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Examination Paper: Supply Chain Management

5
IIBM Institute of Business Management

IIBM Institute of Business Management
Examination Paper MM.100
Statistical Quality Control
Section : !"#ecti$e %ype &'0 mar(s)
%his section consists of Multiple choice *uestions + Short ns,er type *uestions.






ns,er all the *uestions.
Part !ne *uestions carry 1 mar( each + Part %,o *uestions carry - mar(s each.






Part !ne:
Multiple choices:
1. If in a hall there are 1. persons then ho, many han/sha(es are possi"le0
a. 1.11.
". 1.11234
c. 1.112
/. 5one of the a"o$e
4. If the num"er of trials "e 6n7 an/ the pro"a"ilityof occurrence "e 6p7 then the stan/ar/ /e$iation
,ith respect to np8 is gi$en "y:
a. &np)
134
". &np&19p))
134
c. &np)
13-
/. &np&19p))
13-
'. :or a "iase/ coin the pro"a"ility of occurrence of hea/ is 0.- 8if the coin is tosse/ t,ice then the
pro"a"ility of occurrence of at least one hea/ ,ill "e:
a. 0.2;
". 0.-.
c. 0.;-
/. 0.1;
-. :actorial of < e*uals:
a. ;0
". 140
c. 4-
/. <
<. Com"inatory of &-84) e*uals:
a. 14
". .
c. ;
/. 5one of the a"o$e
Examination Paper: Supply Chain Management
6
IIBM Institute of Business Management
;. 6Economic Control of Quality of Manufacture/ Pro/uct78 a "oo( "y =alter She,hart in:
a. 1>'1
". 1>-1
c. 1>'0
/. 1><;
2. Quality is #u/ge/ "y????
a. @etailer
". Ao$ernment
c. Customer
/. Bole seller
.. run chart is a special chart of????
a. Pie chart
". Cine chart
c. @ chart
/. C chart
>. Dni$erses may /iffer :
a. In a$erage
". In a"o$e a$erage
c. t higher le$el
/. ll of the a"o$e
10. SQC an/ 5SI "egan in the year:
a. 1><;
". 1>2;
c. 1>2.
/. 1>;0
Part %,o:
1. Eifferentiate "et,een 6Eefect7 an/ 6Eefecti$e7.
4. Explain the nee/ of 6short metho/7.
'. =hat /oes 6%che"ycheff7s ine*uality theorem7 say0
-. Explain the usa"ility of 6stochastic limit7.
<. =rite a note on 6Cause an/ Effect7 /iagram.
E5E !: SEC%I!5











Examination Paper: Supply Chain Management
7
IIBM Institute of Business Management
Section B: Caselets &-0 mar(s)
%his section consists of Caselets.






ns,er all the *uestions.
Each Caselet carries 40 mar(s.
Eetaile/ information shoul/ form the part of your ans,er &=or/ limit 1<0 to 400 ,or/s).






