Chapter 1: Basics of Management and Industrial Organizations,

✅ 30 Complex Multiple-Choice Questions (MCQs)

(Designed to test deep understanding, application, and analysis of concepts from the chapter)

1. Which of the following best describes the difference between efficiency and effectiveness in
management?

A) Efficiency is about goal attainment; effectiveness is about resource minimization

B) Efficiency is “doing the right things”; effectiveness is “doing things right”

C) Efficiency is “doing things right”; effectiveness is “doing the right things”

D) Both refer to minimizing costs

2. A manager who spends most of their time resolving inter-departmental conflicts is primarily using
which managerial skill?

A) Technical

B) Conceptual

C) Human

D) Strategic

3. In the controlling function, what is the correct sequence of steps?

A) Measure → Compare → Correct → Set standards

B) Set standards → Measure → Compare → Correct

C) Compare → Measure → Set standards → Correct

D) Correct → Set standards → Measure → Compare

4. Which managerial role involves representing the organization at community events?

A) Liaison

B) Monitor

C) Spokesperson

D) Disturbance handler

5. Multifactor productivity differs from partial productivity because it:

 A) Uses only labor input

B) Considers multiple inputs like labor, capital, and materials

C) Ignores overhead costs

D) Measures output per machine hour only

6. In a functional organization, a major drawback is:

A) Clear chain of command

B) Over-specialization leading to confusion from multiple bosses

C) Slow decision-making

D) High cost of training

7. Top-level managers primarily require strong ______ skills.

A) Technical

B) Human

C) Conceptual

D) Operational

8. Which of the following is NOT a characteristic of management?

A) Goal-oriented

B) Static and unchanging

C) Concerned with group effort

D) Environment-oriented

9. If a firm’s output increases by 20% while labor hours increase by 25%, labor productivity:

A) Increases

B) Decreases

C) Remains unchanged

D) Cannot be determined

10. The organizing function includes all EXCEPT:

 A) Departmentalization

B) Delegation of authority

C) Motivating employees

D) Establishing hierarchy

11. Which type of organization aims to advance members’ interests (e.g., labor unions)?

A) Profit-oriented

B) Nonprofit

C) Mutual benefit

D) Public sector

12. A line organization is most suitable for:

A) Large, complex firms

B) Organizations requiring high specialization

C) Small or military-like structures

D) Multinational corporations

13. Total productivity is measured as:

A) Output / One input

B) Output / Sum of all inputs (in monetary terms)

C) Labor hours / Output

D) Output per machine

14. Which managerial role is demonstrated when a manager allocates budget to R&D?

A) Entrepreneur

B) Resource allocator

C) Negotiator

D) Disseminator

15. “Creating conditions for effective resource use” defines:

