IIBM Institute of Business Management
Examination Paper MM.100
Statistical Quality Control
Section A: Objective Type (30 marks)
This section consists of Multiple choice questions & Short Answer type questions. Answer all the questions.
Part One questions carry 1 mark each & Part Two questions carry 4 marks each.
Part One: Multiple choices:
1. If in a hall there are 18 persons then how many handshakes are possible?
a. 18*18
b. 18*17/2 c. 18*17
d. None of the above
2. If the number of trials be ‘n’ and the probability of occurrence be ‘p’ then the standard deviation with respect to np, is given by:
a. (np)1/2
b. (np(1-p))1/2
c. (np)1/4
d. (np(1-p))1/4
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3. For a biased coin the probability of occurrence of head is 0.4 ,if the coin is tossed twice then the probability of occurrence of at least one head will be:
4. Factorial of 5 equals:
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a.
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60
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b.
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120
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c.
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24
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d.
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5
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5. Combinatory of (4,2) equals:
a. 12 b. 8 c. 6
d. None of the above
6. ‘Economic Control of Quality of Manufactured Product’, a book by
Walter A Shewhart in:
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a.
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1931
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b.
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1941
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c.
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1930
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d.
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1956
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7. Quality is judged by…………
a. Retailer
b. Government c. Customer
d. Hole seller
8. A run chart is a special chart of…………
a. Pie chart b. Line chart c. R chart
d. C chart
9. Universes may differ :
a. In average
b. In above average c. At higher level
d. All of the above
10. ASQC and ANSI began in the year:
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a.
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1956
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b.
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1976
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c.
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1978
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d.
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1960
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Part Two:
1. Differentiate between ‘Defect’ and ‘Defective’.
2. Explain the need of ‘short method’.
3. What does ‘Tchebycheff’s inequality theorem’ say?
4. Explain the usability of ‘stochastic limit’.
5. Write a note on ‘Cause and Effect’ diagram.
END OF SECTION A
Section B: Caselets (40 marks)
This section consists of Caselets. Answer all the questions.
Each Caselet carries 20 marks.
Detailed information should form the part of your answer (Word limit 150 to 200 words).
Caselet 1
ADAPTABILITY IN ACTION: A CASE OF RSL
Rajasthan Synthetics
Ltd.
(RSL)
was
established in the
year
1994
at Bhilwara, Rajasthan to manufacture synthetic yarn with a
licensed capacity of 29,000 spindles. Manish Kumar, a
Harvard Business School graduate, established
RSL with 8% equity participation
from Itochu Corporation Japan to manufacture synthetic yarn for shirting, a promising business at that time. The demise of the NTC textile mills was fresh in the minds of
the promoters and therefore, state of
the
art technology imported from U.K., Germany, Japan and France was used in the manufacturing facility. By the time the company started manufacturing yarn the competition in
shirting yarn had become fierce and the returns had diminished. The company incurred losses in the first four years of
its operations and the management was looking for opportunities
to turn things around. The manufacturing plant started functioning with an installed capacity of 26,000 spindles, a
small unit considering yarn- manufacturing industry, in the year 1996 to manufacture synthetic yarn for shirting only. Initially, the major fabric manufactures of
India such as
Raymonds, Donear, Grasim, Amartex, Siyaram, Pantaloon and Arviva were the main customers of the company and the total produce of
the
company was sold within the domestic
market. These fabric manufactures used to import the premium quality yarn before
RSL started
supplying the yarn
to them. The company in the first year of its operations
realized that shirting yarn was one of the fiercely competitive products and the
company with its high interest liability was unlikely to earn the desired profits. Also, the company had a narrow product mix limited to only two more blow room lines were installed in the first quarter of 1997. The addition of two blow room lines helped RSL to manufacture four different types of yarns at the same time. Utilizing this added flexibility, RSL began manufacturing yarn for suitings.Since the suiting yarn was providing better returns, the company was keen to
increase manufacturing of
suiting yarn but was hampered by the two for one doubling (TFO) facility, which was limited to only 40% of the total produce.