Caselet 1
EP%BICI%F I5 C%I!5: CSE !: @SC
@a#asthan Synthetics Ct/. &@SC) ,as esta"lishe/ in the year 1>>- at Bhil,ara8 @a#asthan to
manufacture synthetic yarn ,ith a license/ capacity of 4>8000 spin/les. Manish Gumar8 a Bar$ar/
Business School gra/uate8 esta"lishe/ @SC ,ith .H e*uity participation from Itochu Corporation
Iapan to manufacture synthetic yarn for shirting8 a promising "usiness at that time. %he /emise of the
5%C textile mills ,as fresh in the min/s of the promoters an/ therefore8 state of the art technology
importe/ from D.G.8 Aermany8 Iapan an/ :rance ,as use/ in the manufacturing facility. By the time
the company starte/ manufacturing yarn the competition in shirting yarn ha/ "ecome fierce an/ the
returns ha/ /iminishe/. %he company incurre/ losses in the first four years of its operations an/ the
management ,as loo(ing for opportunities to turn things aroun/. %he manufacturing plant starte/
functioning ,ith an installe/ capacity of 4;8000 spin/les8 a small unit consi/ering yarn9
manufacturing in/ustry8 in the year 1>>; to manufacture synthetic yarn for shirting only. Initially8 the
ma#or fa"ric manufactures of In/ia such as @aymon/s8 Eonear8 Arasim8 martex8 Siyaram8 Pantaloon
an/ r$i$a ,ere the main customers of the company an/ the total pro/uce of the company ,as sol/
,ithin the /omestic mar(et. %hese fa"ric manufactures use/ to import the premium *uality yarn
"efore @SC starte/ supplying the yarn to them. %he company in the first year of its operations
realiJe/ that shirting yarn ,as one of the fiercely competiti$e pro/ucts an/ the company ,ith its high
interest lia"ility ,as unli(ely to earn the /esire/ profits. lso8 the company ha/ a narro, pro/uct mix
limite/ to only t,o more "lo, room lines ,ere installe/ in the first *uarter of 1>>2. %he a//ition of
t,o "lo, room lines helpe/ @SC to manufacture four /ifferent types of yarns at the same time.
DtiliJing this a//e/ flexi"ility8 @SC "egan manufacturing yarn for suitings.Since the suiting yarn ,as
pro$i/ing "etter returns8 the company ,as (een to increase manufacturing of suiting yarn "ut ,as
hampere/ "y the t,o for one /ou"ling &%:!) facility8 ,hich ,as limite/ to only -0H of the total
pro/uce. %o remo$e this "ottlenec(8 14 more %:! machines ,ere a//e/ to the existing . %:!
machines. %he a//ition of these machines increase/ the /ou"ling capacity to 20H of the pro/uction
pro$i/ing a//itional pro/uct mix flexi"ility to the company. %his ena"le/ the company to
manufacture yarn to cater to the re*uirements of suiting8 in/ustrial fa"ric an/ carpet manufacturers. In
the initial years of its operations8 @SC realiJe/ that the promises ma/e "y the Ao$ernment of
@a#asthan to pro$i/e uninterrupte/ po,er supply of the re*uire/ *uality &sta"le $oltage an/
fre*uency) an/ ample *uantity of ,ater ,ere unli(ely to "e met through the pu"lic /istri"ution
system. %he $oltage an/ fre*uency of electric po,er pro$i/e/ through the pu"lic /istri"ution system
,ere erratic an/ fre*uent announce/ an/ unannounce/ po,er cuts stoppe/ pro/uction on a regular
"asis. In these circumstances8 meeting *uality re*uirements of the customers an/ a/hering to /eli$ery
sche/ules ,as a herculean tas(. %o ensure smooth an/ uninterrupte/ operations @SC installe/ in9
house po,er generation facility of - mega,atts capacity an/ /ug 10 tu"e9,ells.@SC face/ stiff
competition in the /omestic mar(et from Au#arat Spinning an/ =ea$ing Mills8 Surat8 @a#asthan
%extile Mills8 Bha,ani Man/i8 Charan Spinning Mills8 Salem an/ In/orama Synthetics Ct/.8
Pithampur in all their pro/uct categories an/ the returns ,ere lo,. In or/er to com"at stiff
competition in the /omestic mar(et an/ impro$e returns the company starte/ /e$eloping export
Examination Paper: Supply Chain Management
8
IIBM Institute of Business Management
mar(ets for their pro/ucts in the year 1>>.. Initially8 @SC starte/ exporting carpet yarn to Belgium
an/ till 4001K carpet yarn forme/ the ma#or component of their exports. tra/e agreement ,as signe/
,ith :i"ratex Corporation8 S,itJerlan/ to share profits e*ually for expan/ing their o$erseas
operations. Euring the same perio/8 @SC continue/ to scout for ne, export mar(ets an/ ,as
