CWA ICWA - Final Stage III : Operations and Project Management and Control - June 2010

CWA ICWA - Final Stage III • Operations and Project Management and Control • June 2010

This Paper has 42 answerable questions with 0 answered.

F–13(OPM) Revised Syllabus
Time Allowed : 3 Hours	Full Marks : 100

The figures in the margin on the right side indicate full marks.

Answer Question No. 1 & Question No. 6, which are compulsory and any two other questions
from Section I and any two other from Section II.

Please:

(i) answer all bits of a question at one place.
(ii) open a new page for answer to a new question.
working Notes should form part of the answer.

Section I

Marks

(a)

Match each item in the left hand Column I with an appropriate item in the right hand Column II:

Column I		Column II
(A) (B) (C) (D) (E) (F) (G) (H) (I) (J)	Shot Blasting Reaming Kaizen Ergonomic Value Engineering Calcination Therbligs Extrusion Annealing Polymerisation	(i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x)	Plastic, Synthetic, Fibres Improvement of work Machining Cement Human Factor Engineering Metal Forming Heat treatment Surface treatment Elementary Motions Cost Reduction

0.5x10=5

(0)

(b)

Expand the following acronyms:

(i)

WAN,

(ii)

CAD,

(iii)

NPC,

(iv)

PMTS,

(v)

AQL,

1x5

(0)

(c)

Find out whether the following statements are ‘True’ or ‘False’

1x5

(ii)

Cutting tools are shaped by the grinding process;

(0)

(ii)

Screw conveyor is used for handing cement in a cement plant;

(0)

(iii)

Nitrogen is used as a bleaching agent in paper manufacture;

(0)

(iv)

Fixtures are used to increase productivity;

(0)

(v)

CNC machines demand higher manual skill of the machinists.

(0)

(d)

Fill in the blanks in the following sentences with the most appropriate words:

1x5

(i)

The latest version of ISO Certification is ISO 9001: ___________ .

(0)

(ii)

Work Study is a technique used for determining the __________ Time for doing a job.

(0)

(iii)

___________ Theory determines as to when a Sub–assembly/Equipment needs to be replaced in order to optimize overall costs of operation.

(0)

(iv)

Reaming is done after boring and ____________ operations.

(0)

(v)

Grouping of all similar machines at one place is called ______________ Layout.

(0)

The existing layout of a Finished Goods Stores is as follows in a manufacturing organization:

	2	3	4	5	6
1	7	8	9	10	11
↓	12	13	14	15	16
			↓	(aisles omitted for simplicity)
Receiving/Despatch Area			Packing Area

The other areas (2 to 8 and 10 to 16) are storage areas for different products.

Material flows between Are 9 and the other 15 sections/areas. Loads are moved to Area 1 only from Area 9. All other loads flow from remaining areas/sections into Area 9. For simplicity, we consider only loads moved to Packing Area 9 from all areas, except the Receiving/Despatch Area 1. The location of Receiving/Despatch Area 1 is fixed and cannot be relocated. All other areas can be considered for relocation.

Average annual loads from each area/section to Area 9 are as follows:

Area	Load	Area	Load	Area	Load	Area	Load	Area	Load
2	500	5	150	8	350	12	150	15	250
3	100	6	150	10	250	13	250	16	500
4	350	7	150	11	100	14	100

From Area 9 to Area 1, average annual loads are 2,800. Using the Load Distance Matrix, Arrive at an improved layout.

3+3+2
+3+3+1

(0)

(a)

what are your views on operation of Quality Circles in India? Justify.

(0)

(b)

WILLSON LTD. a ball bearing manufacturing Co. manufactures three types of ball bearings X, Y and Z. In a particular year, the total production of bearings were 10,000, 12,400 and 12,000 Nos. of X, Y and Z respectively. The standard man hours(SMH) for each type of bearing are 25, 20 and 12.5 respectively. In that year, the Company employed 900 workers (both piece workers and day workers). The ratio of piece workers to day workers was 1:0.5. The Co. worked 50 weeks in the year with 6 days of 5 hourly double shifts. Equal number of piece workers were deployed in each shift.

