1-'' .f-:'_..

;;
t??_.,.;;."'.,

;·, :·;
a ..

IHRA
-
-U-N--IV--E·R--S-ITY -OF
COLOMBO

lrnsUtute of Human Resource Advancement (iHRA)

University of Colombo, Sri Lanka

Master of Science in Service Management Course No.05

1st Year 1st Trimester Examinatioi1l

(Held in January, 2019)

MSM 5131 - Quantitative Techniques for Service Management

Instructions to the Candidates

(1) This paper consists six (06) questions and five (05) pages.

(2) Answer only five (05) questions.

(3) Write your Index Number on all pages of answer scripts.

(4) Time allocated for the examination is Three (03) hours.

(5) Tie up all answer sheets at the end of the examination.

(6) If a page or a part of this question paper is not printed, please inform the SupeNisor
immediately.
 l)-

1. i. The management of a company says that their employees can handle 40 documents per
day. The Chairman of the company needs to test the statement and you have been
appointed to provide a report. Information is provided for 10 employees by the following
table.

Number of documents I 42 I 39 I 37 I 39 I 41 I 40 I 36 I 39 I 38 I 43
a. Test the statement as a two tail test.
(07 Marks)

b. Estimate the confidence interval of the difference.

(03 Marks)

11. Management of a company says that there is no difference between the satisfaction of
employees in Human Resources Department (HRD) and Marketing Department (MD).
Ten employees from each department have been selected and the satisfaction has been
estimated using five points likert scale. Test whether there is a difference between the
employees of two departments in relation to satisfaction and interpret the results.
Following table provides the information.

Satisfaction "HRD" 4 2 4 3 3 4 3 2 3 4
. Satisfaction "MD" 4 3 3 4 3 3 4 3 4 3

(IO Marks)

(Total 20marks)

2. i. A company says that there is no difference among product 1, product 2 and product 3 in
durability. Duration of each product is given in the following table. You need to test
whether there is a difference in the products in relation to the durability. Apply one way
ANOVA at 5% level of significance.

1
 - .
-c(:'f/

Product !(weeks) Product 2 (weeks) Product 3

(weeks)
2S 23 26
30 27 28
27 29 29
t, 28 2S 30
2S 21 32
(IO Marks)

11. Ten companies introduced a new system to the production line to improve the
efficiency. The efficiency for pre and post periods is provided below. Test whether
there is a significant effect from the introduction of new system to production line.
Use 5% significance level.

Companies 1 2 3 4 5 6 7 8 9 10
Efficiency (Number of items) 35 41 35 36 40 30 38 44 44 41
Efficiency (Number of items) 38 43 38 37 38 32 37 46 41 43

(IO Marks)

(Total 20mairks)

3. A Company is expecting to construct a model to forecast Income with regard to time

taken to manufacture a product and number of items produced per hour. Table below
provides information for a period of five years and equation provides the regression
model.

Income (Rs. Millions) Time (weeks) N111mber oflrtems

50 7 7

40 9 5

35 11 8

38 IO 5

30 12 4

Income= 71.8 - 3.7Time + 0.5/tems + e---------Equation

2
 ' <l

Where:

Time: Time taken to manufacture, Items: Number of items produced per hour

1. Construct Regression ANOVA table and interpret the results.

(08 Marks)

11. Calculate R-square, Adjusted R-square and take the decision.

(06 Marks)

111. Calculate coefficient of correlation between income and time.

(06 Marks)

(Total 20marks)

4. I. What is meant by Operations Research (OR)?

(04 Marks)

11. Why mathematical models are frequently used in business.

(04 Marks)

111. A production manager is attempting to determine a production schedule for the

next five years for a product. From past production records that 4000 units can be
produced per year. Also, an additional 600 units can be produced yearly on an
overtime basis. The unit cost of items produced is Rs.IO on a regular time basis
and Rs.15 on an overtime basis. Contracted sales per year are as follows.
Year Contracted sales
2000 3200
2001 3100
2002 3400
2003 5000
2004 6000

3
 ·':,>

Inventory carrying cost is Rs.8 per unit per year. The manager does not want to
carry out the inventory after 2004. The manager wants to lqiow the yearly
,:-1
production that will minimize total production and inventory cost. Develop a LP

4 model.
(12 Marks)
(Total 20ma1·ks)

5. I. Briefly describe the basic requirements of LP models.

(04 Marks)

11. Solve the following Linear Program Model by graphical method.

MaxZ = 20X1 + lOXz(Income)

St. 3X1 + 2X2 5 90 (Raw Materials)

2X1 + 2X2 80 (Labor)

X1 25 (Ware house space for X1)

X2 :;; 35 (Ware house space for X2)

X1,X2? 0

(06 Marks)

111. Solve the following problem by Simplex Method.

MaxZ = lOX1 + 20X2(Income)

St. 2X1 + 2X2 5 60 (Raw Materials)

X1 + 2X2 5 40 (Machine hour)

X1,X2? 0

(10 Marks)
(Total 20 marks)

4
 "(.·

6. A company produces three products "A", "B" and "C". They are represented by X1,
X2 and X3. Following simplex table provides the optimum solution for the given LP
model.

