At the time of setting standards, a manager should try to set them in…

At the time of setting standards, a manager should try to set them in precise quantitative terms.

Which of the following is a standard set in this way?

Answer & explanation

Correct answer: option 2

The correct answer is Option (2) → Reduction of defects from 10 to 5 in every 1,000 pieces by the end of the quarter

Option (1) An increase of 15 per cent in the postal charges of a manufacturing organisation — Incorrect. This is a rise in cost in a minor area, used to explain critical point control. It is not a target fixed in advance.

Option (2) Reduction of defects from 10 to 5 in every 1,000 pieces by the end of the quarter — Correct. A precise quantitative standard is a target in exact numbers: from 10 to 5 defects per 1,000 pieces, by a set date. It is easy to compare with actual results.

Option (3) Units produced by a worker during a week, as recorded by the supervisor — Incorrect. This is actual performance being measured. It is later compared with the standard output for the week.

Option (4) Number of defective pieces found in a batch produced during the quarter — Incorrect. Counting defective pieces in a batch measures the efficiency of production.

NCERT (2026-27 Edition): “Step 1: Setting Performance Standards: … At the time of setting standards, a manager should try to set standards in precise quantitative terms as this would make their comparison with actual performance much easier. For instance, reduction of defects from 10 in every 1,000 pieces produced to 5 in every 1,000 pieces produced by the end of the quarter. …”

“1. Critical Point Control: It is neither economical nor easy to keep a check on each and every activity in an organisation. Control should, therefore, focus on key result areas (KRAs) which are critical to the success of an organisation. These KRAs are set as the critical points. If anything goes wrong at the critical points, the entire organisation suffers. For instance, in a manufacturing organisation, an increase of 5 per cent in the labour cost may be more troublesome than a 15 per cent increase in postal charges.”