successful in entering top9of9the9line fancy for premium fashion fa"ric manufactures of international
repute li(e Mango an/ Lara. @a#asthan Synthetics Ct/. also exporte/ fancy yarn to a num"er of fa"ric
manufacturers locate/ in Italy8 :rance8 Englan/8 Spain an/ Portugal. Farn manufacturers from
In/onesia8 Gorea an/ %ai,an ga$e stiff competition to @SC ,hen it entere/ the international mar(et.
%he companies from South sian countries ha/ a ma#or cost a/$antage o$er @SC "ecause of cheap8
uninterrupte/ a$aila"ility of po,er an/ high la"our pro/ucti$ity. Currencies ha/ "een sharply
/e$alue/ /uring the South sian financial crisis8 ,hich ren/ere/ the pro/ucts manufacture/ "y these
companies still cheaper in international mar(ets. Eespite all these /isa/$antages8 @SC ,as a"le to
gain a foothol/ through constant a/aption of their pro/ucts accor/ing to the customer re*uirements in
the highly *uality conscious international yarn mar(et an/ ,as exporting ><H of its total pro/uce "y
the "eginning of the year 4004.
@a#asthan Synthetics Ct/. ha/ fine9tune/ its /istri"ution channels accor/ing to the type of mar(ets
an/ siJe of or/ers from the customers. In line ,ith this policy the export to Mi//le East8 :ar East an/
%ur(ey ,as carrie/ out through agents. Similarly8 lo, $olume export of fancy yarn re*uirements ,as
also catere/ through agents. =hile /ealing ,ith importers /irectly8 @SC strictly follo,e/ the policy
of exports against confirme/ Cetter of Cre/its only. %he company /irectly exporte/ to important
clients in Belgium8 Englan/ an/ :rance. %he /omestic mar(et ,as also ser$e/ through an agency
system. @a#asthan Synthetics Ct/. consi/ere/ in$entories as an unnecessary ,aste an/ (ept minimum
possi"le in$entories ,hile ensuring re*uire/ le$el of ser$ice. %o ensure that the in$entories ,ere hel/
to a minimum8 the manufacturing plan consiste/ of ;0 to 20H against customer or/ers8 '0 to -0H
against anticipate/ sales an/ 4H capacity ,as reser$e/ for ne, pro/uct /e$elopment. Strategic
Management Committee &SMC) consisting of ME8 CE!8 AM &mar(eting) an/ AM &technical)
re$ie,e/ the pro/uction plan of the manufacturing plant on *uarterly "asis. %he SMC also /e$elope/
the plans for profita"ility8 pro/uct mix an/ cost minimiJation. Eeli$ering high9*uality pro/ucts an/
meeting /eli$ery commitments for e$ery shipment ,ere essential pre9re*uisites to "e successful in the
glo"al mar(et place. %he company ha/ un/erstoo/ this $ery early an/ to ensure that the pro/ucts
manufacture/ "y @SC met the stringent *uality re*uirements of its international customers8 the
company ha/ /e$elope/ a full9fle/ge/ testing la"oratory e*uippe/ ,ith ultra mo/ern testing
machines li(e Dser %ester9' an/ Class fault. %he company ha/ stringent *uality testing chec(s at
e$ery stage of tarn pro/uction right from mixing of fi"er to pac(ing of finishe/ cones. Its in9house
@esearch an/ Ee$elopment an/ Statistical Quality Control &SQC) /i$isions ensure/ consistent
technical specifications ,ith the help of sophisticate/ state9of9the9art machines. team of
professionally *ualifie/ an/ experience/ personnel to ensure that the yarn manufacture/ "y the
company ,as in line ,ith international stan/ar/s "ac(e/ the company. %he company continuously
upgra/e/ its pro/uct mix an/ at the same time8 ne, pro/ucts /e$elope/ "y in9house research an/
/e$elopment /epartment ,ere a//e/ to the pro/uct mix form time to time. @SC7s management ,as
*uic( to analyJe the potential of these in9house /e$elopments an/ follo,e/ a flexi"le approach in
/etermining the le$el of $alue a//ition. %he company ha/ /e$elope/ a ne, yarn recently an/ ,as
selling it un/er the @a#tang "ran/ name. %his ne, yarn ,as stretcha"le in three /imensions8 a"sor"e/
moisture *uic(ly8 ,as soft an/ sil(y an/ fitte/ the "o/y. %his yarn ,as extracte/ from natural
pro/ucts an/ "eing "o/y9frien/ly8 ,as in great /eman/ in international mar(ets. Coo(ing at the
higher $alue a//ition possi"ilities @SC /eci/e/ to for,ar/ integrate an/ starte/ manufacturing fa"ric8
using @a#tang an/ pro$i/e/ rea/y9ma/e garments li(e s,imming suit8 trac(suit8 un/ergarments8 tops8
slac(s an/ (i/s /resses. %he rea/y9ma/e /resses from the fa"ric ,ere "eing manufacture/ on the
