A PROJECT ON TRANSPORTATION PROBLEM
Submitted To:-Prof. B. K. Soam
Submitted by:-
Amit Kum Kumar Ve Verma(TL a(TL)) Sudhanshu Singh I sha Rai Rashmi Sing 5/5/2011
ACKNOWLEDGEMEN It is not possible to prepare a project report without the assistance & encouragement of other people. This one is certainly no exception. On the very outset of this report, I would like to extend my sincere & hear felt obligation towards all the personages. Without their active guidance, help, cooperation & encouragement, I would not have made headway in the project. I would like to express my sincere thanks to everyone who has continuously guided me & supported in all the tasks by giving me valuable insight into issues like the meaning of HR practices, its uses, objectives and tools as well as steps to be considered in developing and studying an organizational structure.
ccman Inst I nstiitute tute We sincerely thank help provided by my institute “Accm of Managem anagement” which provided me necessary material for completion of this project. We are also thankful to our sincere MSDM faculty Mr. B. K. Soam and our dear friend Sunil Kumar Yadav(accounted), Aklakh Khan() of Ultra tech Cement. Also, we thank all respondents who supported me lot without their help project completion was not possible.
Amit Kumar Verma(Tl) Sudhanshu Singh Isha Rai Rashmi Sing
PREFACE It is era of globalization. Now World becomes global village. In present scenario there is a growth in market in our country. Sometimes, we see some fluctuation in market. It is happening because there is changing ch anging in taste and choice of customers/consumers. Now a days Market is very much dependent to consumers/customers choice and taste. To understand the taste and choice of customers/consumers and take step according to customers/consumers choice is very necessary to become the market leader. These things are very common for all company. In this context comparative study of determining transportation cost by different method and choosing those method which offer least cost and maximize the profit. Management Science for Decision Making project is one of the essential parts towards the partial fulfillment of the requirement of two-year full time PGDM program. In this line we had an opportunity to undergo practical project of ULTRA TECH CEMENT . During project time, We visited to ULTRA TECH OFFICE and meet with SUNIL KUMAR YADAV and collect full information about company, his warehouses, his plant production capacity and different warehouses requirement in particular interval of time i.e. one month. Also collect the cost paid by the company to sending product from plant to warehouses. Through this study my company would get valuable information and this project will help me to have a valuable experience of real market which would be fruitful in my career.
Tab Table of Contents
Page No. Topic 3 1.History of transportation 4-6 2. mode of transportation 7 3. Preface 8 4. Acknowledge 9 5. Executive summary 10-11 6, Objective of study 11-13 7. Introduction of Yamaha motors 13-15 8. Industrial Profile 16 9. Collected Primary Data 10.General Mathematical Model of 17-18 Transportation Problem 19 11.Calculation of transportation cost 19-21 11. a. North west corner rules 21-22 11.b. Least Cost Method 22-24 11.c. Vogel’s Approximation Method 12.Cost of different Depot to Dealer of 24-25 Yamaha Motors 12.a. Cost calculated by North West Method 26 12.b. Cost calculated by Least Cost Method 27 28 12.c. Cost calculated by Vogel’s method 30 13.Conclusion 30 14. Recommendation
Lists of Respondents
30
What is Transportation:Transportation:Transportation is the movement of people and goods from one place to another. The term is derived from the Latin trans ("across") and portare ("to carry"). Industries which have the business of providing equipment, actual transport, or goods and services used in transport of goods or people make up a large broad and important sector of most national economies, and are collectively refered to as transport industries.