Max Z = 50X1+20X2+40X3 (Contribution)

St. 2X1+3X2+X3 s 200 (resource 1)

X1+2X2+3X 3S 300
(resource 2)

3X1+X2+4X3 :S 90
(resource 3)

X1, X2, X3 2: 0

basis solution 50 20 40 0 0 0
b Xl X2 X3 Sl S2 S3
20 X2 60 0 1 -3/7 3/7 0 -2/7
0 S2 170 0 0 19/7 -5/7 I l/7
50 Xl 10 l 0 8/7 -1/7 0 3/7
Zj 600 50 20 340/7 10/7 0 110/7
Cj-zj 0 0 -60/7 -10/7 0 -110/7

1. Why product "C" is not produced?

(02Marks)
11. What is the marginal Value of resource 3?
(03Marks)
111. Find the upper and lower limits of the contribution rate of product B.
(06Marks)
1v. Find the upper and lower limits of resource 3.
(06Marks)

v. Management of the company is willing to introduce a new product that needs 1 unit
of resource 1, 3 units of resource 2 and 2 units of resource 3. The contribution of
the product is Rs.30. Should the company introduce the new product?
(03Marks)

(Total 20 marks)

5
 ,,
'q

Formula sheet

=
2
0
Mean== }2x Variance :2:(x-x)
n n-1
.
(n1 -l)sf +(n2-1
(.i1 - .i2):z SE SP== :i
2
n1 +n2-2

TS · x- µo d
(J TS== (J
n
n

TS== TS== X1- i2

I 0:2
-1.. + _£
(52 SP l .J n1 +1n2
n1 n2

Coefficient of Correlation= n1:xy- LXLY

· 2
.j(nr,x - (r,x)2) (r,y)2)
(nr,y_2

Normal Equations

Y = a+ b1x1 + b2x2

I y Lx + b I x
= na + b1 1 2 2

I X1Y = aI + b1I xf + b2I X1X2

X1

I XzY = aI + L X1X2 + b2 Ix}Xz b1

 (J

Sum of Square of Regression= I (Y - Y)2

Sum of Square of Residual= I (Y - Y)2

Sum of Square of Total= I (Y - Y)2

Upper limit cj- zj)

(
Min ck+ for all akj < 0
akj

lower limit ( cj- zj)

Max ck+ for all akj > 0
akj

Upper limit Min(bi - : ) forall akj < 0

lower limit Max(bi - : ) for all akj > 0

()

/ 0 z

z 0.00 0.01 0.02 0.03 0.04 0.05 0.06 O.D7 0.08 0.09

0.0 0.0000 0.0040 0.0080 0.0120 0.0160 0.0199 0.0239 0.0279 0.0319 0.0359
0.1 0.0398 0.0438 0.0478 0.0517 0.0557 0.0596 0.0636 0.0675 0.0714 0.0753
0.2 0.0793 0.0832 0.0871 0.0910 0.0948 0.0987 0.1026 0.1064 0.1103 0.1141
0.3 0.1179 0.1217 0.1255 0.1293 0.1331 0.1368 0.1406 0.1443 0.1480 0.1517
0.4 0.1554 0.1591 0.1628 0.1664 0.1700 0.1736 0.1772 0.1808 0.1844 0.1879
·'
0.5 · 0.1915 0.1950 0.1985 0.2019 0.2054 0.2088 0.2123 0.2157 0.2190 0.2224
0.6 0.2257 0.2291 0.2324 · 0.2357 0.2389 0.2422 0.2454 0.2486 0.2517 0.2549
0.7 0.2580 0.2611 0.2642 0.2673 0.2704 0.2734 0.2764 0.2794 0.2823 0.2852
0.8 0.2881 0.2910 0.2939 0.2967 0.2995 0.3023 0.3051 0.3078 0.3106 0.3133
0.9 0.3159 0.3186 0.3212 0.3238 0.3264 0.3289 0.3315 0.3340 0.3365 0.3389

1.0 0.341.'3 0.3438 0.3461 0.3485 0.3508 0.3531 0.3554 0.3577 0.3599 0.3621
1.1 0.3643 0.3665 0.3686 0.3708 0.3729 0.3749 0.3770 0.3790 0.3810 0.3830
1.2 0.3849 0.3869 0.3888 0.3907 0.3925 0.3944 0.3962 0.3980 0.3997 0.4015
1.3 0.4032 0.4049 0.4066 0.4082 0.4099 0.4115 0.4131 0.4147 0.4162 0.4177
1.4 0.4192 0.4207 0.4222 0.4236 0.4251 0.4265 0.4279 0.4292 04306 0.4319

1.5 0.4332 0.4345 0.4357 0.4370 0.4382 0.4394 0.4406 0.4418 0.4429 0.4441
1.6 0.4452 0.4463 0.4474 0.4484 0.4495 0.4505 0.4515 0.4525 0.4535 0.4545
1.7 0.4554 0.4564 0.4573 0.4582 0.4591 0.4599 0.4608 0.4616 0.4625 0.4633
1.8 0.4641 0.4649 0.4656 0.4664 0.4671 0.4678 0.4686 0.4693 0.4699 0.4706
1.9 0.4713 0.4719 ().4726 0.4732 0.4738 0.4744 0.4750 0.4756 0.4761 0.4767

2.0 0.4772 0.4778 0.4783 0.4788 0.4793 0.4798 0.4803 0.4808 0.4812 0.4817
2.1 0.4821 0.4826 0.4830 0.4834 0.4838 0.4842 0.4846 0.4850 0.4854 0.4857
2.2 0.4861 0.4864 0.4868 0.4871 0.4875 0.4878 0.4881 0.4884 0.4887 0.4890
2.3 0.4893 0.4896 0.4898 0.4901 0.4904 0.4906 0.4909 0.4911 0.4913 0.4916
2.4 0.4918 0.4920 0.4922 0.4925 0.4927 0.4929 0.4931 0.4932 0.4934 0.4936

