Acm MGT 131010

AMIE(I) STUDY CIRCLE(REGD.
)
A Focused Approach
Dated: Oct 13, 2010
Before taking printout of this chapter, please ensure that this material has not been covered
in the printed course material provided to you (by us).
Additional Course Material

Management Processes
Additional Topic
ENGINEERING MANAGEMENT
Engineering management is a specialized form of management concerned with the
application in engineering, as a result of the unique personalities and technical nature of
engineering. Engineering Management programs typically include instruction in accounting,
economics, finance, human resources management, industrial psychology, management
information systems, mathematical modeling and optimization, quality control, operations
research, safety and health issues, and environmental management. Whereas the term project
management refers to human resourcing, engineering management refers to the functional
management of technical professionals.
Example areas of engineering are product development, manufacturing, construction, design
engineering, industrial engineering, technology, production, or any other field that employs
personnel who perform an engineering function.
Successful engineering managers typically require training and experience in business and
engineering. Technically inept managers tend to be deprived of support by their technical
team, and non-commercial managers tend to lack commercial acumen to deliver in a market
economy. Largely, engineering managers manage engineers who are driven by non-
entrepreneurial thinking, thus require the necessary people skills to coach, mentor and
motivate technical professionals.
MANAGERIAL ROLES
Additional topic
Following table shows these roles in detail:
Category Role Activity
Seek and receive information; scan periodicals and reports;

Informational Monitor
maintain personal contact with stakeholders.
Disseminator Forward information to organization members via memos,
POST BOX NO.77, 2 ND FLOOR, SULTAN TOWERS, ROORKEE 247667 UTTARANCHAL PH: (01332) 266328 Email : pcourses@hotmail.com 1
TOTAL PAGES:
AMIE(I) STUDY CIRCLE(REGD.)
A Focused Approach
Category Role Activity
reports, and phone calls.
Transmit information to outsiders via reports, memos, and

Spokesperson
speeches.
Perform ceremonial and symbolic duties, such as greeting

Interpersonal Figurehead
visitors and signing legal documents.
Direct and motivate subordinates; counsel and

Leader
communicate with subordinates.
Maintain information links both inside and outside

Liaison
organization via mail, phone calls, and meetings.
Initiate improvement projects; identify new ideas and

Decisional Entrepreneur
delegate idea responsibility to others.
Disturbance Take corrective action during disputes or crises; resolve

handler conflicts among subordinates; adapt to environments.
Resource Decide who gets resources; prepare budgets; set schedules

allocator and determine priorities.
Represent department during negotiations of union

Negotiator
contracts, sales, purchases, and budgets.
MAJOR ASPECTS OF MANAGEMENT

The manager has one of the most difficult jobs in an organization. As a manager, you need to
handle people which means that you need to understand that as human beings, we are
different from one another. We have different personalities, different beliefs and attitudes
which makes it even harder for the manager to do the job. Because we are different, a
manager can never have a uniform treatment towards everyone. Your success as a manager
depends on the success of the people you manage. The behavior of your entire team is
crucial. This means that how each one behaves will affect you as a manager. You can keep
blaming the candidate screening process but even that won't help because you can't reverse
the system. Therefore, you only have your managerial skills to trust.
There are two important things that you need to iron out to become effective. The first thing
that you should do is to communicate to your team and make them understand what your
goals are. This is important so that you can be sure that your actions are towards attaining
similar goals.
P.B. NO.77, 2 ND FLOOR, SULTAN TOWERS, ROORKEE 247667 UTTARAKHAND PH: (01332) 266328 Email : pcourses@hotmail.com 2
A Focused Approach
One of the most common mistakes that managers make is to assume that employees know
what to do. But this is not always the case. Sometimes, you will have staff who are skilled in
their field of specialization, but you still need to map things out for them to get them started
and get them started in the right direction. So you have to make sure that everyone knows
what to do and why they have to do it. By doing this, you are putting value in their work.
The other basic aspect of management is managing behavioral or attitudinal issues. Because
an organization is composed of diverse individuals, clashes are inevitable. Disagreements are
expected due to opinion differences. A good manager is capable of fixing things and pulling
everyone together so that they can still deliver what is expected of them.
Sure, it's not a perfect world and it never will be. However, if you are a good manager, you
will be able to improve it by listening to your team members. For schools, to improve their
student retention rate, they can improve their teaching quality. This can be part of the
strategies that they will use. A good manager
knows that every issue, no matter how small it is, is worth spending time on. Because even a
single trivial issue can cause a lot of damage to the entire organization. To avoid problems,
you need to know where the cracks in the organization are so that you'll know where you
need to be covering. And then, you can have everything working out with all the holes
covered.
SYSTEM THEORY
Additional Topics
Advantages of Management System

Implementing an effective management system can help you to:
Manage your social, environmental and financial risks
Improve operational effectiveness
Reduce costs
Increase customer and stakeholder satisfaction
Protect your brand and reputation
Achieve continual improvement
Promote innovation
Remove barriers to trade
Bring clarity to the marketplace
SCIENTIFIC MANAGEMENT
Additional Topic
Advantages of Scientific Management

One of the first formal divisions between workers and managers.
A Focused Approach
Contribution to efficient production methods, leading to a major global increase of
living standards.
Focus on the individual task and worker level. Compare: Business Process
Reengineering (process level)
Direct reward mechanisms for workers rather than pointless end-of-year profit sharing
schemes.
Systematic. Early proponent of quality standards.
Suggestion schemes for workers, who should be rewarded by cash premiums.
Emphasis on measuring. Measurement enables improvement.
Pragmatic and useful in times and circumstances as described above.
Disadvantages/Limitations of Scientific management

Taylorism can easily be abused to exploit human beings. Conflicts with labor unions.
Not useful to deal with groups or teams.
Leaves no room for individual preferences or initiative.
Overemphasis on measuring. No attention for soft factors.
Mechanistic. Treating people as machines.
Separation of planning function and doing.
Loss of skill level and autonomy at worker level. Not very useful in current
knowledge worker environments (except as an antithesis).
ASSIGNMENT
BASIC
Q.1. (AMIE W2005, 6 marks): Define management. What are the objectives of management?
Q.2. (AMIE W2008, 6 marks): What is engineering management?
Q.3. (AMIE S2005, 2007, 8 marks): Discuss the functions of a manager. Briefly explain the roles of managers
as per Mintzberg's findings.
Q.4. (AMIE W2008, 10 marks): What are the important functions of management? What is a management
process?
Q.5. (AMIE S2008, 7 marks): How are management functions integrated? Explain with an appropriate
diagram.
Q.6. (AMIE S2008, 09, 8 marks): Briefly explain different aspects of management by which it is conceived,
evolved and implemented.
Q.7. (AMIE S2007, 6 marks): Explain the classic three fold concept for management as proposed by Harbison
and Myers.
Q.8. (AMIE W2000): Differentiate between system design and system control. Differentiate between open-loop
and close-loop systems.
A Focused Approach
Q.9. (AMIE S2000, 09, W2005): Write short note on systems management. Discuss its advantages and
disadvantages.
Q.10. (AMIE W2000): Explain why systems approach is essential for management analysis and practice.
Q.11. (AMIE S2005): What criteria would you suggest for evaluating the effectiveness of a management team?
Q.12. (AMIE W2005, 2008, 6 marks): What do you mean by scientific management? Will you prescribe it for
today's organizations? If not, why?
Q.13. (AMIE W2006, S2009, 10 marks): Discuss the contributions of F W Taylor.
Q.14. (AMIE W2007, 8 marks): Describe the approach to the "scientific management principle" of Taylor and
discuss its limitations.
Q.15. (AMIE S2010, 4 marks): Which aspect or principle of Taylor's philosophy of scientific management
corresponds most closely with some firm's efforts to improve the quality of work life today?
Q.16. (AMIE S2010, 6 marks): What support exists for the claim that management is a science?
PLANNING
Q.17. (AMIE S2000): What are the aims of planning of engineering systems?
Q.18. (AMIE W2000,2001): What is planning? Bring out steps involved in planning. Does planning involve
decision making?
Q.19. (AMIE W2007, 7 marks): What is the purpose of planning? How is the planning process to be organised
for achieving the purpose? List three key activities in the planning process.
Q.20. (AMIE S2006, 2 marks): Outline the fundamental elements of a planning system.
Q.21. (AMIE W2009, 12 marks): Why is planning considered to be the most important function of
management? Discuss different types of plans and at different levels of an organization.
Q.22. (AMIE S2002, W2007, 10 marks): What is SWOT analysis? Discuss its importance in the setting of
objectives and planning of strategies in an organization.
Q.23. (AMIE S2002): Describe briefly the elements of planning forming the hierarchy of planning.
DECISION MAKING & PROBLEM SOLVING

