Business Statistics and Operations Management Questions and Answers

Answer: C

The key gives TQM is best explained with the help of the Deming triangle. No one standard diagram goes by exactly that name, so this answer rests mostly on eliminating the others.

Triangles built on Deming's teaching are used to describe TQM, for example the Joiner triangle, whose three corners are an all-one-team approach, a scientific approach and an obsession with quality. Taken that way, C is a fair description.

D is wrong: Michael Hammer and James Champy are known for business process re-engineering, not for TQM. A is wrong because Kaizen, continuous incremental improvement, is one part of TQM and not another name for it. B names 'production management' as a variable of a 'TQM equation', which is not a standard TQM statement.

Answer: D

1 is incorrect and 2 is incorrect.

VED analysis classifies inventory items, especially spare parts, as Vital, Essential or Desirable according to how critical they are to production. It is a tool of inventory control, not of 'project maximization'.

Network analysis (PERT and CPM) is itself a planning technique: drawing the network forces managers to list activities and their sequence, so it is an integral part of the planning process, not independent of it. Both statements are therefore wrong.

Answer: D

The most appropriate choice is (1) and (3).

(1) is correct: PERT uses three time estimates and probabilities, while CPM uses a single, known duration. (3) is correct: PERT concentrates on time, while CPM is used to study time-cost trade-offs such as crashing.

(2) is wrong because PERT suits new, non-repetitive projects where time is uncertain, and CPM suits repetitive projects with known durations; PERT is not meant for 'old' projects as well. (4) reverses the usual description: PERT is event-oriented and CPM is activity-oriented. That rules out every option containing (2) or (4).

Answer: B

Only statement (3) is true.

(3) is true: the EOQ logic, balancing set-up cost against holding cost, carries over to production in batches as the economic production (batch) quantity model.

(1) is false: a redundant constraint does not affect the feasible region at all, so it cannot make the problem infeasible. (2) is false: a degenerate solution is still a valid basic feasible solution; it can signal multiple optimal bases or cycling, but it is not meaningless. (4) is false: sensitivity analysis in LP gives exactly the range over which a price (objective coefficient) can rise without changing the optimal product mix.

Answer: D

One use of a regression line is to estimate the change in y for a one-unit change in x.

In the fitted line \(\hat{y} = a + bx\), the slope b is the estimated average change in y for each one-unit increase in x, and the line is used to predict y from x.

A regression line does not by itself establish cause and effect, since association is not causation. Outliers are detected by examining residuals and data plots, not by the line alone.

Answer: C

Market intelligence and survey is not a function of production management but of marketing. Production planning and control, procurement of raw materials and plant location and layout are all production functions, the first being the scheduling and control of output, the second the purchase of inputs and the third the decisions about where to produce and how to arrange the plant. So (C) is the key. Market intelligence is gathered by the marketing department to learn about customers and competitors, and a survey of the market is used to forecast demand, which production then takes as given.

Answer: A

Time study refers to developing a standard time to do a particular task: a worker is observed with a stopwatch, the times are rated and an allowance is added to give the standard time. Improving work methods is the aim of method study, which is a different technique, and value analysis and value engineering are techniques for reducing the cost of a product without loss of function. So (A) is correct.

Answer: B

The acceptance quality level (AQL) is the fraction defective that the consumer considers acceptable, the quality level that is acceptable as a process average in sampling inspection. It is a quality level as seen by the consumer, so (B) is the key. The options that put it in terms of the producer, (C) and (D), are wrong, and the maximum number of defectives that the consumers will accept in (A) is a count and not a fraction.

Answer: C

In a transportation problem with m origins and n destinations there is one capacity constraint for each origin and one requirement constraint for each destination, so the number of constraints is m + n. With 10 origins and 5 destinations it is 10 + 5 = 15, option (C). The number of variables is m times n, which is 50, and m + n - 1 = 14 is the number of basic variables in a basic feasible solution, so 50 and 14 are wrong.

Answer: D

The critical path of a network is the longest time path through it, since the project cannot be completed in less time than the longest chain of activities. So (D) is the key. The shortest path in (B) is wrong because it would not fix the project time. Options (A) and (C) describe a zero slack on the activities of that path, and are the results of it, but they are not the definition of the path. A delay in an activity on that path delays the whole project, whereas activities not on it have slack. The path is found by a forward pass and a backward pass over the network.