The History of Transportation 3500BC
Fixed wheels on carts are invented - the first wheeled vehicles in history. Other early wheeled vehicles include the chariot
3500BC
River boats are invented - ships with oars Horses are domesticated and used for transportation The wheelbarrow is invented. Iron horseshoes improve transportation by horse Leonardo da Vinci first to seriously theorize about flying machines - with over 100 drawings that illustrated his theories on fligh
2000BC 181-234 770 1492
1620
Cornelis Drebbel invented the first submarine - an human oared submersible
1662
Blaise Pascal invents the first public bus bu s - horse-drawn, regular route, schedule, and fare system
1740
Jacques de Vaucanson demonstrates his clockwork powered carriage
1738
First practical steamboat demonstrated by Marquis Claude Francois de Jouffroy d'Abbans - a paddle wheel steamboat
1769
First self-propelled road vehicle invented by Nicolas Joseph Cugnot
1783 1787
The Montgolfier brothers invent the first hot air balloons Steamboat invented Modern bicycles invented Richard Trevithick invented the first steam powered locomotive (designed for roads)
1790 1801 1807
Isaac de Rivas makes a hydrogen gas powered vehicle - first with internal combustion power - however, very unsuccessful design
1862
First steamboat with regular passenger service inventor Robert Fulton's Clermont. George Stephenson invents the first practical steam powered railroad locomotiv Jean Lenoir makes a gasoline engine automobile
1867
First motorcycle invented
1868
George Westinghouse invents the compressed air locomotive brake - enabled trains to be stopped with failsafe accuracy First cable car invented
1807 1814
1871 1885 1899 1903 1907
Karl Benz builds the world's first practical automobile to be powered by an internal combustion co mbustion engine Ferdinand von Zeppelin invents the first successful dirigible - the Zeppelin The Wright Brothers invent and fly the first engined airplane. Very first helicopter - unsuccessful design
1926
Henry Ford improves the assembly line for fo r automobile manufacturing Hydrofoil boats co-invented by Alexander Graham Bell & Casey Baldwin - boats that skimmed water First liquid propelled rocket launched
1940
Modern helicopters invented
1947
First supersonic jet flight
1956
Hovercraft invented
1964
Bullet train transportation invented
1969
First manned mission (Apollo) to the Moon
1970 1981
First jumbo jet Space shuttle launched
1908 1908
MODE OF TRANSPO TRANSPORTATI RTATI ON Broadly speaking, transportation means can be classified as under:1. 2. 3.
Land transport Water transport Air transport
L and Trans nsp port:Sometime around the late Neolithic age, man learned how to domesticate animals. He used horse and other beasts of burden to not only help him till the soil but also for transportation purposes. However, the invention of Wheel, around 4000-3500 4000-35 00 BC, entirely changed man’s outlook towards life. Transportation became faster. Not only could man himself travel faster but also take loads of goods along with him to distant places. Thus, was also born the idea of trade and exchange. The land mark inventions that followed are as under:
Two-wheel chariot - world’s first form of wheeled transportation - invented in Sumeria, around 3500 BC. This eventually led to invention of four-wheel chariot in due course. Cart driven by a steam turbine, build by a Jesuit missionary in China – 1670 AD Modern bicycles invented – 1790 AD Richard Trevithick invented the first steam powered locomotive (for roads) -1801 AD
George Stephenson invented the first practical steam powered railroad locomotive – 1814 AD Jean Lenoir made a gasoline engine automobile – 1862 AD Invention of Internal Combustion Enginebya Frenchman – 1860 AD named Jean Joseph Etienne Lenoir – 1867- First motorcycle invented 1885 - Karl Benz builds the world's first practical automobile to be powered by an internal combustion engine First experiment of electric powered trains – 1895 AD Henry Ford improves the assembly line for automobile manufacturing – 1908 AD
During World War II, the diesel engine came into widespread use, and steam was almost completely forgotten. Advancements have continued to be made in the time since.