Q.24. (AMIE W2000): Write short note on collective decision making.
Q.25. (AMIE S2000): What are the advantages and disadvantages of collective decision making?
Q.26. (AMIE S2005): How is decision making in scientific management different from decision making in
traditional management?
Q.27. (AMIE S2007, 10 marks): How do forecasting and decision tree techniques help in planning and
decision making in an organization?
COMMUNICATION
Q.28. (AMIE W2000): What do you mean by communication in the context of an organization? State at least
four reasons why communication is needed in an organization.
Q.29. (AMIE S2002): Discuss the importance of communication in an organization. Describe the various types
of communication.
Q.30. (AMIE S2006, 3 marks): Distinguish between upward and downward communication.
CONTROLLING
Q.31. (AMIE S2000,W2001): What are the basic elements of control of an engineering organization? Explain
them.
A Focused Approach
Q.32. (AMIE W2001, S2005): What are the methods of management control? Explain each of them in brief.
Q.33. (AMIE S2008, 10 marks): What do you understand by management control? Discuss nine methods of
management control suggested by Arthur Bedeian.
Q.34. (AMIE S2006, 6 marks): Elucidate the sequence of activities for exercising managerial control in
organization.
Q.35. (AMIE W2009, 8 marks): Describe the methods of control at shop floor of a manufacturing plant. What
are the basic principles to be followed for controlling?
LEADERSHIP
Q.36. (AMIE W2001): Discuss briefly McGregors theory Y in the context of motivation.
Q.37. (AMIE S2002, S2006): Explain the principles of directing.
Organization
Additional Topic
PARTICIPATIVE MANAGEMENT
An open form of management where employees have a strong decision-making role.
Participative management is developed by managers who actively seek a strong cooperative
relationship with their employees. The advantages of participative management include
increased productivity, improved quality, and reduced costs
Participative management holds employees responsible, accountable, for their work. It allows
them to determine the out-come of work-related activities.
Participative management affords employees a voice. Employees take their jobs seriously,
and become loyal to the organization.
Participative management delegates control to employees, but the organizational goals must
be adhered to.
Participative management fosters a team environment. It is management's job to explain
what's expected, and work with employees to achieve goals.
REORGANIZATION
You will have a pretty good handle on the need for change and what changes must be done if
you've been
Conducting strategic planning to regularly review the purpose of your organization,
its overall goals and who should be doing what to meet those goals
Using sound principles of employee performance management to regularly review
what employees should be doing to produce results, how they're doing toward their
results, and what must be done to help them do a better job of achieving results
A Focused Approach
Typical Problems That Suggest Need for Reorganizing
There are a wide variety of reasons for reorganizing an organization, particularly in today's
rapidly changing marketplace. However, there are several reasons for reorganization that
seem to keep coming up in small businesses, whether for-profit or nonprofit. These reasons
include
An employee keeps complaining (and you agree) that he or she is overloaded with
work.
Employees complain that their activities overlap.
An employee indicates (and you agree) that he or she does not have enough work to
do during a work day.
Employees complain that they're reporting to more than one boss, or supervisor.
An employee complains that their work includes very different tasks. For example,
they may have a highly complex and demanding project (e.g., leading strategic
planning) and a large routine, recurring task (sorting a great deal of the organization's
daily mail).
Management notices a large amount of employee turnover, that is, employees don't
stay long enough with the organization.
A department, or major function in the organization, has recurring problems.
It is not always problems that provoke the need for reorganizing. For example, if the
organization has been conducting strategic planning and produced new goals, these goals
may require the organization to reorganize. For example, if the business wants to expand
market share in a certain region, then the organization may need a new office in that region,
more sales people, etc.
First Guideline for Reorganizing

Recurring problems often seem to have little to do with the business's overall purpose and
goals. However, any attempts at reorganizing may be just fine tuning, or tweaking, if not
done with the long term in mind. In fact, the recurring problems may be a symptom of the
organization's not having clearly thought out what its overall purpose and goals are. Without
visiting the overall purpose and goals, redesign is usually a highly reactive and very short-
term fix. Carefully consider conducting a strategic planning process to guide you through
reviewing your organization's purpose.
How Is Organization-Wide Change Best Carried Out?

Successful change must involve top management, including the board and chief executive.
Usually there's a champion who initially instigates the change by being visionary, persuasive
and consistent. A change agent role is usually responsible to translate the vision to a realistic
plan and carry out the plan. Change is usually best carried out as a team-wide effort.
Communications about the change should be frequent and with all organization members. To
A Focused Approach
sustain change, the structures of the organization itself should be modified, including
strategic plans, policies and procedures. This change in the structures of the organization
typically involves an unfreezing, change and re-freezing process.
The best approaches to address resistances is through increased and sustained
communications and education. For example, the leader should meet with all managers and
staff to explain reasons for the change, how it generally will be carried out and where others
can go for additional information. A plan should be developed and communicated. Plans do
change. That's fine, but communicate that the plan has changed and why. Forums should be
held for organization members to express their ideas for the plan. They should be able to
express their concerns and frustrations as well. For additional information, see the topic
Organizational Change including the article Basics Context for Organizational Change.
Specific Suggestions
In addition to the above general guidelines, there are a few basic guidelines to keep in mind.
Consider using a consultant. Ensure the consultant is highly experienced in
organization-wide change. Ask to see references and check the references.
Widely communicate the potential need for change. Communicate what you're doing
about it. Communicate what was done and how it worked out.
Get as much feedback as practical from employees, including what they think are the
problems and what should be done to resolve them. If possible, work with a team of
employees to manage the change.
Don't get wrapped up in doing change for the sake of change. Know why you're
making the change. What goal(s) do you hope to accomplish?
Plan the change. How do you plan to reach the goals, what will you need to reach the
goals, how long might it take and how will you know when you've reached your goals
or not? Focus on the coordination of the departments/programs in your organization,
not on each part by itself. Have someone in charge of the plan.
End up having every employee ultimately reporting to one person, if possible, and
they should know who that person is. Job descriptions are often complained about, but
they are useful in specifying who reports to whom.
Delegate decisions to employees as much as possible. This includes granting them the
authority and responsibility to get the job done. As much as possible, let them decide
how to do the project.
The process won't be an "aha!" It will take longer than you think.
Keep perspective. Keep focused on meeting the needs of your customer or clients.
Take care of yourself first. Organization-wide change can be highly stressful.
Don't seek to control change, but rather to expect it, understand it and manage it.
A Focused Approach
Include closure in the plan. Acknowledge and celebrate your accomplishments.
Read some resources about organizational change, including new forms and
structures.
ASSIGNMENT
Q.38.(AMIE S2000): Define the organization structure with a neat diagram.
Q.39.(AMIE S2002): Discuss the principles of organization with suitable examples.
Q.40.(AMIE S2005): What are the mechanics of an organizations? How are these effective to achieve the
objective of an organization?
Q.41.(AMIE W2005, 2006, 6 marks): What are the considerations in the design of an organizational structure
for a company? Discuss them.
Q.42.(AMIE S2009, 6 marks): Sound organization structure is an essential prerequisite of efficient
management. Discuss this statement and point out various principles which should be followed in developing
an organization.
Q.43.(AMIE S2006, 6 marks): How are the organizational goals related to the organizational plans?
Q.44.(AMIE S2001): Describe and discuss the forms of management structure that prevail in most modern
organizations.
Q.45.(AMIE S2007, 6 marks): Classify organizations by the nature of authority? Explain one of them.
Q.46.(AMIE W2008, 10 marks): Discuss different types of organizations. Which type of organization would
be most suitable for a manufacturing company?
Q.47.(AMIE S2006, 7 marks): Show the hierarchy of objectives for a manufacturing organization.
Q.48.(AMIE W2007, 6 marks): Why does modern theory consider the organization as a system consisting of
interconnected parts? Briefly discuss the components of the parts and their implications in modern organization.
Q.49.(AMIE W2001): Explain the meaning of line and staff system of organization. What are its merits and
demerits? Draw an organization chart of a fictitious company.
Q.50.(AMIE W2000): Why do you think conflict arises between line and staff in organization? How can one
resolve such conflicts?
Q.51.(AMIE S2001): Line and staff relationships are found in many organizations. briefly differentiate
between these two relationships, and discuss how, in a large manufacturing organization, they could create
interpersonal problems and suggest how such problems might be overcome.
Q.52.(AMIE W2001): What do you mean by matrix organization? Explain with an example.
Q.53.(AMIE S2001): Discuss the advantages and disadvantages of matrix organization structures. How can we
handle conflicts between the demands of an project and the demands of the discipline or department within that
structure?
Q.54.(AMIE W2005, 8 marks): Compare and contrast between a line organization and a matrix organization.
Also identify the kind of firms where such organizational structures would be most suitable.
Q.55.(AMIE S2000, 2002): Enumerate the characteristics of functional organization. What are the advantages
and disadvantages of functional organization?
Q.56.(AMIE W2000, 2001, 2006, 8 marks): What is organizing? Differentiate between formal and informal
organizations.
Q.57.(AMIE 2000): Bring out the advantages and limitations of organization charts.
Q.58.(AMIE S2001): Distinguish between bureaucratic and contingency concepts of organization
structure.
Q.59.(AMIE S2005): How would you undertake the reorganization of an enterprise?
Q.60.(AMIE W2005, 6 marks): What do you mean by participative management? Bring out its advantages
and disadvantages.
A Focused Approach
Human Resources management

Additional Topic
4 CS IN HUMAN HRM
If youve ever been shopping for diamonds or paid attention to anyone getting married, then
the phrase The Four Cs isnt a foreign concept. In the diamond industry the four Cs stand
for the clarity, color, cut and carat weight of this precious gemstone. But human resources
also has to deal with four Cs during the work week. These important ideas include:
Communication
Clarification
Commitment
Credibility
Whether youre working in a recruiting role, a payroll and benefits role, or in more of a
generalist role, you undoubtedly have to deal with not only your communication style, but the
communication style of your peers, subordinates and upper management. Its critical that HR
works to ensure communication throughout an organization because without clear
communication, offer letters can be drafted incorrectly. Benefits that arent explained
correctly can result in employees with poor attitudes. The examples are endless.
Simply put, if you do any type of Internet search on the general census of employees toward
HR youll quickly find that many employees lack respect for our industry, mostly because of
perceived false promises. We might feel we were delivering clear messages, but in fact we
were not clear in our communication. Its imperative that when we communicate, we make
sure that those affected understand what we are looking for. This way, we, like a well-
thought-out marketing initiative, can alleviate any headache of the wrong message being
heard.
Clarification is a second C that should be on the top HR professionals minds. Ive found this
to especially be true in the case of recruiting efforts. Hiring managers and team members may
have specific ideas about certain types of individuals needed to fill an open position, and
many times there are different opinions that come into play. Getting these two camps into
agreement may take many conversations; and clarification is key prior to interviewing
candidates in order to streamline the whole process and to ensure the right pieces of
information are gathered.
Without commitment, HR would certainly be lacking. It can come into play when dealing
with an employees welfare, the companys bottom line or keeping the trust and respect of
management. Regardless of what area commitment is found, how HR deals with it and works
within its constraints is of utmost importance when assessing our performance within an
organization.
A Focused Approach
Finally HR needs credibility. HR is notorious for being the department within organizations
that immediately says No, and things like Its against our policy. How often have we
hidden behind rules and regulations without completely understanding that our audience was
not even aware of their existence? Its easy to talk about reasons why things cant be done,
but taking the opportunity to inform and educate is more often a missed opportunity.
HR as a whole should continue to hold tight to the rules that make their organization
workable, but at the same time look for the unforeseen training opportunities to gain
credibility with their employees, peers and management.
Keeping the four Cs in mind will not only aid in bonding HR as an industry, but will also
continue to propel our focus into closed-door business strategy sessions where it will
ultimately have the most impact.
JOB ENLARGEMENT AND JOB ENRICHMENT