To remove
this bottleneck, 12 more TFO machines were added
to the existing
8 TFO machines. The addition of
these machines increased the doubling capacity to 70% of
the production providing additional product mix flexibility
to
the company. This
enabled
the company to manufacture yarn to cater to the requirements of suiting, industrial fabric and carpet manufacturers. In the initial
years
of its
operations,
RSL realized that the
promises made by the
Government
of Rajasthan to
provide uninterrupted
power
supply of the
required
quality
(stable voltage
and frequency) and ample quantity of water
were
unlikely
to be met through
the public
distribution system. The voltage and frequency of
electric power provided through the public distribution system were erratic and frequent announced and unannounced power cuts stopped production on a regular basis. In these circumstances, meeting quality requirements of
the
customers and adhering to delivery
schedules was a herculean task. To ensure smooth and uninterrupted operations RSL installed in- house
power generation
facility of 4 megawatts
capacity and dug 10 tube-wells.RSL faced
stiff competition
in the domestic market from Gujarat
Spinning and Weaving Mills,
Surat,
Rajasthan
Textile Mills, Bhawani Mandi, Charan
Spinning Mills, Salem
and Indorama
Synthetics
Ltd., Pithampur
in all
their
product categories and
the returns
were
low.
In order
to
combat stiff
competition
in the domestic
market
and improve
returns the company started developing
export
markets for their products in the year 1998. Initially, RSL started exporting carpet yarn to Belgium and till 2001; carpet yarn formed the major component of
their exports. A trade agreement was signed with Fibratex
Corporation, Switzerland
to share
profits equally
for
expanding
their overseas operations.
During the
same
period,
RSL continued to scout for new export
markets
and
was successful in entering top-of-the-line fancy for premium fashion fabric manufactures of international
repute like Mango and Zara. Rajasthan Synthetics Ltd. also exported fancy yarn to
a number of fabric manufacturers located in Italy,
France,
England,
Spain
and Portugal. Yarn
manufacturers from Indonesia, Korea and Taiwan gave stiff competition to
RSL when it entered the international market. The companies from South Asian countries had a major cost advantage over RSL because of cheap, uninterrupted
availability
of power and
high
labour
productivity.
Currencies
had been
sharply devalued during the South Asian financial crisis, which rendered the products manufactured by these companies still cheaper in international markets. Despite all these disadvantages,
RSL was able to gain a foothold through constant adaption of their products according to the customer requirements in the highly quality conscious international yarn market and was exporting 95% of its total produce by the beginning of the year 2002.
Rajasthan Synthetics Ltd. had fine-tuned its distribution channels according to the type of
markets and size of orders from the
customers. In line with this policy the export to Middle East, Far East and Turkey was carried out through agents. Similarly, low volume export of fancy yarn requirements was also catered through agents. While dealing with importers directly, RSL strictly followed the policy of exports against
confirmed
Letter of Credits
only. The company directly exported to important
clients in Belgium, England and France. The domestic market was also served through an agency system. Rajasthan Synthetics Ltd. considered inventories as
an unnecessary waste and kept minimum
possible inventories while ensuring required level of service. To ensure that the inventories were held to a minimum, the manufacturing plan consisted of 60 to 70% against customer orders, 30 to 40% against anticipated sales and 2% capacity was reserved for new product development. A Strategic Management Committee
(SMC)
consisting of MD, CEO,
GM (marketing)
and
GM (technical)
reviewed the production plan of the manufacturing plant on quarterly basis. The SMC also developed the plans for profitability, product mix
and
cost minimization. Delivering high-quality products and meeting delivery commitments for every shipment were essential pre-requisites to
be
successful in the global market place. The company had understood this very early and to ensure that the products manufactured by RSL
met
the stringent quality
requirements of
its
international customers,
the company had developed
a full-fledged
testing
laboratory equipped
with ultra
modern
testing machines like User Tester-3 and Class fault. The company had stringent quality testing checks at every stage of
tarn
production right from mixing of
fiber to packing of finished cones. Its in-house Research
and Development and Statistical Quality
Control
(SQC) divisions ensured consistent technical specifications with
the
help
of sophisticated state-of-the-art machines. A team
of professionally
qualified
and
experienced personnel
to ensure
that
the yarn manufactured
by the company was in line with international standards backed the company. The company continuously upgraded its product mix and at the same time, new products developed by
in-house research and development department were added to the product mix form time to time. RSL’s management was quick to analyze the potential of these in-house developments and followed a flexible approach in determining the level of value addition. The company had developed a new yarn recently and was selling it under the Rajtang brand name. This new yarn was stretchable in
three dimensions, absorbed
moisture
quickly,
was
soft
and silky and
fitted the body. This yarn was extracted from natural products
and being body-friendly,
was in great demand
in international
markets.