Water Transport It is interesting to note that man had developed means of traveling on water even before he had domesticated the horse. Though the origin of the dugout boat still remains one of history’s great mysteries, but it does indicate that man had known how to travel on water long before other means of transport developed. This historians point may have been due to an accidental invention. Nevertheless, the addition of the boat changed the face of water transportation. At first, Simple boats evolved to include a large square of cloth mounted on a central pole. This cloth was called a sail. The sail aided in navigation and wind pressure propelled the boat. Soon this gave way to sail-propelled ships. Later, these sail-propelled ships grew bigger in size while sleeker in design. First the oars and rudders and then the deck covers were also included in the ship’s design. th
With the advent of automation in 19 century, water transportation changed forever. Ships shed their sails. Now more goods and people could be transported transpo rted faster. The landmark inventions in water transportation are as under:
Cornelis Drebbel invented the first submarine in 1620 AD First practical steamboat demonstrated by Marquis Claude -1783 AD Steamboat invented – 1787 AD First diesel-powered ship – 1912 AD Hovercraft invented – 1956 AD First nuclear powered ship launched – 1958 AD
Air Transport Man’s next stride in transportation looked not to the land, or even to the seas, but to the sky. Although many people had toyed with the idea of flight, of flight, but the first sustained, controlled flight took place only in December 17, 1903, at Kitty Hawk, North Carolina. The inventors of this new flying machine were brothers Orville and Wilbur Wright, two bicycle makers. They invented a bicycle propelled contraption which later evolved into jet-propelled aircraft capable of world-wide mass transfer. It came to be called the aeroplane. Aeroplane made it easier for people to travel great distances in less time.
The land mark inventions in air transportation are as under:
Leonardo da Vinci - first to seriously theorize about about flying machines - with over 100 drawings that illustrated his theories on flight – 1492 AD The Montgolfier brothers invent the first hot air balloons – 1783 AD The Wright Brothers invent and fly the first engine airplane – 1903 AD Very first helicopter – though an unsuccessful design – 1907 AD
General Mathematical Model of Transportation Problem Let there be m sources of supply, S1, S2, ……….,Sm having ai (i=1,2,3,4…..n) unit of supply (or capacity) respectively, to be transported among n destination D1, D2,………Dn with b j (j=1,2,3,4,………,n) units of demand (or requirement requirement ) respectively. Let Cij be the cost of shipping one unit of the commodity from source i to destination j for each route. If X ij represent number of units shipped per route from source i to destination j, the problem is to determine the transportation schedule so as to minimize the total transportation cost satisfying supply and demand conditions. Mathematically, the problem is general may be started as follows; Minimize (total cost) Z= ∑
∑
Subject to the constraints ∑ (Supply constrains) ∑ (Demand Constrains)
(1)
(2) (3)
And Xij ≥ 0 for all i and j For easy presentation and solution, a transportation problem data is generally presented as shown in table
E xi xis stence of F easible Solution:Solution: A necessary and sufficient condition for the existence of a feasible solution to the transportation transportation problem (1) and (4) is Total supply= Total Demand
∑ =∑
General Transportation Table To From
S1
D1
D2
……… ….
Dn
Supply
C11
C12
………..
C1n
a1
X11
C21
S2
X12
C22 X21
Ai
X1n
………..
C2n
X22
a2 X2n
… …
… …
… …
………
… …
… …
Sm
Cm1
Cm2
………..
Cmn
Am
Xm1
Demand B j
b1
Xmn
Xm2
b2
……….
Bn
∑ = ∑
In this problem, there are (m+n) constrains one for each source of supply and distinction and m × n variables. Since all (m+n) constraints are equations, since the transportation model is always balanced ( total supply= total demand), one of these equation is extra (redundant). The extra constraints equation can derive from the other constraint equations without affecting the feasible solution. It follows that any feasible solution for a transportation problem must have exactly (m+n-1) non negative basic variables (or allocations)
Calculation of Transportati Transportation on Cost Transportation cost are calculated by three methods, they are: 1. North East Corner Method 2. Lowest Cost Entry Method 3. Vogel’s Approximation Approximation Method (VAM)
1. North-West corner method (NWCM) The North West corner rule is a method for computing a basic feasible solution of a transportation problem where the basic variables are selected from the North – West corner (i.e., top left corner).