The concept of job enlargement was developed as a result of the investigations targeted on
the improvement of group efficiency and motivation in the early 1960s. The major reason for
the investigation was the need for companies to improve the productivity of their employees.
The basic concept had to do with the fact that people who deal with boring and simple kinds
of job are not motivated enough to perform their jobs well. The decision therefore was to
increase the amount of operations the person performed in order to make the job more
attractive to the employee.
The concept proved to be unsuccessful because it tried to simply replace a short boring job
with a long boring job without trying to change the content of the job. The further
development of this concept led to the second theory of job enrichment, which turned out to
be quite successful and has been accepted by many organizations as the correct approach to
increasing group productivity. This concept fits very well with the usual project environment
and is therefore regarded by project managers as a useful approach to project team
development.
The job enrichment concept was developed based on the experiment carried out by the
Swedish Volvo company in the 1960s. The management of Volvo decided to try
discontinuing one of its assembly lines and instead putting all the people with needed skills in
one room with all the tools and equipment needed to carry out the operations. The cost for the
process and the length of the process as the result of this organizational change increased;
however, the overall life cycle cost of the product, including all the needed repair work,
guarantee work, clients' dissatisfaction factors, etc., decreased significantly.
Based on the results of the experiment, it was decided that the increased opportunities for
creative work increased the level of responsibility and ownership. The ability to see the final
product made the members of the group more motivated and therefore increased their ability
to perform good results and check for quality. It was decided that, in order to increase
people's productivity, it is critical to give them more opportunities for independent and
creative work.
A Focused Approach
This approach is strongly reflected in modern project management methodology, where the
systems of delegation and increased involvement of the team members in all phases of the
project are considered to be critical for project success. It is also largely used in other modern
management methodologies, such as total quality management. The basic idea is to decrease
the cost for quality by decreasing the inspection time and increasing the self-sufficiency of
the producers of the products.
COLLECTIVE BARGAINING
Additional Text
For the success of collective bargaining a strong trade union and a rational thinking
employer are necessary, without which collective bargaining is not possible.
Typically, the employees are represented by a union. Collective bargaining actually begins
with joining a union, agreeing to abide by the rules of the union, and electing union
representatives. In general, experienced people from the union will assist the employees with
putting together a draft of a contract, and will help them present their desires to the company.
Numerous meetings between representatives of employer and employees will be held until
the two can agree on a contract.
As the contract is being negotiated, general employees also have input on it, through their
union officers. Thus, the agreement reflects the combined desires of all the employees, along
with limitations that the employer wishes to see put in place. The result is a powerful
document which usually reflects cooperative effort. In some cases, however, the union or the
employer may resort to antagonistic tactics such as striking or creating a lockout, in order to
push the agreement through.
For workers, collective bargaining is an excellent tool. Many workplaces benefit from
unionization, which allows workers to speak together as a body to assert their rights.
Employers also benefit from collective bargaining agreements, which set out clear
expectations for both sides. The experience of collective bargaining can also be a learning
experience for both sides of the discussion, as it encourages employers and employees alike
to consider each other's positions.
ROLE OF PERSONNEL MANAGER

In today's market scenario and looking at the current corporate world......there does not exist
any Personnel Department.
Personnel Department existed a decade ago......but due to rapid change in the corporate
world....personnel management got merged into HR department and it came to known as
HRD.
One will usually find the Personnel Manager in the Manufacturing Companies where they
have their manufacturing factories.
The roles of the Personnel Manager are:
A Focused Approach
Liaison activities with the Government authorities
Solving Employee or workers related problems
Handling Payroll and PF related matters.
Handling contract labors and renewing their license.
Training & Development
Performance Appraisal
Recruitment & Induction
ASSIGNMENT
Q.61. (AMIE W2001, 2009, 12 marks): What do you mean by Human Resources Development? Identify
important activities of human resources development function of an organization.
Q.62. (AMIE W2008, 8 marks): Discuss why human resource management is important today in every
organization. Briefly describe the role of recruitment and selection in this context.
Q.63. (AMIE W2006, 10 marks): Explain the role of a personnel manager.
Q.64. (AMIE S2000): What do you understand by recruitment policy of an organization? Also, discuss the
prerequisites of a good recruitment policy.
Q.65. (AMIE W2007, 6 marks): Describe the purpose of staffing. Discuss the factors to be incorporated in the
staffing system.
Q.66. (AMIE W2000): What are the most commonly used tests in recruitment of people? Discuss any one of
them.
Q.67. (AMIE S2009, 10 marks): What are some selection processes/techniques that a manufacturing
organization should adopt? Discuss.
Q.68. (AMIE W2001, 2006): Discuss the principle/characteristics of incentive methods of wage payment in
modern industry. List various types of incentives plans. Explain any one of the gain sharing plans.
Q.69. (AMIE W2009, 4 marks): Write a short note on trade union and industrial relations.
Q.70. (AMIE S2000): Give the aim of trade unions. Discuss the objects, advantages and disadvantages of trade
unions in industrial environment.
Q.71. (AMIE W2008, 2009, 6 marks): What is collective bargaining? What is its role in human resource
management?
Q.72. (AMIE S2000, W2001, 2005, 6 marks): Describe salient features of collective bargaining. Discuss the
prerequisites for the success of collective bargaining. Why is it referred to as a two way process?
Q.73. (AMIE S2009, 10 marks): Define and differentiate between industrial disputes, lockout and picketing.
Q.74. (AMIE W2000): What is job enrichment? Explain with the help of Maslows hierarchy of needs, how job
enrichment can motivate people.
Q.75. (AMIE S2001): What benefits might be expected to be obtained by a firm which makes a continuing
investment in staff training? What forms might such training take?
Q.76. (AMIE S2005): Put yourself in the position of a training director, who must justify his work to top
management. How would you go about projecting that you are an asset to the firm?
Q.77. (AMIE W2008, 6 marks): Bring out the difference between training and retraining.
Q.78. (AMIE S2002) What is Herzbergs two factor theory? Explain.
A Focused Approach
Q.79. (AMIE S2002): Discuss Maslows need hierarchy with an example.
Q.80. (AMIE S2000): What is motivation? Describe its characteristics. Explain the importance of motivation in
management.
Q.81. (AMIE S2007, 10 marks): Define leadership and motivation. Explain Herzberg's two factor model of
motivation.
Q.82. (AMIE S2006, 10 marks): Explain how the four Cs model can be used to evaluate an organizations
human resource management programme?
Q.83. (AMIE S2010, 4 marks): Distinguish between job enlargement and job enrichment.
Plant management
TYPES OF PLANT LAYOUT
Additional Topic
Fixed Position layout

Fixed-position layout is characterized by a relatively low number of production units in
comparison with process and product layout formats. In developing a fixed position layout,
visualize the product as the hub of a wheel with materials and equipment arranged
concentrically around the production point in their order of use and movement difficulty.
Thus, in building custom yachts, for example, rivets that are used throughout construction
would be placed close to or in the hull; heavy engine parts, which must travel to the hull only
once, would be placed at a more distant location; and cranes would be set up close to the hull
because of their constant use.
Group Technology Layout

The product mix appropriate for this arrangement is similar to that of the job shop. Products
are grouped into classes that have some similarity with respect to processing. A
manufacturing cell is designed for each group consisting of machines particularly adapted to
the processing required. The figure shows the cells as collections of dissimilar machines.
Because the range of products manufactured by each cell is less than that for the job shop, the
machines and workers can be more specialized.
A Focused Approach
Typically, the workers in a cell are given more of the responsibility for production scheduling
of a product class. This, together with the start-to-finish nature of the processing, results in
more interesting jobs for the workers.
The group technology arrangement requires less setup time and cost than the job shop
because of the greater specialization of function. It is compatible with the just-in-time
concept of manufacture, so prevalent today, because of the smaller lot sizes made possible by
the low setup costs.
Often the level of automation with group technology is low, indicating the dependence of the
concept on the skill of the labor force. Many companies have, however, introduced highly
automated flexible manufacturing cells into the system. Because the cell has a smaller range
of products than the entire plant, it is easier to design the automation to handle the set of
products in a group.
The group technology approach is more sensitive to changes in product mix and volume than
the job shop, again because of the specialization introduced because of the manufacturing cell
approach. When a product requires processing in more than one cell, problems similar to
those of the job shop are introduced.
COMPUTERISED LAYOUT TECHNIQUES