2.5 0.4938 0.4940 0.4941 0.4943 0.4945 0.4946 0.4948 0.4949 0.4951 0.4952
2.6 0.4953 0.4955 0.4956 0.4957 0.4959 0.4960 0.4961 0.4962 0.4963 0.4964
.. 2.7 0.4965 0.4966 0.4967 0.4968 0.4969 0.4970 0.4971 0.4972 0.4973 0.4974
2.8 0.4974 0.4975 0.4976 0.4977 0.4977 0.4978 0.4979 0.4979 0.4980 0.4981
2.9 0.4981 0.4982 0.4982 0.4983 0.4984 0.4984 0.4985 0.4985 0.4986 0.4986

3.0 0.49865 0.49869 0.49874 0.49878 0.49882 0.49886 0.49889 0.49893 0.49896 0.49900
3.1 ().49903 0.49906 0.49910 .0.49913 0.49916 0.49918 0.49921 0.49924 0.49926 0.49929
3.2 0.49931 0.49934 0.49936 0.49938 0.49940 0.49942 0.49944 0.49946 0.49948 0.49950
3.3 0.49952 0.49953 0.49955 0.49957 0.49958 0.49960 0.49961 0.49962 0.49964 0.49965
3.4 0.49966 0.49968 0.49969 0.49970 0.49971 0.4!J972 0.49973 0.49974 0.49975 0.49976
3.5 0.49977 0.49978 0.49978 0.49979 0.49980 0.49981 0.49981 0.49982 0.49983 0.49983
.-
 t-Distribution Table

-h t

The shaded area is equal to a for t = ta.

