DeepSea is a natural gas extraction company that retrieves natural gas from rock formations beneath the seabed. This gas is then transported through its extensive pipeline network to a bottling plant, located at the sea surface, for processing. The gas in rock formations is pressurized, enabling it to flow to the surface and reach the bottling plant. Yet, excessive pressure can cause bursts in the pipeline, leading to uncontrolled gas release, known as blowout. A blowout carries a staggering cost, encompassing not only environmental damage but also reputation loss and financial losses totaling crores of rupees. Additionally, the impacted section of the pipeline requires a complete replacement. Industry safety regulations divide the pipeline network into three levels: Level 3 is the part under the seabed, Level 2 is the part above the seabed but in the deep sea, while Level 1 is near the surface. The safety regulations require multiple blowout preventer valves, from now on simply referred to as valves, to be placed at the three different levels of the pipeline network. The valves are normally kept closed, but when the pressure in any part of the pipeline rises beyond a critical level, nearby valves are opened remotely to release the pressure in a controlled manner to prevent blowout. The number of valves across the pipeline helps localize the pressure release, with a greater number of valves providing a backup mechanism, helping in improving pressure localization in case of a blowout. Given that the valves themselves can occasionally malfunction and not release the pressure when needed, using a higher number of valves ensures that a malfunctioning valve can seek the safety of a nearby functioning valve.
A valve can malfunction in two ways: it may fail to release pressure when needed, as previously mentioned, or it can leak gas during regular operation, resulting in unwanted losses. When a valve malfunctions, it necessitates manual replacement.
In the DeepSea Network, 30% of the valves are located at Level 3, which is the deepest level. The remaining valves are evenly distributed between the top two levels. These valves are critical to ensuring safety and are exclusively supplied by GoValve, a highly specialized manufacturer that holds a monopoly in the country’s market.
GoValve has recently proposed a maintenance package for the valves to DeepSea, which includes a clause that whenever a valve at Level 3 malfunctions, all valves at that level will be replaced. Accepting the clause will cost a significant premium. The management of DeepSea have the following pieces of additional information under consideration:
A. The valves are known to be prone to malfunction.
B. Any malfunction in one valve often results in leakage from the neighboring valves.
C. GoValve is ready to negotiate a discount if the clause is accepted.
D. Replacing the valves at Level 3 is a very difficult job, which is best done by GoValve.
E. The chances of pressure buildups are higher near the seabed.
Which of the following combinations, of the above pieces of additional information, will help the management of DeepSea the MOST in accepting the clause?
A. The valves are known to be prone to malfunction.
B. Any malfunction in one valve often results in leakage from the neighboring valves.
C. GoValve is ready to negotiate a discount if the clause is accepted.
D. Replacing the valves at Level 3 is a very difficult job, which is best done by GoValve.
E. The chances of pressure buildups are higher near the seabed.
Which of the following combinations, of the above pieces of additional information, will help the management of DeepSea the MOST in accepting the clause?
- A, B & D
- A, B & E
- B, C & D
- A, C & D
- C, D & E
The Correct Option is
Solution and Explanation
Step 1: Understand the problem.
DeepSea must decide whether to accept a maintenance clause proposed by GoValve, which involves replacing all valves at Level 3 upon any malfunction. The decision hinges on safety and financial feasibility.
Step 2: Evaluate the options.
- Option 1 (A, B, D): - Valves are prone to malfunction (A), which increases the likelihood of replacements. - Malfunction in one valve affects neighboring valves (B), making prompt action necessary. - Valve replacement at Level 3 is highly challenging and best handled by GoValve (D).
- Option 2 (A, B, E): While A and B are relevant, E (pressure buildups) doesn’t directly justify accepting the clause.
- Option 3 (B, C, D): Negotiating a discount (C) is helpful but does not address the safety concerns like A.
- Option 4 (A, C, D): Although A and D are relevant, C (discount) is less critical than addressing leakage (B).
- Option 5 (C, D, E): E (pressure buildups) is less critical compared to malfunctions (A) and their consequences (B).
