"In company Ace Itd, if the plans lay down a 2 percent increase in labor cost as an acceptable range of deviation, only an increase in labor cost beyond 2 percent should be brought to the notice of the management. However, in case of major deviation from the standard (say, 5 percent), the matter has to receive immediate action from management on a priority basis". Identify the concept of management highlighted in the aforesaid statement.
"In company Ace Itd, if the plans lay down a 2 percent increase in labor cost as an acceptable range of deviation, only an increase in labor cost beyond 2 percent should be brought to the notice of the management. However, in case of major deviation from the standard (say, 5 percent), the matter has to receive immediate action from management on a priority basis". Identify the concept of management highlighted in the aforesaid statement.
Solution
Option 1 -> Management by exception is a principle where only significant deviations from standards are reported to management, allowing them to focus on critical issues rather than routine matters.
Option 2 -> Critical point control focuses on identifying and monitoring specific strategic control points in processes, rather than exception-based reporting systems.
Option 3 -> Exception by analysis is not a standard recognized management concept or principle.
Option 4 -> Critical plan control is not a standard management terminology used in control systems.
Hence, Option 1: Management by exception -> The statement clearly demonstrates management by exception where: (1) minor deviations within 2% are acceptable and not reported, (2) deviations beyond 2% are brought to management's notice, and (3) major deviations of 5% receive immediate priority action. This allows management to focus their attention and resources only on significant exceptions rather than routine operations within acceptable limits -> correct
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2025: 29 May Shift 2