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Operations Management Exam Solutions

This document contains sample questions from an operations management and information systems exam. Question 1 asks about bias, workshop capacity calculation, definitions of critical path and kaizen, and when corrective maintenance occurs. Question 2 has two parts, with part (a) calculating worker bonuses based on production cost savings and part (b) analyzing time study data to calculate standard time including allowances.

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0% found this document useful (0 votes)
15 views13 pages

Operations Management Exam Solutions

This document contains sample questions from an operations management and information systems exam. Question 1 asks about bias, workshop capacity calculation, definitions of critical path and kaizen, and when corrective maintenance occurs. Question 2 has two parts, with part (a) calculating worker bonuses based on production cost savings and part (b) analyzing time study data to calculate standard time including allowances.

Uploaded by

vikas
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

Answer to PTP_Intermediate_Syllabus 2012_Jun2014_Set 3

Paper 9 - Operations Management & Information Systems

Time allowed-3hrs Full Marks: 100

Section –A (60 Marks)


(Operations Management)
Answer Question No. 1 (carrying 12 marks) which is compulsory and answer any four (carrying
12 marks each) from the rest in this Section.

Working Notes should form part of the answer.

1. (a) The demand for sewing machine was estimated as 1000 per month for 5 months. Later
on the actual demand was found as 900, 1050, 1000, 1100 and 950 respectively.
Workout Bias. [2]
(b) A workshop operates on 2 shifts of 8 hours per day. It has 10 machines. It works for 5 days
in a week. Machine utilization is 90% and the efficiency of the machines is 85%.
Calculate the rated capacity of the workshop in standard hours. [2]
(c) Define Critical Path. [2]
(d) What does the word KAIZEN mean? [2]
(e) When Corrective Maintenance occurs? [2]
(f) A manufacturing company has a product line consisting of four work stations in series.
The individual workstation capacities are given. The actual output of the line is 500 units
per shift.
Calculate Efficiency of the production line
Workstation No. A B C D
Capacity / Shift 600 650 650 550
[2]
Answer:

(1000 - 900)+(1000 -1050)+(1000 -1000)+(1000 -1100)+(1000 - 950)


1. (a) Bias =
5
100 - 50 + 0 -100 + 50
=
5
= 0 units of sewing machines.

(b) Rated capacity of the workshop = No. of Shifts x No. of hour’s in each shift x No. of days /
week x No. of Machines x Utilization factor x Efficiency
= 2 x 8 x 5 x 10 x 0.90 x 0.85
= 612 Standard hour per week

(c) A critical path is a chain of sequential activities beginning with the project start and
ending with its completion. So, the path through the network that has the longest
expected completion time and is expected to determine the completion date of the
project is called the critical path.

(d) KAI means change and ZEN means better. Thus KAIZEN means change for the better. It
implies continuous improvement done consistently.

Academics Department, The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament) Page 1
Answer to PTP_Intermediate_Syllabus 2012_Jun2014_Set 3

(e) As the name suggests, corrective maintenance occurs when there is a work stoppage
because of machine breakdown. In this sense, maintenance becomes repair work.
Repairs are made after the equipment is out of order – an electric motor will not start, a
conveyor belt is ripped, or a shift has broken. In cases such as these, the maintenance
department checks into the difficulty and makes the necessary repairs.

(f) The capacity of the system is decided by the workstation with minimum capacity / shift,
i.e., the bottleneck. In the given example, the work station ‘D’ is having a capacity of 550
units / shift which is a minimum.
So the system capacity = 550 units / shift.
The actual output of the line = 500 units/shift.
Actual capacity 500
Therefore, the system efficiency = x 100 = x 100 = 90.91%.
System capacity 550

