimize procurement costs while maintaining quality and quantity.
Quality Assurance:
Ensure purchased goods meet required quality standards.
Supplier Relationship Management:
Build and maintain strong relationships with reliable suppliers.
Optimize Inventory Levels:
Maintain optimal stock levels to avoid both excess and shortage.
Maintain Compliance:
Ensure purchases comply with legal and regulatory requirements.
Improve Efficiency:
Streamline the purchasing process for faster and more efficient operations.
Risk Mitigation:
Reduce risks related to supply chain disruptions or price fluctuations.
4. Explain in detail production cycle.
Ans. The production cycle refers to the process of converting raw
materials into finished goods that are ready for sale
Planning:
Identify product demand and production requirements.
Set objectives, deadlines, and assign resources.
Procurement:
Order raw materials and resources necessary for production.
Ensure supplier reliability and inventory management.
Production:
Raw materials undergo processing, manufacturing, or assembly.
Operations may involve multiple stages like machining, packaging, or finishing.
Quality Control:
Inspections and tests are conducted to ensure the product meets the required
standards.
Quality assurance checks at different stages prevent defects.
Storage and Inventory Management:
Finished goods are stored in a warehouse or inventory until they are ready for
distribution.
Proper inventory management systems are used to track stock levels.
Distribution:
Products are sent to retailers, wholesalers, or directly to customers.
This can involve shipping, packaging, and handling logistics.
Feedback and Evaluation:
Post-production evaluations are conducted based on customer feedback and
performance analysis.
This information is used to improve future production processes.
Sums
1. A Company is determining its frequency of orders for an ‘electrical switch’. Each product cost
Rs. 20.The annual carrying cost is Rs.400 and the cost per order is Rs 15. The company
expects to sell 50 units of ‘electrical switch’ each month. It has also decided to maintain an
average inventory level of 40 units. Find the EOQ.
2. Find EOQ with help of information given below:
Annual usage=1000 pieces
Cost per piece= Rs. 250
Ordering cost= Rs. 10
Inventory holding cost= 20% of average inventory
Material handling cost= Rs. 1 per piece
3. When the lead time varies between 60day and 180 days with an average value of 90 days and the
usage rate varies between 75 units and 125 units per day with an average value of 100 units per day.
Calculate the safety stock required.