Looking
at the higher value addition possibilities RSL decided to
forward integrate and
started manufacturing fabric, using
Rajtang and provided ready-made garments like
swimming suit, tracksuit, undergarments, tops, slacks and kids dresses. The ready-made dresses from the fabric were being manufactured on the specifications
and designs of RSL. The management
decided to market these products
under the brand name “Wear-it” through Wearwell Garments Pvt. Ltd., an
associate company of RSL, to ensure that RSL did not lose its focus. The Managing Director of RSL felt that continuous adaptability to
market requirements through a
flexible approach, cost cutting in every sphere of operations and team approach to management had taken them ahead. However, RSL
had
become highly dependent on the volatile export market and if it was not able to retain the international market it would have to re- establish itself in the domestic market, which was not an easy task.
Questions:
1. What marketing strategy should RSL adopt to remain competitive in the international market?
2. Has the company taken the right decision to forward integrate and enter into the highly volatile garment market?
Caselet 2
Popular mythology
in the United States likes to refer to pre-World War II Japan as a somewhat backward industrial power that produced and exported mostly trinkets and small items of dubious quality bought by Americans impoverished by the Great Depression. Few bring up the fact that, prior
to the Pearl Harbor attack, Japan had conquered what are now Korea, Manchuria, Taiwan, and a
large portion of China, Vietnam, and Thailand; and by
the
end of 1942 Japan had extended its empire to include Burma, the
Philippines, Indonesia, Malaysia, Thailand, Cambodia, New
Guinea, plus many strings of
islands in the eastern Pacific Ocean. Its navy had moved a large armada of worships 4,000 miles across the Pacific Ocean, in secret and in silence, to attack Pearl Harbor and then returned safely home. Manufacturers capable of producing only low-grade goods don’t accomplish such feats. High-quality standards for military hardware, however, did not
extend to civilian and export goods, which received very low priority during the war years. Thus the perception in
the
United States for a long time before and then immediately after the war had nothing to do with some inherent character flaw
in
Japanese
culture
or industrial capability. It
had everything
to
do with Japan’s
national priorities and the availability of
funds and material. Following Japan’s surrender
in 1945,
General MacArthur was given the task of rebuilding the Japanese economy on a peaceful footing. As part of that effort an assessment of damage was to be conducted and a national census was planned for 1950. Deming was asked in 1947 to go to Japan and assist in that effort. As a result of his association with Shewhart and quality training, he was contacted
by representatives
from the Union of Japanese Scientists and Engineers (JUSE), and in 1950, Deming delivered his now famous series of lectures on quality control. His message to top industry leaders, whom he demanded to attend, and to JUSE was that Japan had to change its image in the
United States and throughout the world. He declared that it could not succeed as an exporter of poor quality and argued that the tools of statistical quality control could help solve many quality problems. Having seen their country devastated by the war, industry and government leaders were eager to learn
the new methods
and
to speed economic recovery.
Experience was to prove to Deming and others that, without the understanding, respect, and support of management, no group of tools alone could sustain a long-term quality improvement effort.
Questions:
1. How could have the SQC approach, been useful in solving the immediate problems of Japan?
2. If you were among one of the management members, what would have been your first insight.
END OF SECTION B
Section C: Practical Problems (30 marks)
This section consists of Practical Problems.
Answer all the questions.
Each question carries 15 marks.
1. A sample of 30 is to be selected from a lot of 200 articles. How many different samples are possible?
2. In Dodge’s CSP-1, it is desired to apply sampling inspection to 1 piece out of every 15 and to maintain an AOQL of 2%. What should be the value of i?
END OF SECTION C
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