 A) Leadership

B) Control

C) Management

D) Supervision

16. Which factor does NOT typically improve productivity?

A) Bottlenecks

B) Standardization

C) Incentive plans

D) Workspace design

17. In Example 2 (p.33), multifactor productivity equals 2.20. This means:

A) $2.20 profit per input dollar

B) $2.20 output value per $1 of combined input cost

C) 2.20 units produced per labor hour

D) 220% return on investment

18. First-line managers primarily need strong ______ skills.

A) Conceptual

B) Strategic

C) Technical

D) Political

19. Which is a key step in planning?

A) Measuring performance

B) Evaluating alternatives

C) Resolving conflicts

D) Delegating tasks

20. An engineer promoted to plant manager may struggle initially due to lack of:
 A) Technical skills

B) Human and conceptual skills

C) Math skills

D) Computer literacy

21. Which statement about effectiveness is TRUE?

A) It minimizes input use

B) It ensures the organization is doing the right things

C) It is synonymous with efficiency

D) It focuses only on cost-cutting

22. In a line-and-staff organization, staff managers primarily:

A) Give direct orders to workers

B) Provide expert advice to line managers

C) Replace line managers

D) Handle external negotiations

23. Productivity decreased from 0.24 to 0.23 (Example 1). What should management investigate?

A) Increased output

B) Better training or process inefficiencies

C) Higher prices

D) New product lines

24. Which is NOT a type of organizational structure discussed?

A) Line

B) Matrix

C) Functional

D) Line-and-staff

25. The “disturbance handler” role involves:

 A) Hosting ceremonies

B) Managing crises or unexpected disruptions

C) Allocating budgets

D) Training new hires

26. If overhead = 2 × labor cost, and labor = 500 hrs @ $25/hr, overhead equals:

A) $12,500

B) $25,000

C) $6,250

D) $5,000

27. Which communication channel flows from lower to higher levels?

A) Downward

B) Horizontal

C) Upward

D) Diagonal

28. Why is conceptual skill less critical for first-line managers?

A) They focus on strategic vision

B) They deal with daily operational tasks

C) They don’t supervise anyone

D) They lack education

29. Material productivity in Week 1 (Example 4) is 15.62. This means:

A) 15.62 kg per vase

B) 15.62 vases per kg of material

C) $15.62 cost per vase

D) 15.62% material waste

30. Which factor most directly supports sustainable productivity improvement?

 A) Layoffs

B) Investing in employee training

C) Reducing workspace size

D) Ignoring bottlenecks

🔗 10 Matching Questions
Match the term in Column A with the correct description in Column B.

| Column A | Column B |

|----------------------------------|------------------------------------------------------------------------------|

| 1. Efficiency | A. Completing activities that help attain organizational goals |

| 2. Effectiveness | B. Getting the most output from the least input |

| 3. Leading | C. Arranging resources to carry out plans |

| 4. Organizing | D. Inspiring and motivating employees |

| 5. Top-level manager | E. Sets organizational strategy and long-term goals |

| 6. Functional organization | F. Authority based on specialized functions |

| 7. Labor productivity | G. Output per labor hour |

| 8. Multifactor productivity | H. Output divided by combined inputs (labor, material, overhead)|

| 9. Figurehead role | I. Performs ceremonial duties |

| 10. Conceptual skill | J. Ability to analyze complex situations and see the big picture |

✅ Answer Key: 30 Complex MCQs

1. C – Efficiency is “doing things right”; effectiveness is “doing the right things”

2. C – Human skill (resolving conflicts requires interpersonal ability)

3. B – Set standards → Measure → Compare → Correct

4. C – Spokesperson (represents org externally)

5. B – Considers multiple inputs like labor, capital, and materials

6. C – Slow decision-making is not a drawback of functional org; confusion from multiple bosses is →
Correct answer: B

> Clarification: The drawback listed in the text (p.28) is that workers receive instructions from multiple
specialists → confusion. So B is correct.

7. C – Conceptual skills are most critical for top managers

8. B – Management is not static; it’s dynamic

9. B – Productivity = Output/Input → 1.2/1.25 = 0.96 → decreases

10. C – Motivating employees is part of leading, not organizing

11. C – Mutual benefit organizations (e.g., labor unions)

12. C – Line org suits small or military-like structures (p.26)

13. B – Output / sum of all inputs in monetary terms

14. B – Resource allocator

15. C – Management

16. A – Bottlenecks reduce productivity

17. B – $2.20 output value per $1 of combined input cost (p.33)

18. C – Technical skills (first-line managers supervise technical work)

19. B – Evaluating alternatives is a key planning step (p.9)

20. B – Human and conceptual skills (they already have technical)

21. B – Effectiveness = doing the right things (p.4)

22. B – Staff managers advise; line managers command (p.29)

23. B – Investigate training or inefficiencies (productivity dropped)

24. B – Matrix is not discussed in the chapter (only line, functional, line-and-staff)

25. B – Managing crises/disruptions (p.20)

26. B – Labor cost = 500 × $25 = $12,500; Overhead = 2 × $12,500 = $25,000

27. C – Upward communication (from subordinates to superiors)

28. B – They focus on daily operations, not big-picture strategy

29. B – 15.62 vases per kg of material (p.35–36)

30. B – Employee training is a key step for sustainable improvement (p.38)

🔗 Answer Key: 10 Matching Questions

Answer Key:

1–B, 2–A, 3–D, 4–C, 5–E, 6–F, 7–G, 8–H, 9–I, 10–J

Chapter 2: Forecasting
✅ 30 Complex Multiple-Choice Questions (MCQs)
(Designed to test conceptual understanding, application, and analytical reasoning of forecasting
concepts)