0 1
t.100

3.078
t.050

6.314
I
t.025

12.706
t.010

31.821
t.oos
63.657
_J

2 1.886 2.920 4.303 6.965 9.925

3 1.638 2.353 3.182 4.541 5.841
4 1.533 2.132 2.776 3.747 4.604
5 1.476 2.015 2.571 3.365 4.032
6 1.440 1.943 2.447 3.143 3.707
7 1.415 1.895 2.365 2.998 3.499
8 1.397 1.860 2.306 2.896 3.355
9 1.383 1.833 2.262 2.821 3.250
10 1.372 1.812 2.228 2.764 3.169
11 1.363 1.796 2.201 2.718 3.106
12 1.356 · 1.782 2.179 2.681 3.055
13 1.350 1. 77::. 2.160 2.650 3.012
14 1.345 1.761 2.145 2.624 2.977
15 1.341 1.753 2.131 2.602 2.947
16 1.337 1.746 2.120 2.583 2.921
17 1.333 1.740 2.110 2.567 2.898
18 1.330 1.734 2.101 2.552 2.878
19 1.328 1.729 2.093 2.539 2.861
20 1.325 1.725 2.086 2.528 2.845
21 1.323 1.721 2.080 2.518 2.831
22 1.321 1.717 2.074 2.508 2.819
23 1.319 1.714 2.069 2.500 2.807
24 1.318 1.711 2.064 2.492 2.797
25 1.316 1.708 2.060 2.485 2.787
26 1.315 1.706 2.056 2.479 2.779
27 1.314 1.703 2.052 2.473 2.771
28 1.313 1.701 2.048 2.467 2.763
29 1.311 1.699 2.045 2.462 2.756
30 1.310 1.697 2.042 2.457 2.750
32 1.309 1.694 2.037 2.449 2.738
34 1.307 1.691 2.032 2.441 2.728
36 1.306 1.688 2.028 2.434 2.719
38 1.304 1.686 2.024 2.429 2.712
00 1.282 1.645 1.960 2.326 2.576
CRITICAL VALUES for the "F" Distribution.1ALPHA= .05.
Denominator Numerator DF
DF l 2 3 4 5 6 7 8 9. 10 -
I l 61.448 199.500 215.707 224.583 230.162 233.986 236.768 238.883 240.543 241.882
,, 2 18.513 19.000 19.164 19.247 19.296 19.330 19.353 19.371 19.385 19.396
3 I0.128 9.552 9.277 9.117 9.01-3 8.941 8.887 8.845 8.812 8.786
4 7.709 6.944 6.591 6.388 6.256 6.163 6.094 6.041 5.999 5.964
l, s 6.608 5.786 5.409 5.192 5.050 4.950 4.876 4.818 4.772 4.735
6 5.987 5.143 4.757 4.534 4.387 4.284 4.207 4.147 4.099 4.060
7 5.591 4.737 4.347 4.120 3.972 3.866 3.787 3.726 3.677 3.637
8 5.318 4.459 4.066 3.838 3.687 3.581 3.500 3.438 3.388 3.347
9 5.117 4.256 3.863 3.633 3.482 3.374 3.293 3.230 3.179 3.137
10 4.965 4.103 3.708 3.478 3.326 3.217 3.135 3.072 3.020 2.978
11 4.844 3.982 3.587 3.357 3.204 3.095 3.012 2.948 2.896 2.854
12 4.747 3.885 3.490 3.259 3.106 2.996 2.913 2.849 2.796 2.753
13 4.667 3.806 3.411 3.179 3.025 2.915 2.832 2.767 2,714 2.671
14 4.600 3.739 3.344 3.112 2.958 2.848 2.764 2.699 2.646 2.602
15 4.543 3.682 3.287 3.056 2.901 2.790 2.707 2.641 2.588 2.544
16 4.494 3.634 3.239 3.007 2.852 2.741 2.657 2.591 2.538 2.494
17 4.451 3.592 3.197 2.965 2.810 2.699 2.614 2.548 2.494 2.450
18 4.414 3.555 3.160 2.928 2.773 2.661 2.577 2.510 2.456 2.41_2
19 4.381 3.522 3.127 2.895 2.740 2.628 2.544 2.477 2.423 2.378
20 4.351 3.493 3.098 2.866 2.711 2.599 2.514 2.447 2.393 2.348
21 4.325 3.467 3.072 2.840 2.685 2.573 2.488 2.420 2.366 2.321
22 4.301 3.443 3.049 2.817 2.661 2.549 2.464 2.397 2.342 2.297
23 4.279 3.422 3.028 2.796 2.640 2.528 2.442 2.375 2.320 2.275
24 4.260 3.403 3.009 2.776 2.621 2.508 2.423 2.355 2.300 2.255
25 4.242 3.385 2.991 2.759 2.603 2.490 2.405 2.337 2.282 2.236
26 4.225 3.369 2.975 2.743 2.587 2.474 2.388 2.321 2.265 2.220
27 4.210 3.354 2.960 2.728 2.572 2.459 2.373 2.305 2.250 2.204
28 4.196 3.340 2.947 2.714 2.558 2.445 2.359 2.291 2.236 2.190
29 4.183 3.328 2.934 2.701 2.545 2.432 2.346 2.278 2.223 2.177
30 4.171 3.316 2.922 2.690 2.534 2.421 2.334 2.266 2.211 2.165
31 4.160 3.305 2.911 2.679 2.523 2.409 2.323 2.255 2.199 2.153
32 4.149 3.295 2.901 2.668 2.512 2.399 2.313 2.244 2.189 2.142
33 4.139 3.285 2.892 2.659 2.503 2.389 2.303 2.235 2.179 2.133
34 4.130 3.276 2.883 2.650 2.494 2.380 2.294 2.225 2.170 2.123
35 4.121 3.267 2.874 2.641 2.485 2.372 2.285 2.217 2.161 2.114
36 4.113 3.259 2.866 2.634 2.477 2.364 2.277 2.209 2.153 2.106
37 4.105 3.252 2.859 2.626 2.470 2.356 2.270 2.201 2.145 2.098
38 4.098 3.245 2.852 2.619 2.463 2.349 2.262 2.194 2.138 2.091
39 4.091 3.238 2.845 2.612 2.456 2.342 2.255 2.187 2.131 2.084
40 4.085 3.232 2.839 2.606 2.449 2.336 2.249 2.180 2.124 2.077
41 4.079 3.226 2.833 2.600 2.443 2.330 2.243 2.174 2.118 2.071
42 4.073 3.220 2.827 2.594 2.438 2.324 2.237 2.168 2.112 2.065
43 4.067 3.214 2.822 2.589 2.432 2.318 2.232 2.!63 2.106 2.059
44 4.062 3.209 2.816 2.584 2.427 2.3!3 2.226 2.157 2.101 2.054
45 4.057 3.204 2.812 2.579 2.422 2.308 2.221 2.152 2.096 2.049
46 4.052 3.200 2.807 2.574 2.417 2.304 2.216 2.147 2.091 2.044
47 4.047 3.195 2.802 2.570 2.413 2.299 2.212 2.143 2.086 2.039
48 4.043 3.191 2.798 2.565 2.409 2.295 2.207 2.138 2.082 2.035
49 4.038 3.187 2.794 2.561 2.404 2.290 2.203 2.134 2.077 2.030
so 4.034 3. 183 2.790 2.557 2.400 2.286 2.199 2.130 2.073 2.026
 .'-
''\ ,.

CRITICAL VALUES for the "F" Distribution..!A LPHA =.05. .

