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.

Management by Exception

The correct answer is option  1- Management by Exception.

In the given scenario, Maya, the owner, sets production targets in consultation with the Production Manager and supervisors, and has decided that deviations up to 5% are acceptable. Any deviations beyond this threshold should be reported. This is an example of Management by Exception.

Management by exception, which is often referred to as control by exception, is an important principle of management control based on the belief that an attempt to control everything results in controlling nothing. Thus, only significant deviations which go beyond the permissible limit should be brought to the notice of management.