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understanding management
Questions and Answers of
Understanding Management
20. The distribution of life ofa special type of bulb used by a company is as follows:The cost of replacing an individual bulb when it fails is Rs 5 while the cost when replaced on a group basis is
19. A large computer system has 100 identical components which are subject to random failure over time.The failure pattern is given as follows:Failed components have to be replaced immediately for
18. An electronic machine has a component that is subject to failure and needs replacement immediately when this occurs. A total of 200 such machines are used in a company. The cost of each
17. The management of a large hotel is considering the periodic replacement of light bulbs fitted in its rooms. There are 500 rooms in the hotel and each room has 6 bulbs. The management is now
16. Goodlite Company has installed 2,000 electric bulbs of a certain brand. The company follows the policy of replacing the bulbs as and when they fail. Each replacement costs Rs 2. The probability
15. A manufacturer has to decide between two alternative machines M1 and M2, about which pertinent information is given below:Determine, (i) Optimal replacement period of M1 and of M2•(ii) Which of
14. A piece of equipment costs Rs 7,500 initially and requires Rs 400 to be spent on its maintenance in the first Year. The maintenance cost would increase by Rs 500 per Year in each of the
For a machine, the following data are available:Determine the optimum period for replacement of the above machine. (CA, November, 1987) Year Cost of spares (Rs) Salary of maintenance staff (Rs) 1 2 3
12. A fleet owner finds from the past records that the costs per year of running a truck whose purchase price is Rs 60,000 are given as follows:At what age is a replacement due?Now, suppose thatthe
11. A machine shop has a press which is to be replaced as it wears out. A new press is to be installed now.Further, an optimum replacement plan is to be found for the next 7 years after which the
10. A company is intending to purchase a small machine in the near future. It is not necessary that a new machine be purchased and for economic considerations estimates of selling and purchasing
9. The maintenance costs and the resale price ofmachineMwhose purchase price is Rs 12,000 are given as:(i) Suggest optimal period for the replacement of the machine.(ii) When this machine is 2 Years
8. A truck owner finds from his past experience that the maintenance costs are Rs 200 for the first year and then increase by Rs 2,000 every year. The cost of the truck type A is Rs 9,000. Determine
7. A truck owner finds from the past records that the maintenance cost of a truck (whose purchase price is Rs 3,00,000) during the first 8 Years of its life and the resale prices at the end of each
6. Determine the optimal replacement period and the average Yearly cost associated with it, in respect of a machine whose details are as follows:Cost of the machine including installation charges =
5. The cost of a machine is Rs 6,500 and its scrap value is only Rs 500 whenever disposed. The maintenance costs are found to be as under on the basis of experience:When should the machine be
4. A firm is considering replacement of a machine, whose cost price is Rs 12,200; and the scrap value is only Rs 200. The maintenance costs are found as follows:When should the machine be replaced?
3. Determine the age at which the following type of machine be replaced: Cost price Operating costs Resale value = Rs 8,000 Rs 1,000 for the first year, increasing by Rs 500 every year = Rs 4,000 for
2. Determine the optimum replacement interval of an equipment which costs Rs 5,200 and whose resale values and running costs are as follows: Year 1 2 3 4 5 6 7 Resale value (Rs) 3,500 2,700 1,800
1. An electro-mechanical equipment has a purchase price of Rs 7,000. Its running costs per Year and resale values are given here:At which year is the replacement due? Year 1 2 3 4 5 6 7 8 Running
5. Explain briefly the difference in replacement policies of items which deteriorate gradually and items which fail completely.
4. How would you deal with replacement of items that fail completely and suddenly?
3. In the replacement of items which deteriorate with time, prove that "Do not replace the item if the next period's cost is less than the weighted average of the previous costs."
2. Briefly explain the costs which are relevant to decisions for replacement of depreciable assets. Illustrate their behaviour and explain how the optimal time for replacement of an asset can be
1. What is a replacement problem? Describe some important replacement situations and policies.
20. Staff replacement policies can be easily formulated because people retire at known times. Mark the statement as T (True) or F (False).
19. For a hotel with 2,000 bulbs, the replacement policy of"group replacement at fixed intervals together with individual replacements during the intervening period" would always be inferior to the
18. Expected cost of a replacement policy of individual replacements can be obtained as follows:Expected cost per time period= (No. of units/Expected life of asset) x Replacement cost per unit Mark
17. From the following probability distribution, it can be said that for a group of 1,000 bulbs, the number ofbulbs expected to fail in the first week are 1,000 x 0.10 = 100 and (1,000-100 =) 900 x
16. The optimal group replacement interval is determined by the point where the sum of group replacement per unit of time and the cost of individual replacements is the minimum. Mark the statement as
15. No replacement policy can be laid for items that fail suddenly, because the failure time of each unit is uncertain. Mark the statement as T (True) or F (False).
