Maya, the owner of the firm, sets production target for each day and month, in consultation with the Production Manager and supervisors. They decided that deviation between standard production and actual production up to 5% is acceptable. Deviations beyond this, should be reported. Identify the concept mentioned above.
Maya, the owner of the firm, sets production target for each day and month, in consultation with the Production Manager and supervisors. They decided that deviation between standard production and actual production up to 5% is acceptable. Deviations beyond this, should be reported. Identify the concept mentioned above.
Solution
✅ Correct Option: 1
Management by exception, also called control by exception, states that only significant deviations beyond a permissible limit should be reported to top management. Setting a 5% tolerance and reporting only larger deviations is a direct application of this principle.
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