2. (a) A manufacturing enterprise has introduced a bonus system of wage payment on a


slab-rate based on cost of production towards labour and overheads.
The slab-rate being
Between 1% - 10% Saving in production cost 5% of saving
Between 11% - 20% Saving in production cost 15%
Between 21% - 40% Saving in production cost 30%
Between 41% - 70% Saving in production cost 40%
Above 70% Saving in production cost 50%
The rate per hour for three workers A, B, C are `5 , `5.50 and `5.25 respectively. The
overhead recovery rate is 500% of production wages and the material cost is `40 per
unit. The standard cost of production per unit is determined at `160 per unit.
If the time taken by A,B,C to finish 10 units is 26 hours, 30 hours and 16 hours respectively,
what is the amount of bonus earned by the individual workers and actual cost of
production per unit? [6]

b) An industrial engineer deputed to conduct a time study for job,has after observation,
divided the job into 5 elements. He had noted the timings for four cycles of the job as
below:
Time in minutes
Element Cycle 1 Cycle 2 Cycle 3 Cycle 4 Performance
rating (%)
1 1.246 1.328 1.298 1.306 90%
2 0.972 0.895 0.798 0.919 100%
3 0.914 1.875 1.964 1.972 100%
4 2.121 2.198 2.146 2.421 110%
5 1.253 1.175 1.413 2.218 100%
(i) Are there any outliers in the data i.e. probable errors in reading or recording data
which should not be included in the analysis?
(ii) Compute the basic time for the job and the standard time if a relaxation allowance
of 12%, a contingency allowance of 3% and an incentive of 20% are applicable for
the job. [1+5]

Answer:

2. (a)
Particulars A B C
Academics Department, The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament) Page 2
Answer to PTP_Intermediate_Syllabus 2012_Jun2014_Set 3

Unit produced 10 10 10
Wage rate/hr. 5.00 5.50 5.25
Time taken 26 hours 30 hours 16 hours
Wage payable 130.00 165.00 84.00
Overhead recovery 650.00 825.00 420.00
Materials 400.00 400.00 400.00
Total cost of production 1,180.00 1,390.00 904.00
Standard cost of production 1,600.00 1,600.00 1,600.00
Saving in cost of production 420.00 210.00 696.00
% of savings 26.25% 13.13% 43.50%
Bonus slab 30% 15% 40%
Bonus Amount 126.00 31.50 278.40
Actual cost of production 1,306.00 1,421.50 1,182.40
Cost / unit (`) 130.60 142.15 118.24

(b) (i) The times for element No. 3 in cycle 1 and for element No. 5 in cycle 4 are suspected
and should be disregarded as they vary very much as compared with time values for
these elements in other cycles.

(ii) The basic time or normal time is calculated on the basis of data excluding the outliers
as below:
Element Mean actual time Performance rating Normal or basic
(Minutes) (%) time
(minutes)
1 1.295 90 1.295 x 90
1.246 + 1.328 + 1.298 + 1.306
=1.166
= 100
4
2 0.896 100 0.896 x 100
= 0.896
0.972 + 0.895 + 0.798 + 0.919 100
=
4
3 1.937 100 1.937 x 100
1.875 + 1.964 + 1.972
= 1.937
= 100
3
4 2.222 110 2.222 x 110
2.121+ 2.198 + 2.146 + 2.421 = 2.444
= 100
4
5 1.280 100 1.280 x 100
1.253 + 1.175 + 1.413 = 1.280
= 100
3

Normal time for the total job which include all five elements = 7.723 minutes
Calculation of standard time
Standard time for the job = Normal time + Allowances
12 3
= 7.723 + x 7.723 + x 7.723
100 100
= 7.723 + 0.927 + 0.231 = 8.881 minutes
If 20% incentive allowance is given, total time allowed under incentive scheme

Academics Department, The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament) Page 3
Answer to PTP_Intermediate_Syllabus 2012_Jun2014_Set 3

20
= 8.881 + x 8.881
100
= 8.881 + 1.776 = 10.657 minutes

3. (a) Write a short note on Value Engineering. [4]

(b) Details of four stores are given in the following table:


Store 1 Store 2 Store 3 Store 4 Total Supplies
Source 1 48 60 56 58 14
Source 2 45 55 53 60 26
Source 3 50 65 60 62 36
Total Demand 20 32 25 21
Find the initial solution by least cost method. Is the initial solution feasible? [8]