Denominator Numerator DF
DF 1 2 3 4 s 6 7 8 9 10.
SI 4.030 3.179 2.786 2.553 2.397 2.283 2.195 2.126 2.069 2.022
52 4.027 3.175 2.783 2.550 2.393 2.279 2.192 2.122 2.066 2.018
53 4.023 3.172 2.779 2.546 2.389 2.275 2.188 2.119 2.062 2.0[
54 4.020 3.168 2.776 2.543 2.386 2.272 2.185 2.115 2.059 2.011
55 4.016 3.165 2.773 2.540 2.383 2.269 2.181 2.112 2.055 2.008
56 4.013 3.162 2.769 2.537 2.380 2.266 2.178 2.109 2.052 2.005
57 4.0IO 3.159 2.766 2.534 2.377 2.263 2.175 2.106 2.049 2.001
58 4.007 3.156 2.764 2.531 2.374 2.260 2.172 2.103 2.046 1.998
59 4.004 3.153 2.761 2.528 2.371 2.257 2.169 2.100 2.043 1.995
60 4.001 3.150 2.758 2.525 2.368 2.254 2.167 2.097 2,040 1.993
61 3.998 3.148 2.755 2.523 2.366 2.251 2.164 2.094 2.037 1.990
62 3.996 3.145 2.753 2.520 2.363 2.249 2.161 2.092 2.035 1.987
63 3.993 3.143 2.751 2.518 2.361 2.246 2.159 2.089 2.032 1.985
64 3.991 3.140 2.748 2.515 2.358 2.244 2.156 2.087 2.030 1.982
65 3.989 3.138 2.746 2.513 2.356 2.242 2.154 2.084 2.027 1.980
66 3.986 3.136 2.744 2.511 2.354 2.239 . 2.152 2.082 2.025 1.977
67 3.984 3.134 2.742 2.509 2.352 2.237 2.150 2.080 2.023 1.975
68 3.982 3.132 2.740 2.507 2.350 2.235 2.148 2.078 2.021 1.973
69 3.980 3.130 2.737 2.505 2.348 2.233 2.145 2.076 2.019 1.971
70 3.978 3.128 2.736 2.503 2.346 2.231 2.143 2.074 2.017 1.969
71 3.976 3.126 2.734 2.501 2.344 2.229 2.142 2.072 2.015 1.967
72 3.974 3.124 2.732 2.499 2.342 2.227 2.140 2.070 2.013 1.965
73 3.972 3.122 2.730 2.497 2.340 2.226 2.138 2.068 2.01l 1.963
74 3.970 3.120 2.728 2.495 2.338 2.224 2.136 2.066 2.009 1.961
75 3.968 3.119 2.727 2.494 2.337 2.222 2.134 2.064 2.007 1.959
76 3.967 3.117 2.725 2.492 2.335 2.220 2.133 2.063 2.006 1.958
77 3.965 3.115 2.723 2.490 2.333 2.219 2.131 2.061 2.004 1.956
78 3.963 3.114 2.722 2.489 2.332 2.217 2.129 2.059 2.002 1.954
79 3.962 3.112 2.720 2.487 2.330 2.216 2.128 2.058 2.001 1.953
80 3.960 3.111 2.719 2.486 2.329 2.214 2.126 2.056 1.999 1.951
81 3.959 3.109 2.717 2.484 2.327 2.213 2.125 2.055 1.998 1.950
82 3.957 3.108 2.716 2.483 2.326 2.211 2.123 2.053 1.996 1.948
83 3.956 3.107 2.715 2.482 2.324 2.210 2.122 2.052 1.995 1.947
84 3.955 3.105 2.713 2.480 2.323 2.209 2.121 2.051 1.993 1.945
85 3.953 3.104 2.712 2.479 2.322 2.207 2.119 2.049 1.992 1.944
86 3.952 3.103 2.7 l l 2.478 2.321 2.206 2.118 2.048 1.991 1.943
87 3.951 3.101 2.709 2.476 2.319 2.205 2.117 2.047 1.989 1.941
88 3.949 3.100 2.708 2.475 2.318 2.203 2.115 2.045 1.988 1.940
89 3.948 3.099 2.707 2.474 2.317 2.202 2.114 2.044 1.987 1.939
90 ·3_947 3.098 2.706 2.473 2.316 2.201 2.113 2.043 1.986 1.938
91 3.946 3.097 2.705 2.472 2.315 2.200 2.112 2.042 1.984 1.936
92 3.945 3.095 2.704 2.47] 2.313 2.199 2.111 2.041 1.983 1.935
93 3.943 3.094 2.703 2.470 2.312 2.198 2.110 2.040 1.982 1.934
94 3.942 3.093 2.701 2.469 2.311 2.197 2.109 2.038 1.981 1.933
95 3.941 3.092 2.700 2.467 2.310 2.196 2.108 2.037 1.980 1.932
96 3.940 3.091 2.699 2.466 2.309 2.i95 2.106 2.036 1.979 J.93I
97 3.939 3.090 2.698 2.465 2.308 2.194 2.105 2.035 1.978 1.930
98 3.938 3.089 2.697 2.465 2.307 2.193 2.104 2.034 1.977 1.929
99 3.937 3.088 2.696 2.464 2.306 2.192 2.103 2.033 1.976 1.928
100 3.936 3.087 2.696 2.463 2.305 2.191 2.103 2.032 1.975 1.927

a \ ••
 , ..'

(l •)
0.,.,,,

t• IHRA
..
U·-N·I-V·E·R· Sl-1'-Y-0-1"
CO-LOMBO

Institute of Human Resource Advancement (IHRA)

University of Colombo, Sri Lanka

Master of Science in Service Management Course No.05

1st Year 1st Trimester Examination

(Held in January, 2019)

MSM 5132-Services Management

Instructions to the Candidates

(1) This paper consists five (05) questions and six (06) pages.

(2) Answer only four (04) questions, including question number one (01).

(3) Write your Index Number on all pages of answer scripts.

(4) Time allocated for the examination is Three (03) hours.

(5) Tie up all answer sheets at the end of the examination.

(6) If a page or a part of this question paper is not printed, please inform the Supervisor
immediately.
Q
 01.

Cargills (Ceylon) PLC was established in 1844 and built on a strong foundation of values and
e,
ethics, guided bytrusted leadership. It spearheads the sustainable developmen:tofthe food industry
in Sri Lanka. It's continuous investment in retail has made the Cargills retail arm. Cargills Food
0 city the largest retailer in the island in all categories. Pursuing innovation and food safety, It's
manufacturing brands Cargills Supremo and Cargills Finest (processed meats) Cargills Kist
(processed fruits and vegetables) and Cargills Magic (Ice cream and dairy products) lead sectorial
growth. Its KFC franchise is the largest international restaurant chain in Sri Lanka. Through is
marketing and distribution arm spread across the island Cargills distributes its manufactured
brands as well as internationally renowned food and non-food brands.