1. Which of the following best defines forecasting?

A) Estimating current inventory levels

B) Predicting future demand based on past data

C) Calculating production costs

D) Setting employee performance targets

2. According to forecasting principles, which statement is TRUE?

A) Forecasts for individual items are more accurate than for groups

B) Forecast accuracy improves with longer time horizons

C) Forecasts are rarely perfect due to randomness

D) Forecasts eliminate uncertainty in planning

3. A university planning next year’s faculty hiring based on enrollment trends is using forecasting
primarily for:

A) Product design

B) Human resource planning

 C) Equipment maintenance

D) Marketing budgeting

4. Which forecasting horizon is most appropriate for daily production scheduling?

A) Long-range

B) Medium-range

C) Short-range

D) Strategic-range

5. The Delphi method is best characterized by:

A) Face-to-face group discussion

B) Anonymous expert input with iterative feedback

C) Customer purchase history analysis

D) Regression modeling

6. Which qualitative method is most vulnerable to dominance by a single influential manager?

A) Delphi method

B) Consumer surveys

C) Expert opinion (group consensus)

D) Sales force composite

7. In time series forecasting, a repeating pattern every December due to holiday sales is an example of:

A) Trend

B) Cycle

C) Seasonality

D) Random variation

8. A long-term upward movement in demand data over 5 years indicates:

A) Seasonality

B) Irregular variation
 C) Trend

D) Level

9. Which forecasting technique requires historical numerical data?

A) Delphi method

B) Expert opinion

C) Exponential smoothing

D) Consumer surveys

10. In a 3-period simple moving average, if demands were 100, 120, and 140, the forecast for the next
period is:

A) 100

B) 120

C) 130

D) 140

11. A key limitation of the simple moving average is that it:

A) Overweights recent data

B) Ignores all data beyond n periods

C) Requires complex regression

D) Cannot handle seasonality

12. In a weighted moving average with weights 0.5, 0.3, and 0.2 (most recent to oldest), and demands of
200, 180, and 160, the forecast is:

A) 180

B) 188

C) 190

D) 194

13. The smoothing constant (α) in exponential smoothing controls:

A) The number of periods used

 B) How much weight is given to the most recent error

C) The seasonal index

D) The trend slope

14. If α = 0.9 in exponential smoothing, the forecast will be:

A) Very stable and slow to react

B) Highly responsive to recent changes

C) Identical to a 10-period moving average

D) Unaffected by actual demand

15. Given Fₜ₋₁ = 50, Aₜ₋₁ = 55, and α = 0.2, what is Fₜ?

A) 50

B) 51

C) 54

D) 55

16. Which error metric penalizes large errors more heavily?

A) MAD

B) CFE

C) MSE

D) MAPE

17. CFE (Cumulative Forecast Error) is used primarily to detect:

A) Random noise

B) Forecast bias

C) Seasonality

D) Data volatility

18. If actual demand is consistently higher than forecast, the tracking signal will be:

A) Zero
 B) Negative

C) Positive

D) Undefined

19. A tracking signal outside the range of ±3 to ±8 suggests:

A) Perfect forecast accuracy

B) Need to re-evaluate the forecasting model

C) Stable demand pattern

D) Low MAD

20. Which factor is LEAST important when selecting a forecasting model?

A) Color of the product

B) Data availability

C) Forecast horizon

D) Required accuracy

21. Consumer surveys as a forecasting method are limited mainly by:

A) Low cost

B) High accuracy

C) Time and expense

D) Simplicity

22. Causal forecasting differs from time series forecasting because it:

A) Uses only past demand

B) Relies on expert judgment

C) Links demand to independent variables (e.g., advertising)

D) Ignores trends

23. Which of the following is NOT a component of time series data?

A) Level
 B) Trend

C) Regression coefficient

D) Seasonality

24. If MAD = 10 and CFE = +30, the tracking signal is:

A) 0.33

B) 3

C) -3

D) 300

25. In exponential smoothing, if α = 0, then Fₜ equals:

A) Aₜ₋₁

B) Fₜ₋₁

C) 0

D) Average of all past data

26. Which forecasting method is most suitable when no historical data exists (e.g., new product launch)?

A) Moving average

B) Exponential smoothing

C) Delphi method

D) MSE analysis

27. Business cycles that last 5–10 years represent which time series component?

A) Seasonality

B) Trend

C) Cycle

D) Random variation

28. Mean Absolute Deviation (MAD) is calculated as:

A) Σ(Actual – Forecast)
 B) Σ|Actual – Forecast| / n

C) Σ(Actual – Forecast)²

D) Max(Actual – Forecast)