Answer:

3. (a) Value engineering or value analysis is concerned with the improvement of design and
specifications at various stages such as research, development, design and product
development. Benefits of value engineering are:
(i) Cost reduction.
(ii) Less complex products.
(iii) Use of standard parts / components.
(iv) Improvement in functions of the product.
(v) Better job design and job safety.
(vi) Better maintainability and serviceability.
(vii) Robust design.
Value engineering aims at cost reduction at equivalent performance. It can reduce
costs to the extent of 15% to 70% without reducing quality. While value engineering
focuses on preproduction design improvement, value analysis, a related technique
seeks improvements during the production process.

(b) Total demand 98. Total supply 76. Introduce dummy source with supply as 22 and
transportation cost per unit to be zero.
Store 1 Store 2 Store 3 Store 4 Total supplies
Source 1 48 60 56 14 58 14
Source 2 45 20 55 53 6 60 26
Source 3 50 65 10 60 5 62 21 36
Source 4 0 0 22 0 0 22
Total Demand 20 32 25 21 98

Initial Solution
From Source 1 Source 2 Source 2 Source 2 Source 3 Source 3 Source 4
To Store 3 Store 1 Store 3 Store 2 Store 3 Store 4 Store 2
Units 14 20 6 10 5 21 Dummy
Feasibility test m+n–1=7 No. of allocations = 7 The solution is feasible

4. (a) What does sigma value indicates? [2]

(b) The Secretary of a school is taking bids on city’s four school bus routes. Four companies
have made the bids as detailed in the following table:
Academics Department, The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament) Page 4
Answer to PTP_Intermediate_Syllabus 2012_Jun2014_Set 3

Bids
Route 1 Route 2 Route 3 Route 4
Company 1 `4000 `5000
Company 2 `4000 `4000
Company 3 `3000 `2000
Company 4 `4000 `5000
Suppose each bidder can be assigned only one route. Use the assignment model to
minimize the school’s cost of running the four bus routes. [10]

Answer:

4. (a) The sigma value indicates how often defects are likely to occur. The higher the sigma
value, the less likely a process will produce defects. As sigma value increases, costs go
down, cycle time goes down, and customer satisfaction goes up.

(b)
Bids
Route 1 Route 2 Route 3 Route 4
Company 1 `4000 `5000 M M
Company 2 M `4000 M `4000
Company 3 `3000 M `2000 M
Company 4 M M `4000 `5000

Row reduction
Route 1 Route 2 Route 3 Route 4
Company 1 0 1000 M - 4000 M - 4000
Company 2 M - 4000 0 M - 4000 0
Company 3 1000 M - 2000 0 M - 2000
Company 4 M - 4000 M - 4000 0 1000

Column reduction is not required as there is zero in each column.


Minimum lines to cut zeros
Route 1 Route 2 Route 3 Route 4
Company 1 0 1000 M - 4000 M - 4000
Company 2 M - 4000 0 M - 4000 0
Company 3 1000 M - 2000 0 M - 2000
Company 4 M - 4000 M - 4000 0 1000

As the minimum number of lines are not equal to order of matrix, let’s take step to
increase the number of zeros.
Route 1 Route 2 Route 3 Route 4
Company 1 0 1000 M - 3000 M - 4000
Company 2 M - 4000 0 M - 3000 0
Company 3 0 M - 3000 0 M - 3000
Company 4 M - 5000 M - 5000 0 0

Minimum lines to cut zeros


Route 1 Route 2 Route 3 Route 4
Company 1 0 1000 M - 3000 M - 4000
Company 2 M - 4000 0 M - 3000 0
Academics Department, The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament) Page 5
Answer to PTP_Intermediate_Syllabus 2012_Jun2014_Set 3

Company 3 0 M - 3000 0 M - 3000


Company 4 M - 5000 M - 5000 0 0

As the minimum number of lines are equal to order of matrix, optimal assignment should
be made
Optimal Assignment
Route 1 Route 2 Route 3 Route 4
Company 1 0 1000 M - 3000 M - 4000
Company 2 M - 4000 0 M - 3000 0
Company 3 0 M - 3000 0 M - 3000
Company 4 M - 5000 M - 5000 0 0