Final Answer: (1)
A startup, SafeValve, has started importing a technologically superior brand of valves from abroad, which boasts a significant reduction in gas leakage. SafeValve has established a large inventory of these imported valves but is struggling to gain foothold in the local market. An NGO, working for the protection of marine lives, has appealed to DeepSea to replace their existing valves with the product from SafeValve. However, the installation of this new valve will require substantial modification in the pipeline, entailing unknown challenges in installation and maintenance.
Which of the following reasons, if TRUE, can DeepSea BEST cite to publicly reject the appeal?
Which of the following reasons, if TRUE, can DeepSea BEST cite to publicly reject the appeal?
- The new valves cost twice as much as the existing valves.
- GoValve is a reputed brand and had a partnership with DeepSea for a long time.
- Only some developed countries have mandated the use of the new valves.
- SafeValve depends exclusively on imports and may be prone to procurement issues.
- GoValve follows the strictest global industry standards of leakage prevention.
The Correct Option is
Solution and Explanation
Step 1: Understand the problem.
DeepSea must decide how to respond to the NGO’s appeal to switch to SafeValve’s product while ensuring its reputation and operational efficiency remain unaffected.
Step 2: Evaluate the options.
- Option 1: Although higher costs are significant, this reason alone may not justify rejecting the appeal publicly.
- Option 2: Highlighting the longstanding partnership with GoValve might appear biased and less credible.
- Option 3: Limited international adoption of the new valves weakens the appeal but is not the strongest reason.
- Option 4: SafeValve’s dependency on imports raises concerns about supply chain stability but doesn’t address the quality standards of the valves.
- Option 5: Emphasizing that GoValve meets the strictest global standards for leakage prevention is the most compelling argument to reject the appeal as it directly addresses safety and quality, which are critical to DeepSea’s operations.
Final Answer: (5)
A startup, SafeValve, has started importing a technologically superior brand of valves from abroad, which boasts a significant reduction in gas leakage. An update to industry safety regulations has come out, which allows a lower number of valves in a pipeline network, if technologically superior valves, similar to those imported by SafeValve, are used for the entire network. DeepSea is aware that the more the number of valves, the better is DeepSea’s ability to contain blowouts. However, a higher number of valves increases the chance of a leakage. Therefore, DeepSea is contemplating a proposal to reduce the number of valves to almost half, by replacing the existing valves (by GoValve) with the valves sold by SafeValve.
A team, tasked with evaluating the proposal, has made some observations, listed below.
Which of the following observations is the MOST helpful in REJECTING the proposal?
A team, tasked with evaluating the proposal, has made some observations, listed below.
Which of the following observations is the MOST helpful in REJECTING the proposal?
- There is no clear industry standard for the minimum number of valves required at a certain level.
- At Level 1, the chance of a pressure rise is much lesser compared to the other two levels.
- At Level 3, a blowout results in more time consuming and expensive repairs compared to the other two levels.
- The superiority of the SafeValve products is only in terms of preventing leakage, not blowouts.
- If a GoValve valve is opened to prevent a blowout, the chance of leakage from the valves within a certain distance increases.
The Correct Option is D
Solution and Explanation
Step 1: Understand the problem.
DeepSea must evaluate whether replacing the current valves with SafeValve products is in line with their operational safety requirements and cost-effectiveness.
Step 2: Evaluate the options.
- Option 1: Lack of an industry standard is a concern but doesn’t directly address the effectiveness of SafeValve products.
- Option 2: The reduced pressure risk at Level 1 is relevant but not critical to rejecting the proposal.
- Option 3: High repair costs at Level 3 are significant but do not outweigh the importance of blowout prevention.
- Option 4: The inability of SafeValve products to address blowouts directly contradicts DeepSea’s critical safety needs and is the strongest argument against the proposal.
- Option 5: Increased leakage risk near opened GoValve valves is a concern but not sufficient to reject the SafeValve proposal outright.
Final Answer: (4)
Top Questions on Caselets
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Raman had been working tirelessly as a Project Manager in the IT department of Flying Groceries, a renowned app-based supply chain company, for the past three years. Having graduated from a top-tier engineering college, he dived straight into the corporate world, managing projects with great zeal that inspired his seniors.
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