A number of computerized layout programs have been developed since the 1970s to help
devise good process layouts. Of these, the most widely applied is the Computerized
Relative Allocation of Facilities Technique (CRAFT).
The plant layout problem is to find an arrangement of departments that minimizes the total
distance traveled. This measure is called the "cost" in the following. The problem is difficult
for the human because of the large number of calculations required to evaluate the cost of an
alternative. The computer can greatly aid in the layout determination, but, as we will see, the
computer also has its weaknesses.
The problem of finding the optimum arrangement is a very difficult one for mathematical
optimization. Rather than attempt to obtain the optimum, we use a heuristic approach that
tries to better a given solution by switching pairs of departments. At each iteration, every pair
of departments is considered for switching locations. The pair that gives the greatest savings
in cost will be interchanged and the process will continue by looking for another pair to
switch. If no pair results in a positive savings the process stops. This is commonly called the
CRAFT method.
Distinguishing features of CRAFT and issues relating to it are as follows:
It is a heuristic program. It uses a simple rule of thumb in making evaluations:
Compare two departments at a time and exchange them if it reduces the total cost of
the layout. This type of rule is obviously necessary to analyze even a modest size
layout.
It does not guarantee an optimal solution.
A Focused Approach
CRAFT is biased by its starting conditions: where you start (that is, the initial layout)
will determine the final layout.
Starting with a reasonably good solution is more likely to yield a lower-cost final
solution, but it does not always. This means that a good strategy for using CRAFT is
to generate a variety of different starting layouts to expose the program to different
pairwise exchanges.
It can handle up to 40 departments and rarely exceeds 10 iterations in arriving at a
solution.
CRAFT departments consist of combinations of square modules (typically
representing floor areas 10 feet by 10 feet). This permits multiple departmental
configurations, but often results in strange departmental shapes that have to be
modified manually to obtain a realistic layout.
A modified version called SPACECRAFT has been developed to handle multistory
layout problems.
CRAFT assumes the existence of variable-path material handling equipment such as
forklift trucks. Therefore, when computerized fixed-path equipment is employed,
CRAFTs applicability is greatly reduced.
PLANT MANAGEMENT
Q.84. (AMIE S2005): Discuss the importance of plant location.
Q.85. (AMIE S2005, 2006, 4 marks): How are plant location and plant layout decisions related?
Q.86. (AMIE S2005): Outline and explain the factors to be considered for plant layout development.
Q.87. (AMIE S2006, 4 marks): Explain the essential feature of CRAFT, a computerised layout model.
Q.88. (AMIE W2006, 8 marks): Describe the factors which affect the location choices, both for manufacturing
and services.
Q.89. (AMIE W2006, 12 marks): Describe the basic types of layout and indicate when each is best used.
Q.90. (AMIE W2009, 6 marks): Distinguish between product and functional layouts. For an office, what type
of layout is preferred? Why?
Q.91. (AMIE S2007, 8 marks): What is layout planning? Based on the firms flow strategy, how many basic
types of layout are possible? How do you design for a process layout?
Q.92. (AMIE S2007, 12 marks): Why is the facility location decision is important to an organization? What
factors do affect the choice of locations in manufacturing? How do the location decisions for service facilities
differ from that of manufacturing facilities?
Q.93. (AMIE W2009, 8 marks): State the main factors to be considered for selecting a site for (i) a chemical
plant (ii) electronic goods manufacturing unit.
Q.94. (AMIE S2010, 8 marks): Four different organizations are considering your hometown as a potential
plant location: (i) a medical research centre (ii) a soft drink producer (iii) a steel mill (iv) a uranium mining firm.
Select any two of the four, and systematically evaluate the relevant locational factors.
MAINTENANCE MANAGEMENT
Q.95. (AMIE S2006, 4 marks): Explain Total Productive Maintenance (TPM) with example.
A Focused Approach
Q.96. (AMIE S2008, 8 marks): With a neat sketch, discuss the systematic maintenance management system.
Q.97. (AMIE W2009, 6 marks): Identify different types of maintenance for a manufacturing unit. How is
maintenance cost controlled?
Material Management
ECONOMIC ORDER QUANTITY
Additional Topic
Proof
Procurement cost/year = No. of orders placed in a year x cost per order
AxP
= (1)
Q
and Inventory carrying cost/year
= Average value of Inventory in a year x Annual inv. carrying cost/item
Q
= xC (2)
2
AxP QxC
Total cost = (3)
Q 2
This total cost will be minimum if
AxP QxC