Company 1 2 3 4
Route 1 2 3 4
Cost 4000 4000 2000 5000 Total cost `15,000

5. (a) The output of production line is checked by an inspector for one or more of three
different types of defects A, B, and C. If defect A occurs, the item is scrapped. If defect B
or C occurs, the item must be reworked. The time required to rework a B defect is 15
minutes and the time required to rework a C defect is 30 minutes. The probabilities of an
A, B and C defects are 0.15, 0.20 and 0.10 respectively. For ten items coming off the
assembly line, determine the number of items without any defects, the number scrapped
and total minutes of rework time. Use the following random numbers:

RN for defects A:
48 55 91 40 93 01 83 63 47 52

RN for defects B:
47 36 57 04 79 55 10 13 57 09

RN for defects C:
82 95 18 96 20 84 56 11 52 03
[3+3+3]
(b) What are the basic scheduling problems the production planner may face? [3]

Answer:

5. (a) Probability distribution (Defect A)


Event Prob. Cum. Prob. Probability range Probability range for simulation
Defect 0.15 0.15 0-0.15 0-0.14
No defect 0.85 1.00 0.15-1.00 0.15-0.99

Probability distribution (Defect B)


Event Prob. Cum. Prob. Probability range Probability range for simulation
Defect 0.20 0.20 0-0.20 0-0.19
No defect 0.80 1.00 0.20-1.00 0.20-0.99

Probability distribution (Defect C)

Academics Department, The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament) Page 6
Answer to PTP_Intermediate_Syllabus 2012_Jun2014_Set 3

Event Prob. Cum. Prob. Probability range Probability range for simulation
Defect 0.10 0.10 0-0.10 0-0.09
No defect 0.90 1.00 0.10-1.00 0.10-0.99

Item Defect A Defect B Defect C Rework time


1 No No No
2 No No No
3 No No No
4 No Yes No 15m
5 No No No
6 Yes No No
7 No Yes No 15m
8 No Yes No 15m
9 No No No
10 No Yes Yes 15m + 30m
90m

No. of defect items : 5 Scrap : 1 (Item No. 6) Rework : 4

(b) Basic Scheduling Problems:


The production planner may face certain problems while preparing production plans or
Schedules. Some important problems are discussed below:
(a) Flow production scheduling for fluctuating demand (known smoothening problem),
(b) Batch production scheduling, when products are manufactured consecutively,
(c) The assignment problem,
(d) Scheduling orders with random arrivals and
(e) Product sequencing.

6. (a) The data on the operating costs per year and resale prices of equipment A whose
purchase price is `10,000 are given below:
Year 1 2 3 4 5 6 7
Operating Cost (`) 1500 1900 2300 2900 3600 4500 5500
Resale Value (`) 5000 2500 1250 600 400 400 400
(i) What is the optimum period for replacement?
(ii) When equipment A is 2 years old, equipment B, which is a new model for the same
usage, is available. The optimum period for replacement is 4 years with an average
cost of `3600. Should you change equipment A with that of B? If so, when? [5+3]
(b) What is TPM? What are the requirements for specific actions of TPM? [4]

Answer:

6. (a) (i) The determination of the optimal period of replacement of equipment A is given in
Table below:

Table: Determination of Optimal Replacement Period


Year Operating Cost Cum. Operating Purchase Price – T(n) A(n)
(A) Cost (B) Resale Value (C) (B+C)=D (D / Years)
1 1500 1500 5000 6500 6500.0
2 1900 3400 7500 10900 5450.0
3 2300 5700 8750 14450 4816.7

Academics Department, The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament) Page 7
Answer to PTP_Intermediate_Syllabus 2012_Jun2014_Set 3

4 2900 8600 9400 18000 4500.0


5 3600 12200 9600 21800 4360.0*
6 4500 16700 9600 26300 4383.3
7 5500 22200 9600 31800 4542.9
Since the average cost corresponding to the 5-yearly period is the least, the optimal
period for replacement = 5 years.