In 1844, William Miller and David Sime Cagill commenced a general warehouse, import and
wholesale business in Colombo, Fort. The establishment was named the 'House of Cargills. A
successful bid by Sir Chiththampalam A Gardiner saw the House of Cargills being
incorporated as a Public Limited Liability Company on 1si March 1946. In1981 Ceylon
Theatres acquired controlling interest of the company and Mr. Albert A. Page was appointed the
Managing Director. Mr. Albert Page went on to become the Chairman on Cargills on 26
November 1982._Under the new management. Cargills explored the potential of innovatil)g on
its trading legacy. As a result, in 1983 Cargills established the first supermarket chain in Sri
Lanka with the opening of its first outlet at Staple Street.
CargiUs ventured into the production of processed meats in 1993 when the Company invested
in its first manufacturing facility cargills Quality Foods, in Mattakkuliya. In 1996 Cargills
acquired the franchise license for KFC and innovated on its secret recipe to deliver product
that suited the local palate.

Cargills began sourcing fruits and vegetables directly from farmers in 1999 when it established its
first collection center in Haguranketha. In 2002 it invested in a dairy processing plant and thereby
expanded it's out grower network to include dairy farmers. Cargills Magic ice cream was the
outcome of this endeavor. In the same year Cargills diversified into agri-processing with Cargills
Kist, which created further market opportunities for farmers. In 2008 Cargills acquired Millers
Limited consolidating its marketing and distribution operation.
According to research, vegetable prices are one of the many criteria considered the in choosing
a supermarket. These include the quality of service, the range of non-produce items and
convenience oflocation. In general, there were 'store specific' factors, both positive and negative,
that impacted choice.
Cargills Food City is rated the fourth most valuable Brand in Sri Lanka and the most valued Retail
Brand in the island according to research conducted by Brand Finance Lanka. Cargills Food
City has been recognized for its innovation in taking super marketing to the masses. It has also
earned the highest Brand Equity in the Asia Pacific region, with NTUC Fair Price Singapore
coming second according to the 2004 survey on Shopper Trends by ACNielsen Being the
only retail

1
 ,:.

network with its own out-grower network Cargills Food City is 'proud of its ability to give the
highest possible price to suppliers even as it provides nutritious high quality goods to theconsumer
at the lowest possible price. The retail chain is geared with over 204 outlets spread across the
island covering 23 districts. The Cargills agri business model has gained global recognition for
linking farmers and entrepreneurs to the market through a sustainable and inclusive value creation
process.
TheCargills business model is unique with the information supply and technical support networks
which have been developed to benefit smallholders, consumers and Cargills alike. Under the
leadership of CEO Ranjit Page. Cargills has embarked over the last decade on an innovative
approach to building the capacity and profitability of the farming community in Sri Lanka. It
purchases a wide variety of farm produce directly from small landholders. By eliminating
middlemen, Cargills is able to minimize transaction costs. Resultant savings are passed on to
farmers on the one end and consumers on the other. Its business model guarantees a minimum
price that is at least 20% abovethe estimated production costs. By bringing markets to some
10,000 farmers, Cargills has contributed significantly in reducing distress sales during the time of
glut. This has helped in alleviating rural poverty; reducing thereby general disenchantment to
farming as an enterprise Cargills Food city, a chain of supermarkets in Sri Lanka. Improves its
competitive context by working closely with farmer communities that supply fruits, vegetables,
spices, and rice to the chain. It typically pays 20% more than the market does, and importantly,
guarantees a minimum, threshold price in order to cushion downward price movements in the
market. Process inputs such as drip irrigation systems and collection centers are provided by Food
City. Moreover, it underwrites loans granted by banks, and facilitates collaborative arrangements
a number of NGOs have with the farmers, in setting up cleaning and packaging centers. Clearly,
these CSR efforts benefit rural communities, as much as they help the company improve its
competitive context.

The companies long standing strategy of linkages with producers and mechanisms to reduce
wastage are the main resources for relatively low prices. Whilst maintain a strong relationship
with farmers Cargills employs as a strategy to strengthen them, as farmers constitute a very
important part of our internal vegetable supply chain .They work with farmers to make sure that
they do not over-produce and make utmost efforts to reduce wastage, not only in farms, but also
during transportation. Cargills, as a company, can do that because it has a direct relationship with
farmers. From a single seed in a farmer's field to dinner table halfway across Sri Lanka, Cargills
brings ideas together to help satisfy our nation's needs. To get there, the company collaborates
with customers to create better products and services; streamline supply chains, save energy,
reduce costs and move goods to every corner of Sri Lanka. They help farmers get higher yields
from fewer acres, and store crops so they have greater flexibility in marketing their harvest.
Cargills believes in the philosophy of giving back to the communities where they do business
through continuous efforts to improve nutrition, health and education, and protect natural
resources. Everyday Cargills nourishes people and ideas-in both expected and unexpected ways.
The sustainabilitystrategy is making social responsibilityan integral part of everything they do. It
is a Company-wide commitment that channels our expertise and knowledge to create sustainable