Steps:1.Select the north west (upper left-hand) corner cell of the transportation table and allocate as many units as possible equal to the minimum between available supply and demand requirements, i.e., min (s1, d1). 2.Adjust the supply and demand numbers in the respective rows and columns allocation. 3. If the supply for the first row is exhausted then move down to the first cell in the second row 4.If the demand for the first cell is satisfied then move horizontally to the next cell in the second column. 5.If for any cell supply equals demand then the next allocation can be made in cell either in the next row or column. 6.Continue the procedure until the total available quantity is fully allocated to the cells as required.
Example:A Company has three production facilities F1,F2,F3 with production capacity of 250, 300, 400 per day of a product , respectively .These are to be shipped to four warehouses W1,W2,W3,W4 units per day , respectively .The transportation cost per unit between factories to warehouses are given in the table below-
F1 F2 F3
W1
W2
W3
W4
11
13
17
14
SUPPL Y 250
16
18
14
7
300
21
20
13
10
400
225
275
250
950
DEMAN 200 D
Solution BY NORTH-WEST CORNER METHOD : W1 W2 W3 F1
11
F2
16
200
13
50
18
21
20
14
250
14
7
300
10
400
125 13
150 DEMA ND
200
225
SUPPLY
17
175 F3
W4
275
250 250
950
The transpotetion cost is given by :T= 11 × 200 + 13 × 150 + 18 × 175 + 14 × 125 + 13× 150 + 10 × 250 = Rs 12200
1. Least Cost Method Matrix minimum method is a method for computing a basic feasible solution of a transportation problem where the basic variables are chosen according to the unit cost of transportation.
Steps 1.Identify the box having minimum unit transportation cost (cij). 2. If there are two or more minimum costs, select the the row and the column corresponding to the lower numbered row 3. If they appear in the same row, select the lower numbered column. 4. Choose the value of the corresponding xij as as much as possible subject to the capacity and requirement constraints. 5.If demand is satisfied, delete the column . 6. If supply is exhausted, delete the row. 7.Repeat steps 1-6 until all restrictions are satisfied.
EXAMPLE-- Previous example solve by this method EXAMPLE
W1 F1
11
W2 13
200 F2
16
W3
W4
17
14
250
14
7
300
50 18
250
50 F3
21
20
13
250 DEMA ND
200
SUPPLY
225
10
400
250
950
275 275
T = 11 × 200 + 13 × 50 + 18 × 50 + 20 × 250 + 13 × 275 + 7 × 250 = 11575
2. By
Vogel’s Approximation Method:
The Vogel approximation method is an iterative procedure for computing a basic feasible solution of the transportation problem. Steps 1.Identify the boxes having minimum and next to minimum transportation cost in each row and write the difference (penalty) along the side of the table against the Corresponding row. 2. Identify the boxes having minimum and next to minimum transportation cost in each column and write the difference (penalty) against the corresponding column 3. Identify the maximum penalty. If it is along the side of the table, make maximum allotment to the box having minimum cost of transportation in that row. If it is below the table, make maximum allotment to the box having minimum cost of transportation in that column. 4. If the penalties corresponding to two or more rows or columns are equal, select the top most row and the extreme left column
W1 F1
11
W2 13
16
17
W4 14
18
14
7
300
21
20
13
200
10
P5 P6
2
2
2
11 11 11
7
2
2
16
16 ---
3
7
1
21
--- ---
400
275
125 DEM AND
P1 P2 P3 P4
250
50 F3
SUPPL Y 250
225
25 F2
W3
225
275
250
950
R 1
5
5
1
3
R2
5
5
1
-----
R3
5
5
----
-----
R4
5
-----
-----
-----
R5
5
------
-----
-----
R6
11
------
------
-----
T = 11 × 25 + 13 × 225 + 16 × 50 + 7 × 250 + 13 × 275 + 7 × 250 = 11575
Type Industry Founded
Public BSE: 532538 Building materials 1983
Headquarters
Mumbai, Maharashtra, India
Key people
O P Puranmalka, Director
Products
Cements
Revenue
14,068 crore (US$3.09 (US$3.09 billion) (2010-2011) (2010-2011)[1]
Profit
1,404 crore (US$308.88 US$308.88 million) (2010-2011)[1]
Parent
Grasim Industries
Website
www.ultratechcement.com
Financial Auditors:
GP Kapadia & Co (2011)
Total Employees:
11,509
INTRODUCTION:UltraTech Cement Limited is leading cement company and the country is largest exporter of cement clinker based in Mumbai, India. It has an annual capacity of 23.1 million tonnes. It manufactures and markets Ordinary Portland Cement, Portland Blast Furnace Slag Cement and Portland Pozzalana Cement. It also manufactures ready mix concrete (RMC). The export markets span countries around the Indian Ocean, Africa, Europe and the Middle East. It is part of Grasim Group.