(ii) As the minimum average cost for equipment B is smaller than that for equipment A, it
is prudent to change the equipment. To decide the time of change, we would
determine the cost of keeping the equipment in its 3rd, 4th and 5th year of life and
compare each of these values with ` 3,600 (the average cost for equipment B). The
equipment A shall be held as long as the marginal cost of holding it would be smaller
than the minimum average cost for equipment B. The calculations are given here:
Year Operating Cost Depreciation Total Cost
3 2300 1250(=2500-1250) 3550
4 2900 650 (=1250-600) 3550
5 3600 200(=600-400) 3800
Since the cost incurred in keeping the equipment A in the third and the fourth years is
less than the average cost for equipment B, the replacement should be done after 2
years.

(b) Total Productive Maintenance (TPM) is an approach which brings the concept of total
quality management in the practice of preventive maintenance. It involves the concept
of reducing variability through employee involvement and excellent maintenance
records.
Total productive maintenance is a method designed to eliminate the losses caused by
breakdown of machines and equipments by identifying and attacking all causes of
equipment breakdowns and system down-time. It places a high value on teamwork,
consensus building and continuous improvement.

Specific actions of TPM require the following:


(i) restoring equipment to a like-new condition,
(ii) having operators involved in the maintenance of the equipment or machine,
(iii) improving maintenance efficiency and effectiveness,
(iv) training the labour force to improve their job skills,
(v) the effective use of preventive and predictive maintenance technology.

Section B(40 Marks)


Information System
Answer Question No. 7 (carrying 8 marks) which is compulsory and answer any four (carrying 8
marks each) from the rest in this Section.

7. (a) Define the term Case Tools. [2]


(b) Section 66F of Information Technology Amendment Act 2008 deals with ………… [1]
(iii) ……………. are the largest ERP Solution provider. [1]
(iv) Define the term Meta Data. [2]
(v) What is probabilistic system? [2]

Answer:

Academics Department, The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament) Page 8
Answer to PTP_Intermediate_Syllabus 2012_Jun2014_Set 3

7. (a) Case Tools: CASE (Computer-Aided-Software Engineering) refers to the automation of


anything that humans do to develop systems and support virtually all phases of
traditional system development process. These can be used to create internally
requirements specifications with graphic generators and using of specifications
languages. The various CASE tools are menu generator, screen generator, report
generator and code generator.
(b) Section 66F of Information Technology Amendment Act 2008 deals with Cyber Terrorism.
(c) SAP are the largest ERP Solution provider.
(d) Meta data or ‘data about data’ is used to inform operators and users of the data
warehouse about its status and the information held within the data warehouse.
(e) The probabilistic system can be described in terms of probable behavior, but a certain
degree of error is always attached to the prediction. Where a set of instructions given to
a human who, for a variety of reasons, may not follow the instructions exactly as given.
Forecasting is also a Probabilistic system.

8. (a) What is Integration Testing? How is it carried out? [3]


(b) What are the factors upon which the “Make or Buy” decision of an application software
depends? [5]

Answer:

8. (a) Integration Testing


I ntegration testing is an activity of software testing in which individual software modules
are combined and tested as a group. This is carried out in the following manner:
Bottom-up Integration: It consists of unit testing, followed by sub-system testing, and
then testing of the entire system. The disadvantage is that testing of major
decision/control points is deferred to a later period. In this testing it starts from the
bottom-up and then it tests the entire system.
Top-down Integration: Once the main module testing is complete, stubs are
substituted with real modules one by one, and these modules are tested. Stubs are
the incomplete portion of a program code that is put under a function in order to
push the function.
Regression Testing: As the software change, each time a new module is added as
part of integration testing, the software changes. In the context of the integration
testing, the regression tests ensure that changes or corrections have not introduced
new errors.