The average of absenteeism among the workers is 10%.

You are required to calculate the productivity of piece workers in that year.

2+3+2

(0)

(a)

What are the advantages of Diversification?

(0)

(b)

LEENZA ENGINEERING LTD. manufacture Gunmetal bushes. Manufacture of a Gunmetal bush requires operations on Lathe, Milling and Drilling Machine tools. The operator efficiencies and machine availability of each of the machine tools are as follows:

Machinel tools	Operator Efficiency	Std.Man–hrs./bush	M/c.tool availability
Lathe Milling Drilling	75% 80% 80%	0.15 0.20 0.10	95% 75% 75%

(i)	If the Factory operates one shift of 8 hours for 6 days in a week, how many each of Lathe, Milling and Drilling m/cs. will be required to product 2,000 bushes/week?

(ii)	What will be the spare capacity available on each of the machine tools?

7+3

(0)

Write short notes on any three out of the following:

3x5

(a)

Cost of Quality;

(0)

(b)

Zero Based Budgeting;

(0)

(c)

Maintaining Discipline;

(0)

(d)

Appropriate Technology;

(0)

(e)

Powder Metallurgy.

(0)

SECTION II

SECTION II

(a)

Match each item in Column I with the most suitable description in Column II:

Column I		Column II
(A) (B) (C) (D) (E)	Project Viability Checking Short Term Financing for working Capital Utility Capital Ratio Resource Allocation	(i) (ii) (iii) (iv) (v)	Power Investment & Turnover Cost Benefit Analysis Project Activity Commercial Paper

1x5

(0)

(b)

Expand the following acronyms:

(i)

FDI,

(ii)

BEP,

(iii)

LRC,

(iv)

LOB,

(v)

ACWP.

1x5

(0)

(c)

In each of the cases given below one out of our answer is correct. Indicate the correct answer:

1x5

(i)

If an activity of a critical path in a network diagram has a pessimistic time of 18 days and a standard deviation of 4, the optimistic time estimate for the activity is

A.	4 days
B.	6 days
C.	8 days
D.	12 days

(0)

(ii)

Variation in the Cost of capital changes the ranking of a project as per which of the following appraisal methods.

A.	NPV
B.	BCR
C.	P 1
D.	All of the above

(0)

(iii)

The Detail Project Report (DPR) is generally prepared for submission to the

A.	Financial Institutions
B.	Management
C.	Board of Directors
D.	None of the above

(0)

(iv)

Which of the following statement(s) is/are true?

A.	Total float is a sum of free float and independent float
B.	Free float is always for all activities on the critical path
C.	Independent float can be negative or positive
D.	Only the activities on the critical path have an independent float of zero.

(0)

(v)

In matrix form of project organization,

A.	The hierarchical principle is ignored
B.	Responsibility and authority are commensurate
C.	There is dual subordination
D.	Both (A) and (C) above.

(0)

(d)

Find out whether the following statements are ‘True’ or ‘False’ :

1x5

(i)

In Item rate contracts, the Contractor is paid a lumpsum amount at the end of the Contract.

(0)

(ii)

Normal Costs are estimates of Direct Costs of a Project to be executed in Normal Time.

(0)

(iii)

Royalty is the consideration paid to the Collaborator annually for transfer of technical know–how over the duration of the agreement.

(0)

(iv)

Head Slack is the difference between the Earliest and the Latest Occurrence times of the Tail event of an Activity.

(0)

(v)

Benefit Cost Ratio is the ratio of Present Value of Benefits to the Present Value of Investments.

(0)

(a)

What is Social Cost–Benefit analysis? What are the main differences between Social Cost Benefit analysis and the Commercial Calculations in Project Appraisal?