Q 2
2AP
or Q2
C
1/2
2AP
or Q
C
Hence most economic ordering quantity
2AP
=
C
ASSIGNMENT
Q.98. (AMIE S07, 09, 9 marks): What is the purpose of materials management? What factors do contribute
significantly in material requirement planning and how?
Q.99. (AMIE W2009, 6 marks): State the main elements and working of an MRP system. Why is it used?
Q.100. (AMIE S10, 8 marks): What are major outputs from an MRP system? In what way do MRP benefits
extend to inventories, priorities and capacities? Explain.
Q.101. (AMIE W05, 08, 6 marks): What is inventory? Why is it necessary to store an item in inventory? What
are the objectives of an inventory control system?
A Focused Approach
Q.102. (AMIE W2009, 8 marks): State any four objectives of inventory management. Why is selective
inventory management used? What are the factors affecting the types of inventory problems? Briefly state them.
Q.103. (AMIE S07, 5 marks): What are the costs for holding inventories? What types of inventories does a
business own?
Q.104. (AMIE S05, 10, 8 marks): Contrast independent and dependent demand with respect to inventories.
Q.105. (AMIE W07, 5 marks): What kind of policy or procedure would you recommend to improve the
inventory operation in a departmental store.
Q.106. (AMIE W08, S09, 8 marks): What is ABC analysis? Discuss its procedural steps. Give appropriate
figures to substantiate your answer.
Q.107. (AMIE S10, 4 marks): Why do firms classify their materials according to ABC method of
classification? Explain.
Q.108. (AMIE S09, 6 marks): Derive Q 2UP / CP , where Q is the economic lot size; C, the cost of
carrying inventory in percentage per period; P, the procurement cost; and U, the total quantity used per period.
Q.109. (AMIE W2009, 6 marks): Briefly describe continuous and periodic review inventory control system.
Derive the classical EOQ formula.
Q.110. (AMIE S09, 6 marks): A factory uses two pieces per day of a rod, 6 mm in diameter and 150 mm long,
in one of their manufacturing processes. The rod costs Rs. 3 each and the total expenses involved in purchasing
and receiving them are Rs. 50 per order. The annual inventory carrying cost per item is Re. 1. The procurement
period is three days and the minimum stock kept is 8 pieces. Find out the (i) standard ordering quantity, (ii)
reorder point, and (iii) maximum stock.
Answer: 271 units/order, 14 units, 279 units
Q.111. (AMIE S05, 12 marks): A producer distributes 800 packing boxes per month, which he purchased at a
cost of Rs.10 each. The manager has assigned an annual carrying charge of 25 per cent of the purchase price per
box. Ordering costs are Rs.28. Currently the manager orders once a month. How much could the firm save
annually in ordering and carrying costs using the EOQ ? Derive the formulae you use from the first principles.
Answer: Rs. 176
Q.112. (AMIE W05, 12 marks): The annual demand of a product is 24,000 unit?. The buying cost per order is
Rs 100 and the estimated cost of carrying one unit in stock for a month is 2%. The normal price of the product is
Rs. 10 per unit. However, the supplier offers a discount of 7.5% for an order of at least 3000 units and discount
of 12.5% if an order is for at least 5000 units. Find the most economic purchase quantity per year.
Answer: Rs. Rs. 280400, Rs. 268080. Total cost in case (ii) is least. Hence Economic purchase quantity is 5000
units
Q.113. (AMIE W07, 6 marks): Items purchased from a vendor costs Rs. 20 each and the forecast for next
year's demand is 1000 units. If it costs Rs. 5 every time an order is placed for more units and the storage cost is
Rs. 4 per unit per year, what quantity should be ordered each time?
(i) What is the total ordering cost for a year?
(ii) What is the total storage cost for an year?
(iii) What kind of policy or procedure would you recommend to improve the inventory operation in a
departmental store.
Answer: Rs. 100/year, Rs. 400/year
Q.114. (AMIE S10, 8 marks): Overland motors used 25,000 gear assemblies each year and purchases them at $
3.40 each. It costs $50 to process and receive order, and inventory can be carries at a cost of $ 0.78 per unit year.
How many (i) assemblies should be ordered? and (ii) orders per year should be placed?
A Focused Approach
Financial Management
Revised Topic
Financial Statements
The purpose of financial analysis is to diagnose the information content in financial
statements so as to judge the profitability, financial soundness of the firm and chalk out the
ways to improve existing performance.
Every management is interested in knowing the financial strengths to make their better use
and spot out the weaknesses of the firm to take suitable corrective action, in time.
The term Financial Analysis is also known as analysis and interpretation of financial
statements.
Financial analysis can be classified into two categories depending upon
(i) Material used and
(ii) Method of Analysis
(i) On the basis of Material used: According to this category, financial analysis can be of
two types. They are:
External Analysis: Those people who do not have access to the internal records of
the firm do this analysis. Basically, they are creditors, present and potential investors,
credit agencies and the general public. Normally, except select employees in the firm,
all others do not have access to the internal records. There is always a time lag for the
publication of accounts, after their preparation. So, updated or recent information is
not available for analysis. Due to this inherent limitation, this type of analysis serves a
limited purpose as the analysis is based on the published financial accounts, audited or
un-audited. However, of late, the position has, significantly, improved due to
government regulations to make the published accounts more frequent, transparent
and detailed.
Internal Analysis: Those persons, who have the access to the books of accounts,
financial and other records of the firm, do this analysis. Basically, the employees and
executives of the firm who have access to the records can do this analysis. Even, the
Government agencies also can do when they have the statutory powers to access the
records. This analysis would be more meaningful and useful as the analysis is made
A Focused Approach
on the basis of full records and with a specific objective. The management of the firm
would, invariably, adopt internal analysis for managerial purposes.
(ii) Method of Analysis: Based on the method, financial analysis can be of two types. They
are Horizontal analysis and Vertical Analysis.
Horizontal Analysis: When financial statements of a number of years of the same
firm are compared and reviewed, it is known as Horizontal Analysis. Horizontal
analysis helps to observe the changes in the financial variables, across the years. For
this analysis, first base or standard year is chosen as a starting point. Any year may be
taken as the base year, but, generally, horizontal manner. Keeping the data of base
year in the beginning, the data of the different years are kept in separate columns. The
attention of the management would be focussed on those items, which have changed,
significantly. The purpose of the analysis is to identify the strengths and weaknesses
of the firm. Comparison of the item, over several years, shows the development of
trend. The management would be able to get insight of the strength or problem for
necessary action, in time. Since this analysis is based on the data from year to year
rather than on one-year data, this analysis is also termed as Dynamic analysis.
Comparative financial statements use the technique of Horizontal Analysis. Based on
the prevailing trend, it is possible for the firm to make a rational forecast about the
future progress.
Vertical Analysis: Vertical analysis refers to the study of relationship of the various
items contained in the financial statement of one accounting period. For example, the
ratios of different items of cost for a particular period are calculated with the sales for
that period. So, sales are taken as 100 and each expense is taken as a percentage of
sales, i.e. 100. Such analysis is useful in comparing the performance of several
companies in the same group or industry, or divisions or departments in the same
company. Vertical analysis is also known as Static Analysis. Common size
financial statements and financial ratios are the two tools employed in vertical
analysis.
Combined use of Horizontal and Vertical Analysis: Both analyses can be used,
simultaneously. Vertical analysis can be used along with horizontal analysis to make it more
effective and meaningful.
Horizontal Analysis is used for comparing data of several years of one firm, while Vertical
Analysis is used for comparing the relative performance of different firms in the same
industry for one particular period or year.
A simple sample of horizontal and vertical analysis and its comparison with the industry and
its immediate competitor would be like this:
A Focused Approach
The position reveals that the financial expenses of X Ltd. have been increasing from year to
year, compared to the base year 2005. The same is confirmed that the firms percentage of
financial expenses for the year 2008 is more than the industry as well as its immediate
competitor.
On other hand, production and purchase departments have been improving their performance
year after year, reflected in falling cost of sales. Even their cost of sales is lower than the
industry and its immediate competitor for the year 2008. The efficiency of production and
purchase departments is eaten by the inefficiency of finance division in X Ltd. This situation
requires further investigation to improve its profitability. Despite the inefficiency of finance
division, still profitability of X Ltd. is higher than the industry and equal to its immediate
competitor. The profit margin to sales has been stagnant during the period 2005-08. If finance
divisions performance is improved, X Ltd. can improve its profitability, further.
This analysis indicates the area, where focus of action and improvement is, immediately,
essential to show better results.
Comparative Financial Statements
Comparative Financial Statements indicate the direction of movement with respect to
financial position and operating results of the firm.
Method of Preparation: Information in the financial statements, both Profit and Loss
Account and Balance Sheet, has to be grouped and placed, side-by-side, for two or more
years.
The next column has to show the amount of change in absolute amount and the last column
as a percentage of increase or decrease. From this, it is possible to draw reasonable
conclusions about the direction, progress or deterioration of operational efficiency and
financial position of the business and the factors that have contributed.
A Focused Approach
Example
From the Comparative Balance Sheet of Shyam Ltd., prepare Comparative Balance Sheet for
the year 2007 and 2008. Draw tentative conclusions, after preparing CBS.
Tentative conclusions
Total fixed assets have been added during the year 2008 by Rs. 110 lakhs [i.e., about 5%]
compared to 2007, for which long-term investments worth Rs. 100 lakhs have been realised.
The level of current assets worth Rs. 84 lakhs has been reduced. Despite the increase in fixed
assets, the total assets have been decreased by Rs.74 lakhs. It implies that there has been an
addition to fixed assets with a decrease in current assets, which reflects a poor financial
policy. Fixed assets are to be supported by current assets for improvement in business. The
relationship between the total current assets and total current liabilities is also not satisfactory
as the current ratio is around 1 in both the years.
A Focused Approach
Increase in the preference share capital of Rs. 200 lakhs might have been due to the fresh
issue of shares for the redemption of debentures. Reserves have gone up by 100 lakhs, which
shows the improving trend in profits. The redemption of debentures has been made from the
proceeds of the fresh issue of Preference Share Capital and increase in profits.
Dividend Policy
A finance managers objective for the companys dividend policy is to maximize owner
wealth while providing adequate financing for the company. When a companys earnings
increase, management does not automatically raise the dividend. Generally, there is a time lag
between increased earnings and the payment of a higher dividend. Only when management is
confident that the increased earnings will be sustained will they increase the dividend. Once
dividends are increased, they should continue to be paid at the higher rate. The various types
of dividend policies are:
Stable dividend-per-share policy. Many companies use a stable dividend-per-share
policy since it is looked upon favorably by investors. Dividend stability implies a low-
risk company. Even in a year that the company shows a loss rather than profit the
dividend should be maintained to avoid negative connotations to current and
prospective investors. By continuing to pay the dividend, the shareholders are more
apt to view the loss as temporary. Some stockholders rely on the receipt of stable
dividends for income. A stable dividend policy is also necessary for a company to be
placed on a list of securities in which financial institutions (pension funds, insurance
companies) invest. Being on such a list provides greater marketability for corporate
shares.
Constant dividend-payout-ratio (dividend per share/earnings per share) policy.
With this policy a constant percentage of earnings is paid out in dividends. Because
net income varies, dividends paid will also vary using this approach. The problem this
policy causes is that if a companys earnings drop drastically or there is a loss, the
dividends paid will be sharply curtailed or nonexistent. This policy will not maximize
market price per share since most stockholders do not want variability in their
dividend receipts.
A compromise policy. A compromise between the policies of a stable dollar amount
and a percentage amount of dividends is for a company to pay a low dollar amount
per share plus a percentage increment in good years. While this policy affords
flexibility, it also creates uncertainty in the minds of investors as to the amount of
dividends they are likely to receive. Stockholders generally do not like such
uncertainty. However, the policy may be appropriate when earnings vary considerably
over the years. The percentage, or extra, portion of the dividend should not be paid
regularly; otherwise it becomes meaningless.
Residual-dividend policy. When a companys investment opportunities are not
stable, management may want to consider a fluctuating dividend policy. With this
kind of policy the amount of earnings retained depends upon the availability of
A Focused Approach
investment opportunities in a particular year. Dividends paid represent the residual
amount from earnings after the companys investment needs are fulfilled.
PRODUCTION FUNCTION
In microeconomics and macroeconomics, a production function is a function that specifies
the output of a firm, an industry, or an entire economy for all combinations of inputs. This
function is an assumed technological relationship, based on the current state of engineering
knowledge; it does not represent the result of economic choices, but rather is an externally
given entity that influences economic decision-making. Almost all economic theories
presuppose a production function, either on the firm level or the aggregate level.
The primary purpose of the production function is to address allocative efficiency in the use
of factor inputs in production and the resulting distribution of income to those factors. Under
certain assumptions, the production function can be used to derive a marginal product for
each factor, which implies an ideal division of the income generated from output into an
income due to each input factor of production.
There are several ways of specifying the production function.
In a general mathematical form, a production function can be expressed as:
Q = f(X1,X2,X3,...,Xn)
where:
Q = quantity of output
X1,X2,X3,...,Xn = quantities of factor inputs (such as capital, labour, land or raw materials).
This general form does not encompass joint production; that is a production process that has
multiple co-products or outputs.
One way of specifying a production function is simply as a table of discrete outputs and input
combinations, and not as a formula or equation at all. Using an equation usually implies
continual variation of output with minute variation in inputs, which is not realistic in all
cases. Fixed ratios of factors, as in the case of laborers and their tools, might imply that only
discrete input combinations, and therefore, discrete maximum outputs, are of practical
interest.
One formulation is as a linear function:
Q = a + bX1 + cX2 + dX3 + ...
where a, b, c, and d are parameters that are determined empirically.
Another is as a Cobb-Douglas production function:
Q aX 1b X 2c ..
Other forms include the constant elasticity of substitution production function (CES), which
is a generalized form of the Cobb-Douglas function, and the quadratic production function.
The best form of the equation to use and the values of the parameters (a, b, c,...) vary from
A Focused Approach
company to company and industry to industry. In a short run production function at least one
of the X's (inputs) is fixed. In the long run all factor inputs are variable at the discretion of
management.
DEBENTURES & SHARES

Debenture. A debenture is an unsecured loan you offer to a company. The company does not
give any collateral for the debenture, but pays a higher rate of interest to its creditors. In case
of bankruptcy or financial difficulties, the debenture holders are paid later than bondholders.
Debentures are different from stocks and bonds, although all three are types of investment.
Below are descriptions of the different types of investment options for small investors and
entrepreneurs.
Share: A unit of ownership interest in a corporation or financial asset. While owning shares
in a business does not mean that the shareholder has direct control over the business's day-
to-day operations, being a shareholder does entitle the possessor to an equal distribution in
any profits, if any are declared in the form of dividends. The two main types of shares are
common shares and preferred shares.
Debentures vs. Shares
When you buy shares, you become one of the owners of the company. Your fortunes rise and
fall with that of the company. If the stocks of the company soar in value, your investment
pays off high dividends, but if the shares decrease in value, the investments are low paying.
The higher the risk you take, the higher the rewards you get.
Debentures are more secure than shares, in the sense that you are guaranteed payments with
high interest rates. The company pays you interest on the money you lend it until the maturity
period, after which, whatever you invested in the company is paid back to you. The interest is
the profit you make from debentures. While shares are for those who like to take risks for the
sake of high returns, debentures are for people who want a safe and secure income.
Additional numericals on Financial ratios
Example
Current Ratio = 2.8

