The plan of a factory allows its scrap rate to rise by up to 3 per cent. Consider the following statements about how the factory should act under management by exception:
(A) A rise of 2 per cent in the scrap rate need not be brought to the notice of management.
(B) A rise of 3.5 per cent in the scrap rate should be brought to the notice of management.
(C) A rise of 1 per cent in the scrap rate should be brought to the notice of management, so that it is corrected early.
(D) A rise of 8 per cent in the scrap rate should be left to the subordinates as a routine problem.
Which of the statements given above are correct?
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → (A) and (B) only
(A) A rise of 2 per cent in the scrap rate need not be brought to the notice of management. — Correct. A 2 per cent rise is within the 3 per cent limit. Under management by exception, only deviations beyond the permissible limit go to management.
(B) A rise of 3.5 per cent in the scrap rate should be brought to the notice of management. — Correct. A 3.5 per cent rise crosses the 3 per cent limit, so management must be told.
(C) A rise of 1 per cent in the scrap rate should be brought to the notice of management, so that it is corrected early. — Incorrect. A 1 per cent rise is within the limit. Reporting it would mean trying to control everything.
(D) A rise of 8 per cent in the scrap rate should be left to the subordinates as a routine problem. — Incorrect. An 8 per cent rise is a major deviation. It needs immediate action of management on a priority basis.
NCERT (2026-27 Edition): “2. 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. Thus, if the plans lay down 2 per cent increase in labour cost as an acceptable range of deviation in a manufacturing organisation, only increase in labour cost beyond 2 per cent should be brought to the notice of the management. However, in case of major deviation from the standard (say, 5 per cent), the matter has to receive immediate action of management on a priority basis. …” |