specifications an/ /esigns of @SC. %he management /eci/e/ to mar(et these pro/ucts un/er the
"ran/ name M=ear9itN through =ear,ell Aarments P$t. Ct/.8 an associate company of @SC8 to ensure
that @SC /i/ not lose its focus. %he Managing Eirector of @SC felt that continuous a/apta"ility to
Examination Paper: Supply Chain Management
9
IIBM Institute of Business Management
mar(et re*uirements through a flexi"le approach8 cost cutting in e$ery sphere of operations an/ team
approach to management ha/ ta(en them ahea/. Bo,e$er8 @SC ha/ "ecome highly /epen/ent on the
$olatile export mar(et an/ if it ,as not a"le to retain the international mar(et it ,oul/ ha$e to re9
esta"lish itself in the /omestic mar(et8 ,hich ,as not an easy tas(.
Questions:
1. =hat mar(eting strategy shoul/ @SC a/opt to remain competiti$e in the international mar(et0
4. Bas the company ta(en the right /ecision to for,ar/ integrate an/ enter into the highly $olatile
garment mar(et0
Caselet 4
Popular mythology in the Dnite/ States li(es to refer to pre9=orl/ =ar II Iapan as a some,hat
"ac(,ar/ in/ustrial po,er that pro/uce/ an/ exporte/ mostly trin(ets an/ small items of /u"ious
*uality "ought "y mericans impo$erishe/ "y the Areat Eepression. :e, "ring up the fact that8 prior
to the Pearl Bar"or attac(8 Iapan ha/ con*uere/ ,hat are no, Gorea8 Manchuria8 %ai,an8 an/ a large
portion of China8 Oietnam8 an/ %hailan/K an/ "y the en/ of 1>-4 Iapan ha/ exten/e/ its empire to
inclu/e Burma8 the Philippines8 In/onesia8 Malaysia8 %hailan/8 Cam"o/ia8 5e, Auinea8 plus many
strings of islan/s in the eastern Pacific !cean. Its na$y ha/ mo$e/ a large arma/a of ,orships -8000
miles across the Pacific !cean8 in secret an/ in silence8 to attac( Pearl Bar"or an/ then returne/
safely home. Manufacturers capa"le of pro/ucing only lo,9gra/e goo/s /on7t accomplish such feats.
Bigh9*uality stan/ar/s for military har/,are8 ho,e$er8 /i/ not exten/ to ci$ilian an/ export goo/s8
,hich recei$e/ $ery lo, priority /uring the ,ar years. %hus the perception in the Dnite/ States for a
long time "efore an/ then imme/iately after the ,ar ha/ nothing to /o ,ith some inherent character
fla, in Iapanese culture or in/ustrial capa"ility. It ha/ e$erything to /o ,ith Iapan7s national
priorities an/ the a$aila"ility of fun/s an/ material. :ollo,ing Iapan7s surren/er in 1>-<8 Aeneral
Macrthur ,as gi$en the tas( of re"uil/ing the Iapanese economy on a peaceful footing. s part of
that effort an assessment of /amage ,as to "e con/ucte/ an/ a national census ,as planne/ for 1><0.
Eeming ,as as(e/ in 1>-2 to go to Iapan an/ assist in that effort. s a result of his association ,ith
She,hart an/ *uality training8 he ,as contacte/ "y representati$es from the Dnion of Iapanese
Scientists an/ Engineers &IDSE)8 an/ in 1><08 Eeming /eli$ere/ his no, famous series of lectures on
*uality control. Bis message to top in/ustry lea/ers8 ,hom he /eman/e/ to atten/8 an/ to IDSE ,as
that Iapan ha/ to change its image in the Dnite/ States an/ throughout the ,orl/. Be /eclare/ that it
coul/ not succee/ as an exporter of poor *uality an/ argue/ that the tools of statistical *uality control
coul/ help sol$e many *uality pro"lems. Ba$ing seen their country /e$astate/ "y the ,ar8 in/ustry
an/ go$ernment lea/ers ,ere eager to learn the ne, metho/s an/ to spee/ economic reco$ery.
Experience ,as to pro$e to Eeming an/ others that8 ,ithout the un/erstan/ing8 respect8 an/ support
of management8 no group of tools alone coul/ sustain a long9term *uality impro$ement effort.
Questions:
1. Bo, coul/ ha$e the SQC approach8 "een useful in sol$ing the imme/iate pro"lems of Iapan0
4. If you ,ere among one of the management mem"ers8 ,hat ,oul/ ha$e "een your first insight.
E5E !: SEC%I!5 B











Examination Paper: Supply Chain Management
Section C: Practical Pro"lems &'0 mar(s)
%his section consists of Practical Pro"lems.






ns,er all the *uestions.
Each *uestion carries 1< mar(s.






1. sample of '0 is to "e selecte/ from a lot of 400 articles. Bo, many /ifferent samples are
possi"le0
4. In Eo/ge7s CSP918 it is /esire/ to apply sampling inspection to 1 piece out of e$ery 1< an/ to
maintain an !QC of 4H. =hat shoul/ "e the $alue of i0
E5E !: SEC%I!5 C