| 1. | (a) | A manufacturer of biscuits is considering manufacture of 4 types of gift packs containing 3 types of biscuits–orange cream (OC). chocolate cream (CC) and waters (W). Market research conducted recently to assess the preference of consumers shows the following types of assortments to be in good demand: Assortments
A
B
C
D | Content
Not less than 40% of OC
Not more than 20% of CC
Any quantity of W
Not less than 20% of OC
Not more than 40% of CC
Any quantity of W
Not less than 50% of OC
Not more than 10% of CC
Any quantity of W
No restrictions | Selling price/Kg. (Rs.)
120
125
122
112 |
For the biscuits, the manufacturing capacity and the costs are given below. Biscuits variety
OC
CC
W | Plant Capacity (Kg./Day)
200
200
150 | Manufacturing Cost (Rs./Kg.)
80
90
70 |
You are required only to formulate a LP model to find the production schedule which would maximise the profit, assuming that there are no market restrictions. You are not required to solve the LPP. | 10 | (0) |
| | (b) | The variable cost structure of M/S XYZ & Co. is as follows:
Materials
Labour
Overhead
Selling price | Rs/Unit
40
10
04
90 |
Sales and fixed overhead during the current year are expected to be Rs. 13,50,000 and Rs. 1,40,000 respectively. Under a new wage agreement, an increase of 10% In wage is payable to all the direct workers from the beginning of the forthcoming year, while the materials cost, variable overhead and fixed overhead are expected to increase by 7.5%, 5% and 3% respectively
You are required to work out: | (i) | the new selling price, if the current P/V Ratio is maintained, and |
| (ii) | the quantity to be sold during the forthcoming year to yield the same amount of profit as in the current year, assuming that the selling price per unit will remain same. |
| 5+5 | (0) |
| 2. | (a) | A company has 4 factories F1, F2, F3, and F4 manufacturing the same product. Production and raw material costs differ from factory to factory and are given in the table below in the first two rows. The transportation costs from the factories to the sales depot S1 S2, and S3 are also given. The last two columns in the table below give the sales price and total requirement at each depot and the production capacity of each factory is given in the last row. | F1 | F2 | F3 | F4 | Sales price
Unit (Rs.) | Requirement | | Production Cost/Unit (Rs.) | 15 | 18 | 14 | 13 | | | Raw material Cost/Unit (Rs.) | 10 | 9 | 12 | 9 | | | Transportation Cost/Unit (Rs.) | | S1 | 3 | 9 | 5 | 4 | 34 | 80 | | S2 | 1 | 7 | 4 | 5 | 32 | 120 | | S3 | 5 | 8 | 3 | 6 | 31 | 150 |
Determine the optimal solution and the associated profit by using the Vogel’s Approximation Method (VAM). | 10 | (0) |
| | (b) | A repairman is to be hired by a company to repair machines that breakdown at an average rate of 3/hour. Breakdown occurs randomly (Poisson distribution) over time. Non–productive time on any machine is considered to cost the company Rs. 10 per hour. The management has narrowed down the choice to 2 repairment; one ‘slow but cheap’ and other ‘fast but expensive’. The ‘slow but cheap’ repairmen has a rate of Rs. 5 per hour and he will service breakdown machines at an average rate of 4/hour. The ‘fast but expensive’ repairman has a rate of Rs. 7 per hour and he will service breakdown machines at an average rate of 6/hour.
Which repairman should the company hire?
Assume exponential repair time for both repairmen. | 6 | (0) |
| 3. | (a) | Shree Lakshmi Finance Corporation is an investment company. The Management of the company wants to study the investment in a project based on the following three factors. 1. Market demand
2. Profitability, and
3. Amount of investment required.
In analyzing a new consumer product, the corporation estimates the following probability distributions: | Annual Demand | Profit per unit | Investment required | | Units | Probability | Rs. | Probability | Rs. | Probability | 20,000
25,000
30,000
35,000
40,000
45,000
50,000 | 0.05
0.10
0.20
0.30
0.20
0.10
0.05 | 3.00
5.00
7.00
9.00
10.00 | 0.10
0.20
0.40
0.20
0.10 | 17,50,000
20,00,000
25,00,000 | 0.25
0.50
0.25 |
The following random numbers are to be used: For Demand
For Profit
For Investment | 28
19
18 | 57
07
67 | 60
90
16 | 17
02
71 | 64
57
43 | 20
28
68 | 27
29
47 | 58
83
24 | 61
58
19 | 30
41
97 |
| 10 | (0) |
| | (b) | The cost of an article at the capacity level of 10,000 units is given under 'A' below. For a variation in capacity above or below this level, the individual expenses vary as indicated in 'B' below.
