Madhya Pradesh Bhoj Open University 2008 Diploma Material Management INVENTORY MANAGEMENT-GDMM - Question Paper

INDIAN INSTITUTE OF MATERIALS MANAGEMENT
Post Graduate Diploma in Materials Management
Graduate Diploma in Materials Management

Paper – 10 (New) & Paper-9 (Old) - Common
INVENTORY MANAGEMENT
Date: 09.06.2008 Max. Marks: 100
Time: 10:00 A.M to 1:00 P.M Duration: 03 Hrs.
INSTRUCTIONS:-
1. From Part ‘A’, ans all ques. (compulsory) every.
Sub – ques. carries 01 mark Total Marks 32
2. From Part ‘B’, ans 03 ques. out of 05 ques..
every ques. carries 16 marks Total Marks 48
3. Part ‘C’ is a case study with 05 Sub – ques. Total Marks 20
4. Use of the Calculator can be used wherever necessary.
5. Graph sheet can be used wherever necessary.

PART – A
Q.A. (1) The followings are objective kind ques.. Indicate the accurate ans from among the options viz a or b or c.
1.1 CCPS Stands for: -
a) Chief controller of Purchase and store.
b) Chief controller of planning and sales.
c) Both of them.
1.2 Expenditure on materials forms _______ percentage:-
a) 70%
b) 80%
c) None of them
1.3 Activity based costing is for the planning and control of: -
a) Warehousing Activities
b) Inventory Control
c) Both of them.
1.4 Which 1 of these is ten digit codification systems: -
a) Bar Coding b) Brisch System c) Kodak System

1.5 Items which have moved at lowest once in a period of two years are known as: -
a) Non moving b) Slow moving c) Both of them
1.6 In a graphic representative of EOQ, the total cost is ________ near the minimum:-
a) Curved b) Flat c) None of these.
1.7 The ratio of the number of times demands are met to number of times demands are made, is called:-
a) Service Level b) Minimum Level c) Maximum Level
1.8 A level at which stocks are just sufficient to meet demands during 1 normal lead time resulting in stock – out, is known as: -
a) Re-order Level b) Danger Level c) Safety Stock

Q.A. (2) STATE WHETHER THE subsequent STATEMENTS ARE actual OR FALSE: -
2.1 Production Plans need not to flow from Business Plan.
2.2 DRP – II is an extension of distribution Requirement Planning.
2.3 A Philosophy based on the principle of getting the right materials to the right place at the right time is called JIT.
2.4 There are 3 kinds of Kanban Cards – “Move”, “Production” and “Signboard” cards.
2.5 The importance of WIP is a function of 2 factors – Products and Process.
2.6 Every inventory Control measures begins with a focus on costs.
2.7 HIFO (Highest in 1st Out) is 1 of the inventory evaluation systems.
2.8 Stock In Trade and finished Goods are not the identical.

Q.A. (3) Fill in the blanks: -
3.1 Logistic Management extended the flow of _______________ to the outside world.
3.2 ______________ are the replacement parts needed for maintaining all the plants and machinery.
3.3 The ultimate aim of Inventory Control is to have as small an ______________ as possible.
3.4 Selective inventory ______________ can indicate where the Manager should concentrate his efforts.
3.5 EOQ can be adopted to compute optimal ______________ size.
3.6 Safety stock is viewed as a ______________ line of defence.
3.7 The stock out level is also called _____________ zone.
3.8 Material requirement forecasts for more than 3 years are called _____________ term forecasts.
Q.A. (4) Match Column “A” with column “B”.
A B
a) Excess over requirement 1) Buffer Stock
b) Maintenance Spares 2) A model for comparison
c) Safety Stock 3) Codification System
d) Raw Material 4) Pareto’s legal regulations
e) Standard 5) Consumption Rate
f) Bar Coding 6) Redundant / Surplus
g) A.B.C. 7) Items awaiting processing
h) CR 8) Fast moving Spares
PART – B
? Answer any 3 ques. from the followings: -
Q.5 A) What is Raw Material? elaborate its 2 important factors? define.
B) Describe bought out components. What factors influence the decisions for bought out components?

Q.6 A) What are (KU) and (KO). define them in brief.
B) What are elements of ordering costs? How will you workout-ordering cost per order when you release 5000 orders a year with total ordering cost of Rs. 400000.

Q.7 A) What is Safety Stock? List out the different factors influencing the safety stock.
B) Define Service Level? How does it help in determining the Safety Stock? discuss with example.

Q.8 A) What is forecast? List out various kinds of forecasts.
Why is forecast needed?
B) Describe in brief dependent demands and independent Demands.

Q.9 Write Short notes on any four out of the followings: -
A) Inventory with Supplier
B) Inventory carrying cost.
C) FSN Classification
D) Other uses of EOQ.
E) Inventory Control through Stock – Levels.
F) Scrap / Surplus and its disposal.
G) Overhauling Spares
H) Role of computers in Inventory Management.

PART – C
CASE STUDY (COMPULSORY) WITH 05 Sub – ques.

M/s ABC is a car manufacturing company. They have a distribution system for marketing of finished goods as follows:-
A. Finished goods are sent to Central warehouse near the factory.
B. From here, the finished goods (cars) are sent by road to 7 Regional warehouses located at important centers in the country.
C. Besides above 2 kinds of warehouses, there were 27 depots from where the cars are sent to various stockiest for sale.