(b) The factors upon which "Make or Buy" decision of an application software depends:
(a) Availability of skilled manpower: If sufficient number of programmers is not available,
the organization may purchase packages.
(b) Cost of programming: If the cost of developing the software is more than the price
of pre-written software, the organization may decide to buy the software.
(c) Suitability of software: Many times the available software may not be suitable for the
particular needs of the organization. Hence, it may be better to develop software in
such instances.
(d) Time frame available for implementation: If the time available for implementation of
the new computerized system is very short, the organization may go for buying the
software.
(e) Availability of sophisticated software: In many instances, the programs available for
purchase are more sophisticated than the organization would probably develop.
Academics Department, The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament) Page 9
Answer to PTP_Intermediate_Syllabus 2012_Jun2014_Set 3

For example, many of the applications programs are fully integrated with other-
application programs. This integration forces for purchasing rather than developing
programs.

9. (a) State when DBMS should not be used? [4]


(b) Explain the different types of Database backups. [4]

Answer:

9. (a) When Not to Use a DBMS


In spite of the advantages of using a DBMS, there are a few situations in which such a
system may involve unnecessary overhead costs as that would not be incurred in
traditional file processing. The overhead costs of using a DBMS are due to the following:
High initial investment in hardware, software, and training.
Generality that a DBMS provides for defining and processing data.
Overhead for providing security, concurrency control, recovery, and integrity
functions.
Additional problems may arise if the database designers and DBA do not properly
design the database or if the database systems applications are not implemented
properly. Hence, it may be more desirable to use regular files under the following
circumstances:
The database and applications are simple, well defined, and not expected to
change.
There are stringent real-time requirements for some programs that may not be met
because of DBMS overhead.
Multiple-user access to data is not required.

(b) Different types of database backups are given as follows:


On-line backup: It is performed by executing the command-line or from the "Backup
database" utility. When an on-line backup process begins, the database engine
externalizes all cached data pages kept in memory to the database file on disk. This
process is called a check point. The database engine continues recording activity in
the transaction log file while the database is being backed up. The log file is backed
up after the backup utility finishes backing up the database. The log file contains all
of the transactions recorded since the last database backup. For this reason the log
file from an on-line full backup must be applied to the database during recovery.
Live backup: A live backup is carried out by using the BACKUP utility with the
command-line option. A live backup provides a redundant copy of the transaction
log for restart of the system on a secondary machine in the event the primary
database server machine becomes unusable.
Full database backup: For a full backup, the database backup utility copies the
database and log. A full backup capture all files on the disk or within the folder
selected for backup. With a full backup system, every backup generation contains
every file in the backup set.
Incremental Backup: An incremental backup uses the DBBACKUP utility to copy the
transaction log file since the most recent full backup. When we perform an
incremental backup, the mirror log is not backed up. When we backup and
renamed the log files, the transaction and mirror logs file are renamed and a new log
files are created. One must plan to manually backup the mirror log.

10. (a) What are the special features of an Executive Information System? [5]

Academics Department, The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament) Page 10
Answer to PTP_Intermediate_Syllabus 2012_Jun2014_Set 3

(b) Discuss the various reporting tools available in Data Warehouse [3]

Answer:

10. (a) Following are the special features of an EIS:


It a specially designed tool to feed executives information need.
It is an easy - to - use and screen based software.
It provides the executives the facilities of on-line analysis tools like time series analysis,
regression analysis etc.
It is not limited to internal data only. Access to external sources of data is also
provided.
It provides the facilities to connect to internet.
Information is presented in summary format.
It is a comprehensive Information System and work in conjunction with DSS.

(b) Various reporting tools available in Data Warehouse are discussed below.
(i) Business Intelligence tools: These are software applications that simplify the process
of development and production of business reports based on warehousing data.
(ii) Executive Information System tools: These are software applications that are used to
display complex business metrics and information in a graphical way to allow rapid
understanding of the overall process.
(iii) Online Analytical Processing (OLAP) tools: They form data into logical multi-
dimensional structures and allow users to select dimensions to view data.
(iv) Data Mining tools: They are software that allows users to perform detailed
mathematical and statistical calculations on detailed warehousing data to detect
trends, identify patterns and analyze data.