Acid-test Ratio = 1.5
Working Capital = Rs. 1, 62,000
Find out
(A) Current Assets
(B) Current Liabilities
(C) Liquid Assets
Solution
A Focused Approach
Current Ratio = 2.8
It means if current assets are 280, current liabilities are 100.
Current Ratio/Current asset = 280/100 = 2.8
Working Capital = Current Assets Current Liabilities
= 2.8 1
= 1.8
Working capital = 1,62,000
In such a case, if 1.8 is Rs. 1,62,000 current Assets (2.8) would be 2,52,000 and current
liabilities (1) would be Rs. 90,000.
The correctness can be checked with the current ratio.
Current Ratio = 2,52,000/ 90,000 = 2.8
Acid Test Ratio or Liquid Ratio = Liquid assets/Current liabilities
Liquid assets = current assets stock
Liquid ratio is 1.5. It means if current liabilities are 1, liquid assets are 1.5.
Current liabilities are Rs. 90,000, so liquid assets are Rs. 1,35,000.
Acid Test Ratio or Liquid Ratio = 1,35,000/90,000 = 1.5
(A) Current Assets = Rs. 2,52,000
(B) Current Liabilities = Rs. 90,000
(C) Liquid Assets = Rs 1,35,000
Example
The only current assets possessed by a firm are cash Rs. 1,05,000, inventories Rs. 5,60,000
and debtors Rs. 4,20,000. If the current ratio for the firm is 2:1, determine its current
liabilities.
Solution
Current Assets
Cash 1,05,000
Inventories 5,60,000
Debtors 4,20,000
Total current Assets 10,85,000
Current ratio of the firm is 2:1. If current assets are 2, Current liabilities are 1.
Current Ratio = Current Assets/Current Liabilities = 2
10,85,000/Current Liabilities = 2
A Focused Approach
Current liabilities = 10,85,000/2 = 5,42,500
ASSIGNMENT
Q.115. (AMIE W07, 10 marks): Explain briefly the concept of financial management. State the important
characteristics of financial management.
Q.116. (AMIE S10, 5 marks): What are different financial ratios? Discuss their implications in financial
management.
Q.117. (AMIE W05, 8 marks): Describe the following important components of a balance sheet giving
suitable examples: (i) Current assets (ii) Fixed assets (iii) Current Liabilities (iv) Fixed liabilities
Q.118. (AMIE S06, 6 marks): Distinguish among funds, working capital, net working capital, and income.
Q.119. (AMIE W07, 5 marks): Distinguish between the gross and net working capital concepts. Explain the
classification of working capital.
Q.120. (AMIE W08, 6 marks): What are the different liabilities in a balance sheet? What is owner's equity?
Q.121. (AMIE W05, 6 marks): How are inventories considered in balance sheet assets or liabilities? Discuss
why?
Q.122. (AMIE S09, 6 marks): What do you understand by trial balance? Explain with a suitable example.
Q.123. (AMIE W08, 8 marks): According to the recent balance sheet of ABC company, the following data are
obtained:
Current status Rs. 5,00,000
Current liability Rs. 50,000
Sales Rs. Rs. 1,00,000
Inventory Rs. 50,000
Find the following (i) current ratio (ii) quick ratio (iii) inventory turnover ratio.
Answer: 10, 2, 2
Q.124. (AMIE W09, 8 marks): Financial statements reflect the financial performance of a company. State the
basic structure of balance sheet and profit and loss statement indicating clearly their items.
Q.125. (AMIE W08, 6 marks): What are the different standard forms of financial statements? Why are they
used?
Q.126. (AMIE W09, 4 marks): Define current asset and current liability.
Q.127. (AMIE W05, 6 marks): Show a representative Profit and Loss statement of a company of your choice.
Use hypothetical figures.
Q.128. (AMIE S06, 5 marks): Differentiate between the current ratio and acid test.
Q.129. (AMIE S06, 6 marks): Why do financial managers use a variety of measures of profits for firms?
Q.130. (AMIE S06, 5 marks): Explain the concept of managerial economics stating the important
characteristics and major applications.
Q.131. (AMIE S07, 4 marks): Present the account form as well as report of a balance sheet.
Q.132. (AMIE S07, 10 marks): What is investment analysis? Why is it of great importance to a firm? Discuss a
method of evaluating investment proposals.
Q.133. (AMIE S07, 6 marks): What is the present value of the following cash stream, if the discount rate is
14%.
A Focused Approach
Year 0 1 2 3 4
Ash flow 5000 6000 8000 9000 8000
Answer: Rs. 27230.28
Q.134. (AMIE W07, 5 marks): Discuss briefly the factors to be considered in deciding the dividend policy.
Q.135. (AMIE W07, 8 marks): What is a "production function" in the context of managerial economics? How
many types of production functions are there? Indicate how, with the help of production function, the optimum
combination of factor inputs can be obtained for a given level of total investment.
Q.136. (AMIE W07, 2 marks): What is the basic difference between short run and long run analysis in the
context of theory of cost?
Q.137. (AMIE W07, 10 marks): The total cost C(x) of a firm is
C ( x) 0.005 x 3 0.02 x 2 30 x 5000

where x is the output. Determine
(i) average cost (AC)
(ii) slope of AC
(iii) marginal cost (MC)
(iv) slope of MC
(v) value of x for which MVC = AVC
Answer:
5000
(i) AC Total cos t / x 0.005 x 0.02 x 30
2
x
d ( AC ) 5000
(ii) Slope of AC 2 x0.005 x 0.02 2
dx x
dC ( x)
(iii) MC , x 0 3 x0.005 x 2 2 x0.02 30
dx
d ( MC )
(iv) Slope of MC, 6 x0.005 2 x0.02
dx
(v) Variable cost(VC) = 0.005 x 0.02 x 30 x ; AVC = VC/x = 0.005 x 0.02 x 30
3 2 2
d (VC )
MVC 3x0.005 x 2 2 x0.02 x 30 ; For MVC = AVC we get x = 0.2
dx
Q.138. (AMIE S08, 8 marks): Discuss the concept of "theory of firm". Explain profit maximization under
perfect condition.
Q.139. (AMIE S08, 12 marks): If the total cost function of a firm is
1 3
C ( x) x 5 x 2 30 x 10
3
where C is total cost and x, the output under perfect condition given as 6. At what values of x will the profit be
maximised? Examine both first and second order conditions. Will the firm continue production?
A Focused Approach
Answer: -46 i.e. loss.
Q.140. (AMIE S09, 6 marks): Differentiate between debentures and shares.
Quality Management
Revised Topic
Principles of TQM: Major principles of TQM are described by Deming's fourteen points:
1. Maintain constancy of purpose.

2. Adopt a new philosophy.
3. Eliminate need for inspection.
4. Consider only total cost, not price.
5. Improve constantly.
6. Initiate on-the-job training.
7. Initiate leadership.
8. Drive out fear.
9. Break down barriers.
10. Eliminate slogans, targets, and the like.
11. Eliminate management by standards and quotas.
12. Remove barriers to pride of workmanship.
13. Institute education and self-improvement.
14. Get everyone involved.
The quality circle is Deming's idea that people having a low position in the organization, the
actual producers of the product, be involved in the decision-making process, introducing
small changes to the production cycle. The idea was to allow special time during the working
day for these people to get together and talk about possible quality improvements. In order to
make it more efficient, each quality circle had a person from middle management assigned to
it whose responsibilities included providing overall methodological support to these people as
well as making sure that their ideas reach the organization's decision makers. For introducing
small incremental improvements to the processes, Deming suggests a so-called PDCA, or
Plan-Do-Check-Act cycle.
In the planning phase, Deming suggests that you select the problem, describe it and the
process and all potential causes for the problem, and then develop a solution. In the do phase,
you put a solution into a processin other words, you carry out a pilot process with the
solution implemented. In the check phase, you see how the solution worked and, if it did, you
act, moving on to operate this process with the solution.
A Focused Approach
The steps of Deming's cycle correspond very well to what is later suggested as the four steps
for process improvement in CPI, as shown in figure.
Additional Topic
QUALITY CIRCLE
A quality circle is a volunteer group composed of workers (or even students), usually under
the leadership of their supervisor (but they can elect a team leader), who are trained to
identify, analyse and solve work-related problems and present their solutions to management
in order to improve the performance of the organization, and motivate and enrich the work of
employees. When matured, true quality circles become self-managing, having gained the
confidence of management.
Quality circles are an alternative to the dehumanising concept of the division of labour, where
workers or individuals are treated like robots. They bring back the concept of craftsmanship,
which when operated on an individual basis is uneconomic, but when used in group form (as
is the case with quality circles), it can be devastatingly powerful and enables the enrichment
of the lives of the workers or students and creates harmony and high performance in the
workplace. Typical topics are improving occupational safety and health, improving product
design, and improvement in the workplace and manufacturing processes.
The term quality circles derives from the concept of PDCA (Plan, Do, Check, Act) circles
developed by Dr. W. Edwards Deming.
Quality circles are not normally paid a share of the cost benefit of any improvements but
usually a proportion of the savings made is spent on improvements to the work environment.
They are formal groups. They meet at least once a week on company time and are trained by
competent persons (usually designated as facilitators) who may be personnel and industrial
relations specialists trained in human factors and the basic skills of problem identification,
information gathering and analysis, basic statistics, and solution generation. Quality circles
A Focused Approach
are generally free to select any topic they wish (other than those related to salary and terms
and conditions of work, as there are other channels through which these issues are usually
considered).
Quality circles have the advantage of continuity; the circle remains intact from project to
project.
COST OF POOR QUALITY (COPQ)

