INDIAN INSTITUTE OF MATERIALS MANAGEMENT
Post Graduate Diploma in Materials Management
Graduate Diploma in Materials Management.
PAPER No. 10
INVENTORY MANAGEMENT
Date 15.06.2017 Max. Marks :100
Time 10.00a.m. to 1.00 p.m. Duration 3 Hrs.
Instructions:
1. The question paper is in three parts B C.
2. Part A is compulsory. Each question carries one mark. Total 32 Marks
3. In Part answer 3 questions out of 5. Each question carries 16 marks.Total 48 Marks
4. Part C is a case study with sub questions and it is compulsory. It carries 20 marks.
5. Use of calculator is allowed wherever necessary.
6. Graph sheets can be used wherever necessary.
Part A (compulsory) 32 marks
(Attempt all questions each question carries 1 mark)
Q.1 State whether the following statements are True or False. 8 marks
1.1 Demand Management is a part of Inventory Management
1.2 Newspaper is a perishable item.
1.3 Standardisation is a good tool to promote maximum number of parts to serve
minimum number of purposes.
1.4 Two Bin System Three Bin Systems are examples of Fixed Order System.
1.5 If cost of reconditioning an item is 70% of the cost of a new item and it will give
life of 60% of the new item, then one should go for reconditioning.
1.6 FIFO Method is suitable for the trend of rising prices in the market.
1.7 Chemical change in material is termed as a normal loss.
1.8 AGVs are used ASRS Warehouses.
Q.2 Fill in the blanks: 8 marks
2.1 Safety Stock is a function of
2.2 be calculated accurately from production schedule and
BOM.
2.3 Analysis. This classification is based on the stock value of
materials.
2.4 In Classification, items are classified based on shelf life.
June 2017
2.5 If 20 Orders are placed in a year and management accepts 1 stock out in a year
the Acceptance Level of stock out is
2.6 purchasing powder by combining multiple
Purchase requirements..
2.7 Inspection is done at supplier's premises.
2.8 When Safety Stock is more, Holding Cost is more and Stock Out cost is

Q.3. Match A and B 8 marks
A
B
3A.1) PAN
3B.1) Safety Stock
3A.2) PPC
3B.2) Exponential Smoothing
3A.3) Pull System
3B.3) Shortening Supply Chain
3A.4) Service Level
3B.4) Consumables
3A.5) Time Series Analysis
3B.5) ABC Classification
3A.6) VMI
3B.6) WIP
3A.7) Catalyst
3B.7) Codification
3A.8) Pareto Law
3B.8) Kanban
Q.4. Expand the following: 8 marks
1. JIS 2. KU 3.EERP 4. STR 5. TBO 6. TAC 7. US FDA 8.AUS
PART B
Write any three of the following questions 16 marks each (48 Marks)
Q.5 How you will turn Inventory Management into a Profit Centre?
Q.6 What are rough methods of determining Safety Stock
What are various costs you will consider to work out Life Cycle Cost of Xerox machine.
Q.7 How you will set procedure for effective procurement of spare parts?
How you will control factors affecting management of spare parts.
Q.8 Discuss in detail System and System of Re Order Level System.
Describe various methods of disposal of surplus inventory.
Q.9 Answer any four of the following:
Write Short Notes on:
Vendor Managed Inventory
Material Handling Equipments
Finished Good Inventory
Accounting for loss/pilferage.
PQR Classification
PART C
Q. 10 compulsory (20 marks)
ABC Ltd is a chemical manufacturing company. The company has an average inventory of Rs 100
lacs and placed 4000 orders per year. Following details are available.
1. Purchase Department Expenses Rs 20 lacs
2. Store Warehouse Personnel Salary Rs 2 lacs
3. Obsolescence, Spoilage Rs 0.60 lac
4. Floor space charge related to Stores, warehouse Rs 1.40 lac
activities.
5. Cost of Collecting materials Rs 0.40 lac
6. Cost of Receiving materials Rs 0.35 lac
7. Cost of Inspection Rs 0.50 lac
8. Cost of Materials Handling Rs 1.50 lac
9. Cost of Bill Payment Rs 0.75 lac
10. Interest 12%
11. Insurance
Questions:
Calculate Cost of placing order.
Calculate Inventory Carrying Cost.
Work out Economic Order Quantity
Supplier offers discount if Order quantity is 2000 units per order.
Find out
Saving on account of price discount.
ii) Saving in Ordering Cost
iii) Loss due to carrying extra inventory
iv) Advise company whether discount should be accepted or not Why