UltraTech Cement Limited has five integrated plants, six grinding units and three terminals two in India and one in Sri Lanka. UltraTech is subsidiaries are Daksh in Cement Limited, UltraTech Cement Lanka (Pvt.) Ltd. And UltraTech Cement Middle East Investments Limited.
Mission, Vision & Values:Vision of the company:
To be a premium global conglomerate with a clear focus on each business. To become world most big company of cement and concrete.
Mission of the company:
To deliver superior value to the customers, shareholders, employees and society atlarge. KUMAR MANGALAM BIRLA SAYS. our goal is to become a US $65 billion group by 2015 from US $30 billion company today. we expect company to contribute significally to this growth and earnings.
Values of the company:People contribute when they relate to an organization and they relate, when they understand the organization. People understand an organization through its values by experiencing the culture that values create and by using the systems and processes that values define. In large organizations, such shared understanding cannot be created through leadership of individuals alone; it requires leadership of principles, of beliefs, of conviction. Integrity, Commitment, Passion, Seamlessness, Speed. These together constitute what they call their Value
History of the company:1983
Awarpur Cement Works Plant I
1987
Awarpur Cement Works Plant II
1993
Jharsuguda grinding unit
1994
Hirmi Cement Works
1996
Gujarat Cement Works Plant I
1998 1999 2000
2001
2002
Andhra Pradesh Cement Works Gujarat Cement Works Plant II Narmada Cement Company Limited acquired Ratnagiri Cement Works Bulk cement terminals at Mangalore, Navi Mumbai and Colombo Grasim acquires 10 per cent stake in L&T. Subsequently increasesstake to 15.3 per cent Grasim increases its stake in L&T to 14.15 per cent Arakkonam grinding unit The Grasim Board approves an open offer for purchase of up to 20 percent of the equity shares of Larsen & Toubro Ltd (L&T), in accordance with the provisions and guidelines issued by the Securities & Exchange Board of India (SEBI) Regulations, 1997.
2003
The board of Larsen & Toubro Ltd (L&T) decides to demerge its cement business into a separate cement company (CemCo) (C emCo) Grasim decides to acquire an 8.5 per cent equity stake from L&T and then make an open
2004
Completion of the implementation process to demerge the cement ce ment business of L&T and completion of open op en offer by Grasim, with the latter acquiring controlling stake in the newly formed company UltraTech
2006
Narmada Cement Company Limited amalgamated with UltraTech Ultratech Cement receives order from BIFR. Ultratech Cement Ltd has appointed Mr Girish M Dave as a Director on the Board of the Company.
2009
UltraTech to absorb Samruddhi to form India's biggest cement firm Ultratech to be the lead sponsors of Rajasthan Royals UltraTech to consider Grasim merger proposal
2010
Ultratech Cement Ltd has appointed Mr. 0 P Puranmalka as Additional Director with immediate effect.
COMPANY DESCRIPTION:-
UltraTech Cement Limited, together with its subsidiaries, engages in the manufacture and sale of cement in India and internationally. The company manufactures ordinary portland cement, portland blast furnace slag cement, and portland pozzalana cement, as well as ready mix concrete. It exports cement clinker to countries around the Indian Ocean, Africa, Europe, and the Middle East. The company was formerly known as UltraTech CemCo Limited and changed its name to UltraTech Cement Limited in October.