COPQ comprises costs which have generated as byproducts of defective and inconsistent
manufacturing process. Six Sigma directly assigns a dollar value to cost of poor quality,
meaning that the COPQ is measurable. The cost of poor quality originates at all places where
the product or a part thereof is being made.
COPQ originating from suppliers
COPQ at the production points
COPQ at warehouse
COPQ at transportation and distribution
The cost effect due to poor quality from suppliers is defined at two levels. One is straight
from the defective production of materials and the other is due to handling and delivery. The
second and the third points are very much under the control of the manufacturer.
The following are the generally applicable consistent costs of poor quality:
Wastage Or Under-Utilization: This is also referred to as spoilage in Six Sigma, arising
out of raw material wasted due to inconsistent and inefficient processes.
Cost Of Reworking: This cost includes the cost of repairing and replacing some parts. In
addition, this also includes the cost labor to repair.
Cost Of Additional Utilities: The overall cost of setting up the extra infrastructure and
utilities consumed to run the recycling operation needs to be considered while calculating
the COPQ.
Lost Opportunities: The dissatisfaction triggered business loss can not be just the loss of
margin. You have to include the capital to be invested to regaining the lost revenue and
offset the cumulative revenue loss.
Lost Revenue Due To Poor Quality: This cost refers to the potential loss of new
business due to defective quality.
Poor Customer Satisfaction: This is the mother of all costs of poor quality. This cost is
compounded by the loss the customer suffers due to the defective product first and
servicing second.
ACCEPTANCE SAMPLING
Acceptance sampling is an important field of statistical quality control that was popularized
by Dodge and Romig and originally applied by the U.S. military to the testing of bullets
A Focused Approach
during World War II. If every bullet was tested in advance, no bullets would be left to ship.
If, on the other hand, none were tested, malfunctions might occur in the field of battle, with
potentially disastrous results.
Dodge reasoned that a sample should be picked at random from the lot, and on the basis of
information that was yielded by the sample, a decision should be made regarding the
disposition of the lot. In general, the decision is either to accept or reject the lot. This process
is called Lot Acceptance Sampling or just Acceptance Sampling.
Acceptance sampling is "the middle of the road" approach between no inspection and 100%
inspection. There are two major classifications of acceptance plans: by attributes ("go, no-
go") and by variables. The attribute case is the most common for acceptance sampling, and
will be assumed for the rest of this section.
A point to remember is that the main purpose of acceptance sampling is to decide whether or
not the lot is likely to be acceptable, not to estimate the quality of the lot.
Acceptance sampling is employed when one or several of the following hold:
Testing is destructive
The cost of 100% inspection is very high
100% inspection takes too long
Basic Acceptance Sampling terms
Type I Error (Producer's Risk): This is the probability, for a given (n,c) sampling plan, of
rejecting a lot that has a defect level equal to the AQL. The producer suffers when this
occurs, because a lot with acceptable quality was rejected. The symbol is commonly used
for the Type I error and typical values for range from 0.2 to 0.01.
Type II Error (Consumer's Risk): This is the probability, for a given (n,c) sampling plan, of
accepting a lot with a defect level equal to the LTPD. The consumer suffers when this occurs,
because a lot with unacceptable quality was accepted. The symbol is commonly used for the
Type II error and typical values range from 0.2 to 0.01.
Operating Characteristic (OC) Curve: This curve plots the probability of accepting the lot
(Y-axis) versus the lot fraction or percent defectives (X-axis). The OC curve is the primary
tool for displaying and investigating the properties of a LASP.
Average Outgoing Quality Level (AOQL): A plot of the AOQ (Y-axis) versus the incoming
lot p (X-axis) will start at 0 for p = 0, and return to 0 for p = 1 (where every lot is 100%
inspected and rectified). In between, it will rise to a maximum. This maximum, which is the
worst possible long term AOQ, is called the AOQL.
A Focused Approach
DIFFERENCE BETWEEN QUALITY CONTROL, QUALITY ASSURANCE
AND TESTING
Many people and organizations are confused about the difference between quality assurance
(QA), quality control (QC), and testing. They are closely related, but they are different
concepts.
But all these three are useful to manage risks of developing and managing software.
Quality Assurance: A set of activities designed to ensure that the development and/or
maintenance process is adequate to ensure a system will meet its objectives.
Quality Control: A set of activities designed to evaluate a developed work product.
Testing: The process of executing a system with the intent of finding defects. (Note that
the "process of executing a system" includes test planning prior to the execution of the
test cases.)
QA activities ensure that the process is defined and appropriate. Methodology and standards
development are examples of QA activities. A QA review would focus on the process
elements of a project - e.g., are requirements being defined at the proper level of detail.
QC activities focus on finding defects in specific deliverables - e.g., are the defined
requirements the right requirements
Testing is one example of a QC activity, but there are others such as inspections
The difference is that QA is process oriented and QC is product oriented.
Testing therefore is product oriented and thus is in the QC domain. Testing for quality isn't
assuring quality, it's controlling it.
Quality Assurance makes sure you are doing the right things, the right way.
Quality Control makes sure the results of what you've done are what you expected.
ASSIGNMENT
Q.141. (AMIE W08, 09, S10, 6 marks): What is TQM? State a few important objectives of TQM.
Q.142. (AMIE S05): What are the concepts that underline the construction and use of control charts?
Q.143. (AMIE S05): What factors govern the choice of single versus multiple sampling plans?
Q.144. (AMIE W05, 6 marks): Give at least two definitions of quality in the context of a product. Which
definition would you prefer and why?
Q.145. (AMIE S07, 5 marks): Define quality. What are the costs of poor quality.
Q.146. (AMIE W05, 4 marks): What are the objectives of quality control?
Q.147. (AMIE S08, W08, 6 marks): What is the difference between quality assurance and quality control?
Q.148. (AMIE S08, 6 marks): What is inspection? What is the basic difference between inspection and quality
control?
Q.149. (AMIE S08, 09, 4 marks): Explain the term "quality circle" with neat sketch.
Q.150. (AMIE S08, 6 marks): What do you mean by ISO standards? Name three standards for different
purposes.
A Focused Approach
Q.151. (AMIE S10, 6 marks): What is ISO 9000 quality system? Explain.
Q.152. (AMIE S07, 7 marks): What are the five pillars of total quality management? Define Deming's PDCA
cycle. Explain Juran's trilogy.
Q.153. (AMIE W05, 6 marks): Explain in brief, the X bar and R charts used for quality control.
Q.154. (AMIE S07, 8 marks): Define assignments causes and common causes of variation. The ABC company
produces incandescent light bulbs. Following data on the number of lumens for 40 W light bulbs were collected
when the process was in control.
Sample Observation
1 2
1 600 610
2 590 600
3 580 570
4 620 600
5 570 620
Construct x chart. The value for A2 for n = 2 is 1.88.

Q.155. (AMIE W05, 08, 4 marks): What is acceptance sampling?
Q.156. (AMIE W09, 10 marks): What are the advantages of control charting? Why is acceptance sampling
used? State how is quality improvement a possibility through TQM.
Q.157.(AMIE W07, 6 marks): Identify the trends and challenges relating to quality in the present context of
global competitiveness.
Q.158.(AMIE W07, 2 marks): Distinguish between p and c charts.
Q.159.(AMIE W07, 2 marks): Distinguish between producer's risk and consumer's risk in a sampling plan.
Project Management
STEPS IN PROJECT MANAGEMENT
Team Assembly
No man is on an island. Same is true in undergoing a project. It is a collaboration of different
minds working together to come up with a cohesive idea and plan out the strategies needed to
execute the project successfully. In creating your team make sure that you have different
people from a variety of fields to have the most brilliant ideas on hand.
Project Initiation
Identification of the project definition, objectives and approach are discussed in this phase. It
is important to have your goal in mind before starting to brainstorm into the scope and
specifications of your project to serve as your guide throughout the duration of the project.
Project Planning
Among the project management steps, I would say this is very important since the foundation
and backbone of the project will depend on the planning stage. If a complete and thorough
A Focused Approach
planning is done the probability of setbacks and problems along the course of the project will
be highly prevented. As a project manager you would need to use management-level planning
to map out an overview of resources, acquisitions, subcontracts and costs. It is expected of
you to estimate, plan and oversee all phases of the project management phase. As a project
manager you need to include your team or set up a committee to execute project planning.
Project Execution
In this project management step the project manager needs to know the importance of
delegation. Each task needs to be delegated to everyone to achieve efficiency in delivering
results. It is also helpful since easy tracking can be done through small teams or groups
working together as one to achieve a single goal identified on the Initiation phase. Use a
project management software to give a constant overview of how the project is going in terms
of scheduling, cost control, budget management, resource allocation, collaboration software,
communication, quality management and documentation or administration systems especially
in large scale projects. Then collaborate with your team to hold meetings and conferences to
provide feedback solve challenges and aid in decision making. Communication is essential in
making your project a success to determine degree of dependency among team members and
to foster camaraderie.
Project Leadership
What sets apart a manager and a leader? Some might not even know the slightest difference.
A leader leads by example by that it means he embodies in himself the values of providing
quality service to others. He is passionate in helping his team members be productive and
resourceful without demanding for results right away. A leader knows and understands his
team members weaknesses and strengths which he works around to motivate them to do their
best and work collaboratively to produce excellent results.
Project Monitoring and Controlling

In any project you need to be able to allocate your resources effectively. Project software is
available to oversee your costs, resources and financial capability throughout the project.
Highest quality is achieved by constant monitoring and project tracking. Standard Quality is
the goal being obtained in this phase to be able to present a high quality result.
Project Presentation
This phase is close to completion of the project wherein majority of what was planned has
already taken place. The client will have a preview of the project outcome before it is
officially launched to be able to change, update or do some minor revisions. The project
manager will have the responsibility in presenting to the clients since he is the head of the
organizing team. Effective communication skills are needed to undergo this phase
impressively.
A Focused Approach
Project Conclusion
At any project close there should be a complete documentation, audit and feedback.
Regardless of the success of the project, proper transition of work processes and deliverables
should be done. Proper documentation of processes should have been established with
sufficient data for the operation of the system and to also provide basis for future projects and
maintenance.
ASSIGNMENT
Q.160. (AMIE S05): Outline the important steps involved in project management.
Q.161. (AMIE S05): What are the important aspects to be considered for a project within the scope of project
control?
Q.162. (AMIE S07, 6 marks): Define project. What are the elements of a successful project? What tools are
available for scheduling and controlling projects.
Q.163. (AMIE S08, 4 marks): Explain the various concepts of project management.
CPM/PERT
Additional Numerical
Example (AMIE Winter 2005, 20 marks)
The data for a simple construction project are as given below:

Activity Immediate Processor(s) Time (days) Direct cost (Rs.)
Normal Crash Normal Crash
A - 4 3 60 90
B - 6 4 150 250
C - 2 1 38 60
D A 5 3 150 250
E C 2 2 100 100
F A 7 5 115 175
G D,B,E 4 2 100 240
Indirect costs are Rs. 40/- per day
(a) Draw an arrow diagram for the project
(b) Find all the paths in the project along with their normal and crash times
(c) Find the crashing costs for each activity on a per day basis.
(d) Determine the project duration that will return the minimum total project cost by
appropriately crashing the project.
Solution
A Focused Approach
(a) See the following arrow diagram.
(b) The different paths obtained from the network is given below:
(i) A-F
Normal Time = 4 + 7 = 11 days
Crash Time = 3 + 5 = 8 days
(ii) A-D-G
Normal Time = 4 + 5 + 4 = 13 days
Crash Time = 3 + 3 + 2 = 8 days
(iii) C-E-G
Normal time = 2 + 2 + 4 = 8 days
Crash Time = 1 + 2 + 2 = 5 days
(iv) B-G
Normal time = 6 + 4 = 10 days
Crash time = 4 + 2 = 6 days
(c) The crash cost per day table is given below:
Activity Time Max. Cost (Rs.) Crash cost
(Days) Reduction per day
Normal Crash time Normal Crash (Rs.)
A 4 3 4-3=1 60 90 (90 - 60)/1 = 30
B 6 4 6-4=2 150 250 (250 - 150)/2 = 30
C 2 1 2-1=1 38 60 (60 - 38)/1 = 22
D 5 3 5-3=2 150 250 (250 - 150)/2 = 50
E 2 2 2-2=0 100 100 0
F 7 5 7-5=2 115 175 (175 - 115)/2 = 30
A Focused Approach
G 9 2 4-2=2 100 240 (240 - 100)/2 = 70
Total = Rs. 713
Critical activity Cost/day Maximum reduction (days)
A 30 1
D 50 2
G 70 2
From table, the cheapest activity is A and it can be reduced by 1 day. The increase in cost
will be Rs. 30 and the project duration reduces to = 13 - 1 = 12 days.
Total cost = 713 + 30 = Rs. 743
Again, critical path is A-D-G

The cheapest activity is D because A can not crushed further
Reducing activity D by 1 day
Project duration = 12 - 1 = 11 days
Total project cost = Rs. (743 + 50) = Rs. 793
Again, critical activity A-D-G

D can be reduced by 1 day
Total project cost = Rs. (793 + 50) = Rs. 843
A Focused Approach
There are three critical paths

A-F
A-D-G
B-G
Activity Cost/days (Rs.) Max. reduction (days)
G and F 70 + 30 = 100 2
F, D and B 30 + 50 + 50 = 130 2
Both G and F can be reduced by 1 day.

Project duration becomes = 10 - 1 = 9 days
Total project cost = Rs. (843 + 100) = Rs. 943.
Again G and F can be reduced by 1 day.

Project duration = 9 - 1 = 8 days.
Total project cost = Rs. (943 + 100) = Rs. 1043.
A, F, D and G can not crushed further. At this stage, crushing is possible only at activity B,
but B is not present in all critical paths, therefore further crashing is not possible.
A Focused Approach
Possible project duration = 8 days.

Total project cost = Rs. 1043.
ASSIGNMENT
Q.164. (AMIE S06, 10, 8 marks): Differentiate between PERT and CPM with respect to their use, advantages
and disadvantages.
Q.165. (AMIE S06, 08, 8 marks): A project schedule has the following characteristics:
Activity Time Activity Time
1-2 4 5-6 4
1-3 1 5-7 8
2-4 1 6-8 1
3-4 1 7-8 2
3-5 6 8 - 10 5
4-9 5 9 - 10 7
(i) Construct a network diagram.

(ii) Determine the critical path and total project duration.
(iii) calculate total float and free float for each activity.
Answer: Critical path is 1-3-5-7-8-10; Total project duration is 22 units.
Total float 5, 0, 5, 8, 0, 5, 5, 0, 5, 0, 0, 5
Free float 0, 0, 0, 3, 0, 0, 0, 0, 5, 0, 0, 0
Q.166. (AMIE S07, 14 marks): Given the following data:
A Focused Approach
Activity Optimistic Time Most Likely Time Pessimistic Time

A 6 7 14
B 8 10 12
C 2 3 4
D 6 7 8
E 5 5.5 9
F 5 7 9
G 4 6 8
H 2.5 3 3.5
(a) Calculate the expected time and variance for each activity
(b) What is the critical path?
(c) How long will it take to complete this project?
(d) What is the probability that the project will be completed within 25 days.
Answer: Expected time 8, 10, 3, 7, 6, 7, 6, 3; variance 1.78, 0.44, 0.11, 0.11, 0.44, 0.44,0.44, 0.028
Project will take 23 days to complete. Probability = 1.205
Q.167. (AMIE W06, 20 marks): A company has received an order from a good customer for a specially
designed electric unit. The contract states that starting on the thirteenth day from now, the firm will experience a
penalty of Rs. 100 per day until the job is completed. Indirect projects costs amount to Rs. 200 per day. The data
on direct costs and activity precedence relationship are given below.
Activity Normal Time Normal Cost Crash Time Crash costs Immediate Predecessor(s)
(days) (Rs.) (Days) (Rs.)
A 4 1000 3 1300 -
B 7 1400 4 2000 -
C 5 2000 4 2700 -
D 6 1200 5 1400 A
E 3 900 2 1100 B
F 11 2500 6 3750 C
G 4 800 3 1450 D, E
H 3 300 1 500 F, G
(a) Draw the project network diagram.
(b) What completion date would you recommend?
A Focused Approach
Answer:
Q.168. (AMIE W06, 20 marks): A project has been defined to contain the following list of activities, along
with their required times for completion:
Activity Time (days) Immediate Predecessors
A 1 -
B 4 A
C 3 A
D 7 A
E 6 B
F 2 C, D
G 7 E, F
H 9 D
I 4 G, H
a) Draw the critical path diagram.
b) Show the early start and early finish time.
c) Show the critical path
d) What would happen if activity F was revised to take four days instead of two?
Answer: Critical path is A-B-E-G-I
Q.169. (AMIE W08, 12 marks): A project consists of eight activities, the details of which are given below:
Activity Duration days Immediate Predecessors
A 1 -
B 3 A
C 5 -
D 3 B, C
E 1 D
F 12 -
G 3 E, F
H 1 G
A Focused Approach
(i) Draw the project network diagram. Find the critical path and the project completion time.
(ii) If the activity F, is now completed in 8 days only, what would be the critical path and the project
completion time?
Answer: (i) Critical path F-G-H, project completion time is 16 days. (ii) there will be two critical paths viz. C-
D-E-G-H and F-G-H. Project completion time is 13 days.
Q.170. (AMIE W09, 10 marks): A project has the following characteristics:
Activity Preceding Activity Expected Completion Time
(weeks)
A - 5
B A 2
C A 6
D B 12
E D 10
F D 9
G D 5
H B 9
I C, E 1
J G 2
K F, I, J 3
L K 9
M H, G 7
N M 8
(a) Draw a PERT network for the project.
(b) Find the critical path and the project completion time.
(c) Will the critical path change if activity G takes 10 weeks instead of 5 weeks? If so, what will be the
new critical path.
Answer: (b) Critical path is 1-2-3-4-5-8-10-11 and project duration is 42 weeks. (c) 1-2-3-4-6-7-9-11

Acm MGT 131010

Transféré par

Informations du document

Description originale:

Titre original

Copyright

Formats disponibles

Partager ce document

Partager ou intégrer le document

Options de partage

Avez-vous trouvé ce document utile ?

Ce contenu est-il inapproprié ?

Droits d'auteur :

Formats disponibles

Acm MGT 131010

Transféré par

Droits d'auteur :

Formats disponibles

AMIE(I) STUDY CIRCLE(REGD.

Additional Course Material

Category Role Activity

Seek and receive information; scan periodicals and reports;

Disseminator Forward information to organization members via memos,

Category Role Activity

reports, and phone calls.

Transmit information to outsiders via reports, memos, and

Perform ceremonial and symbolic duties, such as greeting

Direct and motivate subordinates; counsel and

Maintain information links both inside and outside

Initiate improvement projects; identify new ideas and

Disturbance Take corrective action during disputes or crises; resolve

Resource Decide who gets resources; prepare budgets; set schedules

Represent department during negotiations of union

MAJOR ASPECTS OF MANAGEMENT

Advantages of Management System

Advantages of Scientific Management

Disadvantages/Limitations of Scientific management

DECISION MAKING & PROBLEM SOLVING

First Guideline for Reorganizing

How Is Organization-Wide Change Best Carried Out?

Human Resources management

JOB ENLARGEMENT AND JOB ENRICHMENT

ROLE OF PERSONNEL MANAGER

Fixed Position layout

Group Technology Layout

COMPUTERISED LAYOUT TECHNIQUES

DEBENTURES & SHARES

Current Ratio = 2.8

C ( x) 0.005 x 3 0.02 x 2 30 x 5000

1. Maintain constancy of purpose.

COST OF POOR QUALITY (COPQ)

Construct x chart. The value for A2 for n = 2 is 1.88.

Project Monitoring and Controlling

Example (AMIE Winter 2005, 20 marks)

The data for a simple construction project are as given below:

Again, critical path is A-D-G

Again, critical activity A-D-G

There are three critical paths

Both G and F can be reduced by 1 day.

Again G and F can be reduced by 1 day.

Possible project duration = 8 days.

(i) Construct a network diagram.

Activity Optimistic Time Most Likely Time Pessimistic Time

Vous aimerez peut-être aussi