14. The models relating to replacement of depreciable assets are based on rather unrealistic assumption that future costs and resale prices ofan equipment are predictable accurately. Mark the
13. When time value of money is considered, weighted average costs are obtained and the optimal policy is "Do not replace if the next period's cost is less than the weighted average of the previous
12. The present value factors serve as the weights when time value of money is considered. Mark the statement as T (True) or F (False).
11. Replacement models considered in the text are based on the assumption that replacements, individual or group, can be done only at fixed intervals of time.Mark the statement as T (True) or F
10. Even if it is decided in principle to replace an existing machine with a new one, the replacement should be postponed up to the point where the old machine can be run at a relatively lower cost.
9. Timing of incurrence of costs is important when the time value of money is considered. Mark the statement as T (True) or F (False).
8. When the time value of money is considered, costs need to be discounted. Mark the statement as T (True) or F (False).
7. An optimal replacement interval of six Years indicates that the asset in question should be replaced at the beginning of every six years. Mark the statement as T (True) or F (False).
6. The replacement interval calculations are based on the implicit assumption that the replacement of the asset is repetitive in nature. Mark the statement as T (True) or F (False).
5. Optimal replacement interval is the minimum time elapsing between the successive replacements. Mark the statement as T (True) or F (False).
4. The total cost of a piece of equipment over a given period of n years would equal Purchase price+ maintenance cost for n years+ value of the asset after n years. Mark the statement as T (True) or
3. While total depreciation of depreciable assets increases with passage of time, the successive years'depreciation usually declines. Mark the statement as T (True) or F (False).
2. For the assets that deteriorate in performance over time, the maintenance costs usually rise significantly with time. Mark the statement as T (True) or F (False).
1. The replacement theory is concerned with replacement of assets when they stop working. Mark the statement as T (True) or F (False).
A large computer installation contains 2,000 components of identical nature which are subject to failure as per probability distribution that followsComponents which fail have to be replaced for
A group of process plants in an oil refinery are fitted with valves. Over a period of time, the failure pattern of these 400 valves has been observed and it is as follows:It costs Rs 100 to replace
The cost of a new car is Rs 10,000. Compare the optimum moment of replacement assuming the following cost informationsAssume that the repairs are made at the end of each year only if the car is to be
Consider Example 11.4 again. Suppose that there is another machine Y which costs Rs 8,000. It requires maintenance cost equal to Rs 200 in the first year, which increases by Rs 400 in each succeeding
A firm has a machine whose purchase price is Rs 20,000. Its maintenance cost and resale price at the end of different years are as given here:(a) Obtain the economic life of the machine and the
The Mini Transport Company owns three mini buses, two of which are two years old while the third one is only a year old. Each of these buses was purchased for Rs 80,000. The company contemplates
The data on the operating costs per year and resale prices of equipment A whose purchase price is Rs 10,000 are given here:(a) What is the optimum period for replacement?(b) When equipment A is 2
A company plans to have a strength of 80 sales persons over time. The people employed by the company leave their job, the distribution of which is assumed to be as follows:Using this information,
A large establishment has an installation with 1,000 bulbs of a certain type. From the past data, it has observed the failure rates of these bulbs as detailed here:It is given that the cost of
A machine X costs Rs 5,000. Its maintenance cost is Rs 1,000 in each of the first four years and then it increases by Rs 200 every year. Assuming that the machine has no salvage value and the
(a) A machine M1, costing Rs 9,000 has a maintenance cost of Rs 200 in the first year of its operation which rises by Rs 2,000 in each of the successive years. Assuming that the machine replacement
The Simple Engineering Company has a machine whose purchase price is Rs 80,000. The expected maintenance costs and resale price in different years are as given here:After what time interval, in your
A firm is using a machine whose purchase price is Rs 13,000. The installation charges amount to Rs 3,600 and the machine has a scrap value of only Rs 1,600 because the firm has a monopoly of this
19. A large firm has on an average, 30 pieces ofan equipment requiring repairs per week. The probability of an equipment failure is approximately constant so that the arrivals are distributed
12. In the central railway station 15 computerised reservation counters are available. A customer can book his/her ticket in any train on any day in any one of these computerised reservation
30. The probability of n customers arriving during a time interval T, according to the Poisson law, is given byMark the statement as T (True) or F (False). e-m m" P(n) = where m = T. n!