29. A negative forecast error (Eₜ = Aₜ – Fₜ < 0) indicates:

A) Under-forecasting

B) Over-forecasting

C) Perfect forecast

D) No bias

30. Which statement about forecasting is FALSE?

A) Short-range forecasts are more accurate than long-range

B) Group forecasts are more accurate than individual item forecasts

C) Forecasts should never be updated

D) All forecasts contain some error

🔗 10 Matching Questions
Match the term in Column A with the correct description in Column B.

| Column A | Column B |

|----------------------------------|------------------------------------------------------------------------------|

| 1. Short-range forecast | A. Used for new product launches with no historical data |

| 2. Delphi method | B. Forecasting horizon of 1–2 months to 1 year |

| 3. Seasonality | C. Repeating pattern at regular intervals (e.g., monthly, quarterly) |

| 4. Exponential smoothing | D. Uses α to weight recent forecast errors |

| 5. MAD | E. Measures average absolute forecast error |

| 6. Tracking signal | F. CFE / MAD; indicates forecast bias |

| 7. Causal forecasting | G. Links demand to external variables like price or ad spend |

| 8. Medium-range forecast | H. Used for workforce planning, production scheduling |

| 9. Qualitative forecasting | I. Relies on judgment, opinions, and expert input |

| 10. Cycle | J. Long-term economic fluctuations lasting several years |

✅ Answer Keys
MCQ Answers:

1. B 2. C 3. B 4. C 5. B 6. C 7. C 8. C 9. C 10. B 11. B 12. B 13. B 14. B 15. B 16. C 17. B 18. C 19. B
20. A 21. C 22. C 23. C 24. B 25. B 26. C 27. C 28. B 29. B 30. C

Matching Answers:

1–H, 2–A, 3–C, 4–D, 5–E, 6–F, 7–G, 8–B, 9–I, 10–J

Chapter 3: Plant Layout

✅ 30 Complex Multiple-Choice Questions (MCQs)

(Designed to test deep understanding, application, and critical analysis of plant layout and ergonomics
concepts)

1. Plant layout primarily aims to:

A) Maximize office space

B) Optimize the physical arrangement of economic activity centers

C) Reduce employee salaries

D) Increase advertising reach

2. Which of the following is NOT a key question in layout planning?

A) How much space is required for each center?

B) What color should the walls be?

C) Where should each center be located?

D) How must the space be configured at each center?

3. A re-layout is most likely needed when:

 A) Employee birthdays increase

B) There is a change in product design, technology, or production volume

C) The company changes its logo

D) Sales exceed forecasts by 5%

4. Which symptom strongly indicates poor plant layout?

A) High employee satisfaction

B) Simultaneous bottlenecks and idle workstations

C) Low utility bills

D) Frequent team-building events

5. In plant layout, “economic activity centers” refer to:

A) Only accounting departments

B) Any entity that occupies space and contributes to operations

C) Marketing campaign zones

D) Break rooms

6. Which factor is LEAST relevant to plant layout design?

A) Material weight and volume

B) Machinery height and auxiliary service needs

C) CEO’s personal preferences

D) Labor safety and ventilation

7. Material handling in plant layout is considered:

A) Value-adding

B) Essential for branding

C) Non-value-adding (waste)

D) A form of quality control

8. Why is flexibility important in plant layout?

 A) To allow frequent office parties

B) To accommodate future changes in product or volume

C) To reduce lighting costs

D) To simplify payroll processing

9. Which layout type arranges machines by function (e.g., all lathes in one area)?

A) Product layout

B) Fixed layout

C) Process layout

D) Cellular layout

10. A product/line layout is best suited for:

A) Custom furniture workshops

B) Low-volume, high-variety production

C) High-volume, standardized products (e.g., automobiles)

D) Construction projects

11. A major disadvantage of product layout is:

A) High material handling costs

B) Lack of flexibility and high capital investment

C) Excessive idle time

D) Poor lighting

12. In a fixed/project layout, what remains stationary?

A) Workers

B) Raw materials

C) The product (e.g., ship, building)