Due to severe market competition and restrictions on bank credit, the Top Management of M/s ABC appointed an expert committee to streamline the distribution system, The committee obtained followings :-

1. Central warehouse, seven Regional warehouse and 27 Depots together have finished stock (cars) equal to 105 days all India sales.
2. The Marketing Manager has no time to check the Finished Goods Stock as he is busy with marketing functions.
3. There are several cars which are lying for more than two years due to availability of new better models.
4. There was lack of controlling and supervising norms for monitoring the stock positions and taking corrective actions. Indents for new cars were sent without checking of stocks.

Apart from other things, the committee advised to put the finished Goods warehousing under Materials Management deptt. and advised a finished goods stock (Cars) equal to 48 days all India sales stock as ideal stock level in all the warehouses and depots together.
M/s ABC Management has appointed you as Materials Manager to complete the above tasks. How will you proceed? The ques. are:-

1. Will you review the existing numbers of warehouses and depots for reduction? If so, why?
2. How will you obtain slow moving and non-moving stock of cars? What methodology will you suggest to dispose off such cars?
3. What shall be your methods for monitoring and controlling of finished Goods (car) to avoid accumulation of unsold stocks in future?
4. Will you retain Central warehouse and why?
5. What will be your distribution trend for keeping stocks in central warehouse/Regional warehouse and Depots equal to the norms of 48 days All India Sales stock level?
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INDIAN INSTITUTE OF MATERIALS MANAGEMENT Post Graduate Diploma in Materials Management Graduate Diploma in Materials Management

Paper - 10 (New) & Paper-9 (Old) - Common INVENTORY MANAGEMENT

Date: 09.06.2008 Time: 10:00 A.M to 1:00 P.M INSTRUCTIONS:-

1.    From Part A, answer all questions (compulsory) each.

Sub - question carries 01 mark

2.    From Part B, answer 03 questions out of 05 questions.

Each question carries 16 marks

3.    Part C is a case study with 05 Sub - questions

4.    Use of the Calculator can be used wherever necessary.

5.    Graph sheet can be used wherever necessary._

PART-A

The followings are objective type questions. Indicate the correct answer from among the choices viz a or b or c.

CCPS Stands for: -

a)    Chief controller of Purchase and store.

b)    Chief controller of planning and sales.

c)    Both of them.

Expenditure on materials forms_percentage:-

a)    70%

b)    80%

c) None of them Activity based costing is for the planning and control of: -

a)    Warehousing Activities

b)    Inventory Control

c)    Both of them.

Which one of these is ten digit codification systems: -

a) Bar Coding b) Brisch System c) Kodak System

Items which have moved at least once in a period of 2 years are known as: -

a) Non moving b) Slow moving c) Both of them

In a graphic representative of EOQ, the total cost is_near the

minimum:-

a) Curved    b) Flat    c) None of these.

The ratio of the number of times demands are met to number of times demands are made, is called:-

a) Service Level b) Minimum Level c) Maximum Level A level at which stocks are just sufficient to meet demands during one normal lead time resulting in stock - out, is known as: -

a) Re-order Level b) Danger Level c) Safety Stock

STATE WHETHER THE FOLLOWING STATEMENTS ARE TRUE OR FALSE: -

Production Plans need not to flow from Business Plan.

DRP - II is an extension of distribution Requirement Planning.

2.3    A Philosophy based on the principle of getting the right materials to the right place at the right time is called JIT.

2.4    There are three types of Kanban Cards - Move, Production and Signboard cards.

2.5    The importance of WIP is a function of two factors - Products and Process.

2.6    Every inventory Control measures starts with a focus on costs.

2.7    HIFO (Highest in First Out) is one of the inventory valuation systems.

2.8    Stock In Trade and finished Goods are not the same.

(3)    Fill in the blanks: -

3.1    Logistic Management extended the flow of _ to the

outside world.

3.2    _are the replacement parts required for maintaining all

the plants and machinery.

3.3    The ultimate aim of Inventory Control is to have as small an _as possible.

3.4    Selective inventory_ can indicate where the Manager

should concentrate his efforts.

3.5    EOQ can be adopted to calculate optimal_size.

3.6    Safety stock is viewed as a_line of defence.

3.7    The stock out level is also called_zone.

3.8    Material requirement forecasts for more than three years are called

_term forecasts.

(4)    Match Column A with column B._

A B a) Excess over requirement 1) Buffer Stock b) Maintenance Spares 2) A model for comparison c) Safety Stock 3) Codification System d) Raw Material 4) Paretos Law e) Standard 5) Consumption Rate f) Bar Coding 6) Redundant / Surplus g) A.B.C. 7) Items awaiting processing h) CR 8) Fast moving Spares

PART - B

Answer any three questions from the followings: -

A) What is Raw Material? What are its two important factors? Describe.

b) Describe bought out components. What factors influence the decisions for bought out components?

A) What are (KU) and (KO). Describe them in brief.

b) What are elements of ordering costs? How will you workout-ordering cost per order when you release 5000 orders a year with total ordering cost of Rs. 400000.

A)    What is Safety Stock? List out the various factors influencing the safety stock.

B)    Define Service Level? How does it help in determining the Safety Stock? Explain with example.