11. (a) Discuss the tangible and intangible benefits of ERP [3+3]
(b) Define the Master Data Management of an ERP System. [2]

Answer:

11. (a) Tangible and Intangibles benefits of ERP


Some of the quantifiable and tangible benefits of ERP system are mentioned below:
Implementation of ERP, however, does not lead to headcount reduction (redundancies
of few lower ended positions of payroll and accounts payable gets counterbalanced by
additional higher paid IT staff).
(i) Reduced level of inventory, including raw material, work in progress and finished
goods, through improved planning and control.
(ii) Reduced materials cost through improved procurement and accounts payable
practices, less obsolescence and wastage.
(iii) Reduced labor cost through better allocation and reduction of overtime of
workmen directly involved with production such as technicians and skilled workers.
(iv) Improved production throughput through better scheduling of critical equipment
and sub contracting operations, thereby minimizing shortages, interruption and
rework.
(v) Reduction in the cost of after sales services.

In addition to tangible benefits, following intangible benefits also occur:


(i) Integration of information resulting efficiency, transparency and effective MIS.
(ii) Error reduction, accuracy of inventory record.

Academics Department, The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament) Page 11
Answer to PTP_Intermediate_Syllabus 2012_Jun2014_Set 3

(iii) Improved customer service, on time shipment, shorter order to shipment cycle.
(iv) Establishment of standardized procedures.
(v) Improved accounting control and shorter sales to cash cycle.
(vi) Legal and regulatory compliance.

(b) Master Data Management of an ERP System:


ERP packages contain several modules, such as finance, sales and distribution, materials
management, manufacturing and production control, human resources, plant
maintenance and quality management. Main characteristics of ERP system is that all its
modules function in an integrated manner. Due to integrated nature of functioning, a
few master tables are referenced frequently all across the system and databases, and
shared by different applications, functional areas and sites. Data incorporated thereon
need to be accurate, complete, timely and consistent. The quality of data as inputted in
master tables, is a major reason for success or otherwise of an ERP system.

12. (a) Describe the constitution and power of Cyber Appellate Tribunal. [2+3]
(b) Explain different dimensions of E-commerce security [3]

Answer:

12. (a) Constitution


The composition of the Cyber Appellate Tribunal is provided for under section 49 of the
Information Technology Act, 2000. Initially the Tribunal consisted of only one person who
was referred to as the Presiding Officer who was to be appointed by way of notification
by the Central Government. Thereafter the Act was amended in the year 2008 by which
section 49 which provides for the composition of the Cyber Appellate Tribunal has been
changed. As per the amended section the Tribunal shall consist of a Chairperson and
such number of other Members as the Central Government may by notification in the
Official Gazette appoint. The selection of the Chairperson and Members of the Tribunal is
made by the Central Government in consultation with the Chief Justice of India. The
Presiding Officer of the Tribunal is now known as the Chairperson.

Some of the powers specified are following:


(i) Summoning and enforcing the attendance of any person and examining him on
oath.
(ii) Requiring production of documents and other electronic records.
(iii) Receiving evidence on affidavits
(iv) Reviewing its decisions.
(v) Issuing commissions for examination of witness etc.

(b) The different dimensions of E-commerce security are as follows:


Integrity – The ability to ensure that information being displayed on a web site or
transmitted or received over the internet has not been altered in any way by an
unauthorized party.
Non-repudiation – The ability to ensure that e-commerce participants do not deny
(i.e., repudiate) their online actions.
Authenticity – The ability to identify the identity of a person or entity with whom we
are dealing in the internet.
Confidentiality – The ability to ensure that messages and data are available only to
those who are authorized to view them.
Privacy – The ability to control the use of information about oneself.

Academics Department, The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament) Page 12
Answer to PTP_Intermediate_Syllabus 2012_Jun2014_Set 3

Availability - The ability to ensure that an e-commerce site continues to function as


intended.

Academics Department, The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament) Page 13

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