36. A certain queuing system has a Poisson input with a mean arrival rate of two calling units per hour.The service time distribution is exponential with a mean of0.4 hour. The marginal cost of
35. If the mean arrival rate is 24 per hour, consider from the customers's point of view, the time spent in the system, whether three channels in parallel with a mean service rate of 10 per hour is
34. A post office has two clerks, either of whom averages 1.5 minutes per customer transaction (the service time being distributed exponentially). The arrival rate of the customers to the post office
33. (a) The arrivals at a desk are Poisson distributed with a mean of one customer every two minutes.The service times are exponentially distributed with an average of 15 seconds per customer. You
32. The customers arrive into a large departmental store and wander around the place selecting items of household and other use, and then proceed to checkout stands with a basket of items. There are
31. A steel fabrication plant was considering the installation of a second tool crib in the plant to save walking time of the skilled craftsmen who check out equipment at the tool cribs. The
30. The customers in the Raja Ji Departmental Store, which is being renovated, order their requirements in the different sections, pay cash at the cash counters and then, finally, obtain delivery
29. A post office has two counters, the first one handles moneY-orders and registration letters, while the second handles all other business. It has been found that service time distributions for
28. Customers arrive at a barber's shop according to Poisson distribution. The average time between successive arrivals is 6 minutes. There are three barbers, all of same efficiency. The service time
27. An insurance company has three claim adjusters in its Delhi branch office. Claimants against the company are found to arrive in a Poisson fashion, at an average rate of 20 per 10-hour day. The
26. Two typists have identical jobs. Each types letters dictated by a manager. Suppose that letters to be typed arrive at random (following Poisson distribution) at a rate of three per hour for each
25. A company has two manufacturing shops and two tool cribs, one for each shop. Both the tool cribs handle almost identical jobs, gauges, and measuring instruments. Analysis of service time shows a
24. Patients arriving in the OPD of the Delhi Institute of Medical Sciences are registered at the counter after which they can be attended to by any one of the panel of 5 equally efficient doctors.
23. A telephone exchange has two long distance operators. It is observed that, during the peak load, long distance calls arrive in a Poisson fashion at an average rate of 15 per hour. The length of
22. A laundry has six washing machines which breakdown randomly and the average time interval between successive breakdowns is 4 hours. The machines breaking down require, on an average, forty-five
21. The Hi-Power Company provides electric power, supplied by four big generators, to an industrial area. The generators are subject to an occasional breakdown and, from the past data, it is known
20. A mechanic is to be recruited to repair scooters that breakdown at an average rate of 6 per hour. The breakdowns follow a Poisson distribution. Non-productive time of a scooter costs Rs 40 per
18. PQR Company has been experiencing machine breakdown for sometime and now wants to hire a mechanic on a permanent basis as against the present practice of engaging a mechanic as and when a
17. Unique Tyre Company decided to hire a new mechanic to handle all tyre changes for customers ordering a new set of tyres. Two mechanics applied for the job. One mechanic has limited experience,
16. In an engineering workshop, motors breakdown at an average rate of 5 per day, the number of breakdowns being Poisson distributed. The present unqualified mechanic can repair motors at an average
15. At a tool counter, the supply clerk is paid daily wage at Rs 100 per day for an 8-hour working day. The employees who come to him to take and return the tools, their daily charges are Rs 120 per
14. Arrivals at the enquiry counter of Roshanara Transport Company are Poisson distributed with an average of six per hour. The time that the customers spend in seeking information from the clerk
13. A repair shop attended to by a single mechanic has an average of four customers an hour who bring small appliances for repair. The mechanic inspects them for defects and quite often can fix them
11. Customers arrive to a typist, who is known for quality typing, according to Poisson probability law with an average inter-arrival time of20 minutes. The customers wait if the typist is not free.
10. Customers arrive at a one-window drive according to a Poisson distribution with mean of 10 minutes and service time per customer is exponential with mean of 6 minutes. The space in front of the
9. Customers for a local bakery arrive randomly following a Poisson process. The single salesman can attend customers at an average rate of 12 customers per hour, the service time being distributed
8. A company distributes its products by trucks loaded at its only loading station. Both, company's trucks and contractor's trucks are used for this purpose. It was found that on an average, every
7. The mechanic at CarPoint is able to install new mufflers at an average of three per hour while customers needing this service arrive at an average rate of2 per hour. Assuming that the conditions
6. A foreign bank is considering opening a drive-in window for customer service. Management estimates that customers will arrive for service at the rate of 12 per hour. The teller, whom it is
5. A TV repairman finds that the time spent on his jobs has an exponential distribution with a mean 30 minutes. If he repairs sets on the first-come-first-served basis and if the arrival of sets is
4. (a) For a single server queuing model, the average service time is 3 minutes and service is idle for 25% of the time. The inter-arrival time of customers for such a system will be:(i) 12 minutes
3. On a national highway, automobiles arrive for toll tax payment at an average rate of 3 in 5 minutes, according to the Poisson probability law. The attendant receives the tax in an average time of
2. The secretary of the Excellent Corporation receives letters for typing, the arrival of which follows the Poisson law with an average arrival rate ;\, = 3 letters/hour.(a) Find the probability that
1. At a certain petrol pump, customers arrive in a Poisson process with an average time of five minutes between successive arrivals. The time taken at the petrol pump to serve customers follows
12. Give the role of queuing theory in decision-making and discuss its application.
11. Write the expressions for (a) expected length of the queue, and (b) expected waiting time of customers in the queue, in the single server model (i) with infinite input population, and (ii) with
10. What is traffic intensity? If traffic intensity ofa system is given to be 0.76, what per cent of time the system would be idle? Can the traffic intensity be more than 1?
9. Distinguish between deterministic and probabilistic queuing models. Discuss some probabilistic queuing models with examples.
8. Explain the basic queuing process. State the meaning of queue discipline and give its role in queuing problem.
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