2
 C
'·

value for every direct and indirect stakeholder we touch. Three commitments anchor the many
programs, projects and initiatives that Cargills takes on with the objective of reducing the Cost of
. Living - Enhancing youth skills and Bridging regional disparity.

r.
The company's vision "is to be a Global Corporate Role Model in Community Friendly
National Development" and the mission "is to serve the Rural Community, Our customers and
all other stakeholders through the core businesses, food with love and other related businesses,
based on our three main principles of, reducing the cost of living, enhancing youth skills and
bridging regional disparities by enhancing local and global markets. Cargills values are
(C.A.RG.L.L.S) Customer focused, Accquntable, Respect, Green, Innovative, Love, Lead,
Serve the nation.
Empowering farmers is a commitment that embodies the heart and soul of Cargills and stems from
our commitment to bridging regional disparity. Providing nutrition to Sri Lankan's makes Cargills
direct partners of the thousands of farmers across Sri Lanka. Each year, Cargills works directly
with hundreds of thousands of farmers to help increase their productivity, thereby helping to
raise their standard of living and our access to quality raw materials. Activities include training
farmers on best practices in crop and animal agriculture; providing credit, inputs, transport and
infrastructure for farmers and cooperatives; establishing fair and transparent pricing policies;
and increasing access to markets.
The relationships establish with farmers is a bond Cargills will have with the fields the sow.
The families they nurture, the communities they live in and the schools where their children
learn. Cargills has initiated a farmer community development fund where one rupee is given
back to the village against kilogram of vegetables purchased from fanners. This fund is used to
provide scholarships for needy children from the community, to provide resources for learning
and advancement and to meet basic community needs such as utility connections. The focus is
to engage the communities that work with Cargills to charter their own course of development.
"Enhancing Youth Skills" is one of the key principles of the Cargills business philosophy. It is
incorporated into its mission statement as a commitment that the organization holds true to its
heart. Not surprisingly as much as 70% of its work force is from rural Sri Lanka and 80% is
below the age of 25. ·

Every single individual in our organization is welcome to given in new ideas and suggestions.
,,
The management entertains any new idea no matter how big or small it is. All ideas are
carefully screened by a multi-disciplinary innovations team which strives to deliver responsible
business results. All multiple manufacturing sites are equipped with state of the art R&D
facilities which constantly generate products innovations to delight customers.
Cargills ensures that the food purchased, processes or manufacturing meet the highest quality
safety, environmental and social standards. Cargills Quality Dairies and Cargills Quality Foods
are accredited with all three ISO Certifications ISO 9001 : 2000 for Quality Management, ISO
14001:22000:2005 for Food Safety Quality Management. The manufacturing processes, which are
automated, take place in a sterile environment. Equipped with anti-bacterial cold rooms, cold

3
 /)

storage and manufacturing areas the Cargills Quality Dairies and Cargills Quality Foods plants are
the most technologically advances facilities in the region.
'
The Cargills Kist quality assurance pr9cess is a stringent one that kick starts from the farm. Fruits
are purchased during the season and processed in the UHT plant minus the use of any
preservatives, aseptically packed and stored for use all year around. The newly installed
Retort machine is the only one of its kind in Sri Lanka and will produce a novel TV Diner range
of Ready to Eat products in cans and pouches. The total Quality Management process used by
our Kist facility, including SLS certifications. CODEX. Standards ensure consistently high
products and process quality.
Cargills always figured that putting people before products just made good common sense. So far,
ifs been working out for us. The company's relationships with farmers yield the highest quality
of rice, milk, fruits and vegetables. The connections they make in communities create a loyal
following, and the support provided to suppliers pays off every day. Cargills has the ambition to
take their business to the next level via its Green Business Program as part of its larger cooperate
strategy. Through the "Green Business" program Cargills is committed to minimizing its
environmental impacts throughout the entire supply chain, from the farm to the trolley. Cargills is
also committed to a role of environmental leadership in all facets of business.
The One Trust came into being from the very heart of Cargills out of compassion and empathy for
our fellow Sri Lankans whose lives were devastated in the Boxing Day Tsunami of 2004.
Today one Trust has expanded its vision to heal the spirits and hearts of children affected by
war and restore their ability to hope and dream. One trust_aims to build a sustainable support
system by engaging multiple stakeholders towards strengthening and empowering children
directly or indirectly affected by conflict.
Round-the-clock convenience Cargills has further driven the growth of convenience stores in Sri
Lanka through its 15 Cargills express outlets, which are located at 24-hour fuel stations.
Cargills Express caters especially to the pressures of modem life styles, which leave many with
little time to shop for essentials. The round-the-clock convenience stores offer everything
from snacks and drinks to canned, packed and frozen foods, as well over-the-counter drugs,
magazines and other convenience items.
Made from fresh milk collected from localdairy farmers, Cargills Magic is a big part of the
Cargills promise of bringing nutritious, quality food to consumers at an affordable price and is
Sri Lanka's No# 1 Dairy Ice Cream. Around 5,000 dairy farmers located in Banduragoda,
Hanguranketha and the coconut triangle directly supply fresh milk to Cargills Magic. The
farmers are organized into cooperative style associations through which Cargills provides them
a guaranteed market and a standard price, raw materials at subsidized rates, technical inputs etc.
The entire production process is automated with the high-tech plant able to chum out as much as
3,200 liters of ice cream per · hour. The plant has the capacity to produce our 10 million liters
of ice cream per annum. Cargills Magic is a trailer blazer being the first Ice Cream manufacturer
to introduce fresh fruit, indigenous flavors and festive collections to its product portfolio.