Material cost
Labour cost
Power
Repairs or maintenance
Stores
Inspection
Depreciation
Administrative overhead
Selling overhead | A
(Rs.)
50,000
30,000
3,000
3,500
2,000
800
10,000
3,600
4,500 | B
(Rs.)
100
100
80
80
100
25
100
25
50 |
Variable
Variable
Variable
Variable
Variable
Variable
Variable
Variable
Variable | | Total | 1,07,400 | | | Cost/Unit (Rs.) | 10.74 | |
Find out the unit cost of product, showing each individual expenses, at the production levels of 8,000 units and 12,000 units respectively. | 6 | (0) |
| 4. | (a) | Explain the concept of Just–In–Time (JIT) Manufacturing system, highlighting its features and conditions necessary for its success. | 8 | (0) |
| | (b) | After observing heavy congestion of customers over a period of time in a petrol station, Mr. Petro has decided to set up a petrol pump facility on his own in a nearby site. He has compiled statistics relating to the potential customer arrival pattern and service pattern as given below. He has also decided to evaluate the operations by using the simulation technique. | Arrivals | Services | Inter-arrival
Time(Minutes) | Probability | Time | Probability
(Minutes) | 2
4
6
8
10 | 0.22
0.30
0.24
0.14
0.10 | 4
6
8
10 | 0.28
0.40
0.22
0.10 |
Assume: | (i) | The clock starts at 8.00 hours. | | (ii) | Only one pump is set up | | (iii) | The following 12 Random Numbers are to be used to depict the customer arrival pattern: 78, 26, 94, 08, 46, 63, 18, 35, 59, 12, 97 and 82. | | (iv) | The following 12 Random Numbers are to be used to depict the service pattern: 44, 21, 73, 96, 63, 35, 57, 31, 84, m24, 05, 37. | | You are required to find out the |
| (i) | Probability of the pump being idle, and |
| (ii) | average time spent by a customer waiting in queue |
| 4+4 | (0) |
|
| 5. | (a) | Budget No. of working days
Working hours per day
No. of direct workers | 25
8
16 | Efficiency
One standard hour per clock hour | Overheads: Fixed
Variable | Rs. 15,360
Rs. 20,480 |
| The actual data for the month of January 2002 are as under. Fixed overhead costs
Net operating hours worked
Standard hours produced | Rs. 16,500
1,920
2,112 |
|
here was a special holiday in January, 2002. Work out the Fixed Overhead Variances. | 1½x6 | (0) |
| | (b) | What do you understand by the term ‘Investigation of Variances’? A manager has just received the Direct Labour Efficiency Variance Report which shows Rs. 10,000 adverse efficiency variance. The following estimates in investigation of variances are provided. Cost of Investigation
Cost of correcting, if an
Out of control process is discovered | Rs. 10,000
Rs. 15,000 |
The manager remained in different about conducting and investigation where there was a probability of 0.60 that the process was in control.
Estimate the cost of allowing the out of control situation to continue. | 5+2 | (0) |
| 6. | (a) | What do you mean by 'transfer price'? State the objectives of "transfer price". | 1+3 | (0) |
| | (b) | A company has two divisions A and B. Division A transfers 500 units of X – 25 to able to sell X – 25 in the open market, in case of refusal of Division B to buy them. Division B incurs additional variable costs of Rs. 39 per unit of X – 25 and produces X – 30 which it sells in the market at Rs. 90 per unit. Both the divisions have surplus production capacity. Division B can sell 7,200 units of X – 30, If it reduces the selling price to Rs. 80 per unit. The manager of Division B has proposed to reduce the transfer price of X – 25 to Rs. 12 per unit. Find out the contributions of the divisions and of the company at the — | (i) | Existing transfer price, and |
| (ii) | Proposed transfer price. |
| 6+6 | (0) |
| 7. | (a) | Define 'Residual Income' and state its disadvantages in Divisional Performance Appraisal. | 2+4 | (0) |
| | (b) | Division Y of C Ltd. has employed Rs. 1,00,000 and earned an annual profit (after depreciation) of Rs. 18,000. The divisional manager is considering an investment of Rs. 10,000 in an asset which will have a ten–year life with no residual value and will earn a constant annual profit (after depreciation) of Rs. 1,000. The cost of capital is 15%.
Work out | (i) | the return on divisional investment and the divisional residual income before and after the new investment, and |
| (ii) | the net present value of the new investment (10–year annuity factor at 15% : 5.019). |
Also comment on the results. | 6+4 | (0) |
| 8. | Write short notes on the following:- | 4x4=16 | |
| | (a) | Material Requirement Planning | | (0) |
| | (b) | Value analysis | | (0) |
| | (c) | Benchmarking | | (0) |
| | (d) | Activity based budgeting. | | (0) |