COMPANY ANALYSIS:According to the Consolidated - Audited financial statement for the ear of 2011, total net operating revenues increased with 93.20%, from INR 7,281.76 tens of millions to INR 14,068.35 tens of millions. Operating result increased from INR 1,991.26 tens of millions to INR 2,589.33 tens of millions which means 30.03% change. The results of the period increased 12.65% reaching INR 1,235.55 tens of millions at the end of the period against INR 1,096.84 tens of millions last year. Return on equity (Net income/Total equity) went from 23.75% to 11.61%, the Return On Asset (Net income / Total Asset) went from 15.51% to 6.87% and the Net Profit Margin (Net Income/Net Sales) went from 15.06% to 8.78% when compared to the same period of last year. The Debt to Equity Ratio (Total Liabilities/Equity) was 169.02% compared to 153.11% of last year. Finally, the Current Ratio (Current Assets/Current Liabilities) went from 1.16 to 1.13 when compared to the previous year.
Andhra Pradesh Cement Works Awarpur Cement Works
Gujarat Cement Works
Maggalla Cement Works
Hirmi Cement Works
Ratnagiri Cement Works
Jafrabad Cement Works
West Bengal Cement Works
Ginigera Cement
Arakkonam Cement Works
Jharsuguda Cement Works
Objective of study The main objective of transportation is Physical distribution of goods and services from several supply centers to demand centers. Delivery the goods at right time at right place. Objective of the transportation is to minimize the overall costs by increasing operational efficiency of the manufacturing process. 1) Increased efficiency 2) Improved customer service 3) Increased sales 4) Improved relationships 1.Increased efficiency To increase efficiency, a company must develop cost-effective transportation rates while reducing overhead, total inventory, and overall cost-per-order processing. You can improve your warehouse operations, including processes, layout, and flow, by working closely with your transportation provider. Establish a two-way relationship with your carrier to frequently share best practices, issues, and opportunities. 2.Improved customer service In direct marketing enterprises, fulfilment operations are in partnership with marketing and merchandising. This partnership is like a three-legged stool — without all three legs the stool cannot stand. Fulfilment operations’ inbound and outbound transportation is key to delivering marketing’s promise to the customer to get the shipment delivered on time and in good condition. 3.Increased sales Several opportunities exist for improving service, and those in turn can be used to marketing’s advantage. Look at inbound and outb ound
freight as separate operations with separate requirements. Bundle the volumes wherever possible with your carriers, but recognize the differences between the channels. 1) Building relationships True two-way collaboration between retailer and carrier is key to the success of logistics execution. Measures of success are total cost, time in transit, and responsiveness of the carrier representative
Defining the problem and deciding the research objective:objective: Identified problem or the objective of the research discussed in the report are:-1. Developing the research plan:plan: A. Secondary data:The source from which secondary data collectect: Press
releases of the company . Magazines Websites such as http://www.moneycontrol.com ,and
B. Primary data:Collection of primary data was conducted by visiting the people personally for the
.
preparation of the report repo rt
Research approach:It means the way by which the information was collected. Visiting the various places of Delhi, getting the questionnaire filled by different individual.
Transportation cost from Different Ware house to different dealer of UltraTech. We are taking four ware house i.e. delhi , Agra Harayana, and Ghaziyabad their respective dealer i.e. . delhi , Agra Harayana, and Ghaziyabad and cost for each combination is given below-
Delhi Harayana Agra Ghaziabad
Demand 1500 mt 2000 mt 1850 mt 1200 mt
Capacity 10000sq (1000mt) 13000 sq(1300mt) 18000sq(1800mt) 18000sq (1800mt) 12000sq(1200mt) 12000sq (1200mt)
Delhi
Haryana G. bad Agra
250
420
350
700
Harayana 420
600
500
800
G. bad
350
500
500
700
Agra
700
800
700
450
Delhi
All the cost are given in mt.