D) Conveyor belts

13. Cellular layout groups machines based on:

 A) Color

B) Power consumption

C) Component families with similar processing needs

D) Supplier origin

14. Which layout combines features of both product and process layouts?

A) Fixed layout

B) Mixed/combination layout

C) Office layout

D) Retail layout

15. Excessive work-in-process inventory is a symptom of:

A) Excellent forecasting

B) Poor workflow and layout design

C) High employee morale

D) Overstaffing

16. Auxiliary services in a plant typically occupy about:

A) 5% of space

B) 30% of space

C) 70% of space

D) 90% of space

17. Which objective is NOT associated with effective plant layout?

A) Minimum movement of materials

B) Maximum congestion

C) Worker safety

D) Flexibility

18. Ergonomics is best defined as:

 A) The study of machine repair

B) The study of human-machine interaction to optimize well-being and performance

C) Financial auditing of plant operations

D) Inventory tracking systems

19. The term “ergonomics” originates from Greek words meaning:

A) “Work” and “law”

B) “Machine” and “design”

C) “Flow” and “time”

D) “Safety” and “space”

20. Which is a goal of ergonomics?

A) Increase machine breakdowns

B) Create tolerable, acceptable, and optimal working conditions

C) Reduce product variety

D) Minimize training costs

21. In process layout, material flow:

A) Follows a fixed straight line

B) Varies by product

C) Is eliminated entirely

D) Occurs only at night

22. Which layout is typical in job shops?

A) Product layout

B) Fixed layout

C) Process layout

D) Cellular layout

23. Waiting time and stock accumulation in layout design relate to:
 A) Marketing delays

B) Disruptions in continuous material flow

C) Employee lunch breaks

D) Software updates

24. When designing layout, too much space can:

A) Improve morale

B) Reduce productivity and increase costs

C) Speed up production

D) Eliminate bottlenecks

25. Which factor directly affects material handling requirements?

A) Employee tenure

B) Material size, weight, and sequence of operations

C) Office furniture style

D) Company stock price

26. In cellular layout, the first step is to:

A) Paint machines

B) Determine component families

C) Hire more supervisors

D) Install new lighting

27. Which statement about fixed layout is TRUE?

A) Used for mass-producing smartphones

B) Workers and equipment move to the product

C) Requires minimal space

D) Ideal for fast-food chains

28. Ergonomic improvements can include:

 A) Redesigning user interfaces to reduce memory load

B) Increasing shift length

C) Removing safety guards

D) Reducing break times

29. Which is a benefit of good plant layout?

A) Increased accidents

B) Higher WIP inventory

C) Reduced manufacturing time and improved supervision

D) More paperwork

30. If a factory producing custom gears in small batches uses cellular layout, it is likely applying:

A) Group Technology

B) Just-in-Time exclusively

C) Delphi forecasting

D) Exponential smoothing

🔗 10 Matching Questions
Match the term in Column A with the correct description in Column B.

| Column A | Column B |

|---------------------------|------------------------------------------------------------------------------|

| 1. Product Layout | A. Machines grouped by function; used for low-volume, high-variety

production |

| 2. Process Layout | B. Product remains fixed; resources move to it |

| 3. Fixed Layout | C. Arranged by sequence of operations; high-volume production |

| 4. Cellular Layout | D. Combines process and product layout features |

| 5. Mixed Layout | E. Groups machines to handle families of similar parts |

| 6. Ergonomics | F. Study of human-system interaction for safety and efficiency |

| 7. Bottleneck | G. Workstation that limits overall production capacity |

| 8. Auxiliary Services | H. Support functions like maintenance, safety, QC (~30% of space) |

| 9. Material Handling | I. Non-value-adding activity; should be minimized |

| 10. Flexibility | J. Ability to adapt layout to future changes in product or volume |

✅ Answer Keys
MCQ Answers:

1. B 2. B 3. B 4. B 5. B 6. C 7. C 8. B 9. C 10. C 11. B 12. C 13. C 14. B 15. B 16. B 17. B 18. B 19. A
20. B 21. B 22. C 23. B 24. B 25. B 26. B 27. B 28. A 29. C 30. A

Matching Answers:

1–C, 2–A, 3–B, 4–E, 5–D, 6–F, 7–G, 8–H, 9–I, 10–J