4
 l

One of Sri Lanka's most trusted food brands, Cargills Kist offers a range of delectable Juices,
Jams, Sauces, Cordials & accompaniments made from fresh produce directly hand picked
from orchards. Today's Sri Lankan generation has grown up with the Kist brand, and they have
grown to trust it for its quality and taste.Cargills leverages its ability to source the freshest quality
produce from farmers and suppliers directly to ensure that Kist products retain all their natural
,I
goodness and flavor. The Kist production plant employs state-of-the-art aseptic packing and
processing facilities that conform to international food manufacturing standards.

Agribusiness, as is well known, involves trade of food production in all its aspects. From that
angle it includes farming, seed supply, agri-chemicals, farm machinery, wholesaling and
distribution, processing, storing, marketing trade and retailing. Currently, Cargills Agri-business
focuses on direct produce purchase from the farmers, processing and retailing. Its future plans on
Agri business will follow an end-to-end approach. Thus, means Cargills, besides facilitating direct
market access to farmers, would also concentrate on the development of farmer and farming. In
that pursuits Cargills will undertake up-skilled farmers' knowledge and know•how through
training and would make certain supply of high quality seeds and agri-chemicals.
(Source: Diasz, L 2017, Marketing and business strategy, 1stEdn, Soft wave Printing and
packaging (Pvt) Ltd, Col.05 SL)

Case Questions

1. Identify the business strategy (among Porter's Generic Strategies) of Cargills foodcity.
Justify your answer

11. Explain how the Porter's 5 competitive forces can be used to describe the profitability
and the attractiveness of the FMCG Super Market Industry in Sri Lanka?

111. Explain the existing marketing mix strategies of Cargills foodcity.

(-
JV. What are the strategies you suggested for the future survival of the company

(Marks IO x04 = 40 Marks)

5
 j

02. "Service business is a business model, that offers intangible values beyond a physical
product". Identify different types of service classifications and explain three (03) types of
classification using examples from service sector.

(20 marks)
03. i. "Frontline work is really stressful". Discuss the above statement emphasizing the role
of 'emotional labor' in service delivery.

(10 marks)
ii. 'Managing the service business is really challengeable'. Explain the above statement
comparing the business practices related with goods and services. Provide appropriate
examples to explain your answer.

(IO
marks) (Total 20

marks)

04. Explain circle of failure, mediocrity and success using appropriate examples in the service
sector.
(20 marks)

05. Briefly explain following concepts with its' practical applications.

i. Nornann's Service Management System

(08 marks)
11. Service Blue Print strategy

(06 marks)
Ill.Buyer behavior in service
consumption
(06 marks)

(Total 20 marks)

****

6
 •
\ e
, ',·

,. ,..
0 ...

IHRA
UNIVERSITY OF COI.OMBO
•'

Institute of Human Resource Advancement (IHRA)

University of Colombo, Sri Lanka

Master of Science in Service Management Course No.OS

1st Year 1st Trimester Examination

(Held in January, 2019)

MSM5133 - Management Process

Instructions to the Candidates

(1) This paper consists seven (07) questions and two (02) pages.

(2) Answer only five (05) questions.

(3) Write your Index Number on all pages of answer scripts.

(4) Time allocated for the examination is Three (03) hours.

(5) Tie up all answer sheets at the end of the examination.

(6) If a page or a part of this question paper is not printed, please inform the Supervisor
immediately.
 I. i. Describe the characteristics ofan effective goal.
(06 Marks)
11, Explain the relationship between planning process and formal mission statement
of an organization.
(06 Marks)
m. Discuss the importance of contingency planning for today's organization.
(08 Marks)
(Total 20 marks)

2. i, Define the term "environmental scanning".

(03 Marks)
11, Discuss the relevance of environmental certainty and organizational business
process.
(07 Marks)

111. Justify the importance of inter-organizational partnerships for contemporary

organizations.
(IO Marks)
(Total 20 ma1·ks)

3. i, Determine the elements of an organizational culture.

(04 Marks)
11, Describe the levels of an organizational culture with appropriate examples.
(06 Marks)
m, Discuss the importance of an organizational culture in making of citizenship
behavior among employees.
(10 Marks)
(Total 20 marks)

4. I,
State the level of strategies with managerial positions ofan organization.
,.
(03 Marks)
II,
Determine the basic elements of an effective strategy.
(03 Marks)
111, Describe the steps of strategy formulation.
(06 Marks)
1v. Discuss the importance of effective communication for implementation of a
strategy in an organization.
(08 Marks)
(Total 20 marks)
1
 "

5, i, Explain the types of decision making.

(04 Marks)

11. Discuss the relevance of certainty and uncertainty with types of decision making.
(05 Marks)

111, Compare the different models of decision making.

(06 Marks)

1v. How do you justify the essentiality of evaluation and feedback in a decision
making process.
(05 Marks)
(Total 20 marks)

6. i, Define the meaning of control.

(04 Marks)
11, Describe the importance of quality management for a service organization.
(06 Marks)
111. Discuss the process of balanced scorecard in an organization.

(IO Marks)
(Tota! 20 marks)

7. Write short notes on followings.

1, Unity of command
ii, Departmentalization.
111. Advantages and disadvantages of virtual network.
iv. Concurrent control.
v. Total quality management.

(04 X.05 = 20 Marks)

*****