1+4

(0)

(b)

The top management of ZAVRI LTD. is considering the problem of marketing a new product. The investment required in the project is Rs.15,000. The three factors that are uncertain are the selling price, variable cost and the annual sales volume.

The product has a life of only one year. The management has collected the following data regarding the possible levels of these three factors:

Unit Selling Price (Rs.)	Probability	Unit variable Cost (Rs.)	Probability	Sales Volume Units	Probability
14 15 16	0.35 0.50 0.15	2 3 4	0.30 0.50 0.20	3,000 4,000 5,000	0.25 0.40 0.35

Consider the following three series of random Numbers:

Series 1: 82, 84, 28, 82, 36, 92, 73, 91, 63, 29
Series 2: 27, 26, 92, 63, 83, 03, 10, 39, 10, 10
Series 3: 23, 57, 99, 84, 51, 29, 41, 11, 66, 30

Required:
Using Monte Carlo simulation technique, determine the expected profit for the above project on the basis of 10 trails.

2+6+2

(0)

(a)

What is Gestation period of a project? How the financing decisions are Governed by the gestation period of the project?

1+3

(0)

(b)

PRECISION TOOLS LTD. has obtained a contract to built and deliver nine extruding presses to MARISON LTD. The contract price negotiated is contingent on meeting a specified delivery time, a bonus being given for early delivery. The marketing department has established the following cost and time information:

Activity	Normal time (Weeks)	Crash time (Weeks)	Normal cost (Rs.)	Crash cost (Rs.)
1–2 2–3 2–4 2–5 3–6 4–6 5–7 6–7	3 4 3 8 4 6 5 3	1 3 2 7 2 4 4 1	15,000 18,000 14,000 15,000 13,000 12,000 20,000 17,000	19,000 24,000 16,000 16,000 15,000 13,600 24,000 20,600

The normal delivery time is 16 weeks for a Contract Price of Rs.1,24,000.
Required:
Based on the calculated profitability for each of the following specified delivery time, what delivery schedule do you recommend that PRECISION TOOLS LTD. may implement?

Contract delivery time (weeks)	Contract amount (Rs.)
15 14 13 12	1,42,500 1,45,000 1,50,000 1,52,500

2+1+2+5+1

(0)

(a)

Explain Venture Capital Funding of Projects.

(0)

(b)

The Balance Sheet of VASTAN LTD. as on 31^st March, 2009 is as follows:

(Rs. in lakhs)

Liabilities		Assets
Share capital Reserves & Surplus Secured Loans Unsecured Loans Current Liabilities Provisions	50 40 40 30 60 10	Fixed Assets Investments Current Assets Cash Receivables Inventories	10 40 65	110 5 115
Total	230			230

The projected Income Statement and distribution of earnings for the year 2009–10 are given below:

(Rs.in lakhs)

Cost of Goods Sold Depreciation Interest Tax Dividend Retained Earnings	190 15 12 18 10 5	Sales	250
Total	250		250

During the year 2009–10, the Company plans to raise secured loans of Rs.10 lakhs, repay a previous secured term loan to the extent of Rs.5 lakhs, acquire fixed assets worth Rs.15 lakhs and to raise its inventories by Rs.5 lakhs. During the year, Current Liabilities and Receivables are expected to increase by 5% each.
Required:

Prepare the Projected Cash Flow Statement for 2009–10 and the Projected Balance Sheet as on 31st March, 2010.

5+5

(0)

10.

(a)

Explain “Life Cycle Costing” in Project Management.

(0)

(b)

The sales of a product during a 14 year period are as follows:

Year	Sales	Year	Sales
1 2 3 4 5 6 7	2,000 2,200 2,100 2,300 2,500 3,200 3,600	8 9 10 11 12 13 14	4,000 3,900 4,100 4,400 4,600 4,900 5,300

Required:
Forecast the Sales for the 15th year, with the help of a trend line using Mid Point Method.

(0)

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