Saturday, June 29, 2013

Transportation Modelling

Transportation Modelling
Transportation is the most important part of Logistics & Supply Chain Management. All costs associated with movement of products from one location to another constitute of transportation cost. The average transport costs ranges from 5 to 6 percent of the recommended retail price of the product.

Why Transportation Models are required ?
Companies produce products at locations called Origins and ships these products to customer locations called Destinations.
Each Origin has a limited amount that it can ship, and each Destination must receive a required quantity of the product. 
The Transportation Models prove useful when considering alternative facility locations within the framework of existing distribution system.
Each potential plant, warehouse, or distribution centre will require a different allocation of shipments, depending upon its own production or shipping costs and its strategic position in the network.

Transportation Modelling finds the least cost means of shipping supplies from several Origins to several Destinations.

Origin points (Sources) can be facilities, warehouse or any other points from which the goods are shipped.
Destinations are any points that receive the goods.

To use a Transportation Model, we need to know the following.
  1. The origin points and the capacity or supply per period at each.
  2. The destination points and the demand per period at each.
  3. The cost of shipping one unit from each origin to each destination.
To illustrate one transportation problem, let's look at a company called Bengal Plumbing, which makes among other products, a full line of bathtubs. The company has many factories and warehouses spread along the length and breadth of the country.
In our example the firm must decide which of its factories should supply which of its warehouses.

Relevant data of Bengal Plumbing are presented in the table below :

Transportation Matrix for Bengal Plumbing
From \ To
Warehouse E
Warehouse F
Warehouse G
Factory Capacity
Plant A

Rs.50

Rs.40

Rs.30
100
Plant B

Rs.80

Rs.40

Rs.30
300
Plant C

Rs.90

Rs.70

Rs.50
300
Warehouse Requirement
300
200
200
700









The Table shown above can be explained as following.

Plant (A) Capacity Constraint - 100 Units
Cost of shipping 1 Unit from Plant (A) to Warehouse (E) - Rs. 50
Cost of shipping 1 Unit from Plant (A) to Warehouse (F) - Rs. 40
Cost of shipping 1 Unit from Plant (A) to Warehouse (G) - Rs. 30
Total Demand of Warehouse (E) - 300 Units

Now we know that the 300 Units required by Bengal Plumbing's Warehouse (E) can be shipped in various combinations from its Plants (A), (B) & (C).
The first step in Modelling Process is to set up a Transportation Matrix as shown above. Its purpose is to summarize all relevant data and to keep track of algorithm computations.

Once the data is arranged in tabular form, we must establish a feasible solution to the problem. A number of methods have been developed for this step.
  1. The Northwest Corner Rule
  2. The Intuitive Lowest Cost Method
  3. The Stepping Stone Method
  4. The MODI (Modified Distribution) Method
  5. Vogel's Approximation Method

Wednesday, June 26, 2013

National Stock Exchange (NSE)

National Stock Exchange (NSE)

NSE the 11th largest stock exchange in the world by market capitalization and largest in India by daily turnover and number of trades for both equities and derivatives is located in Mumbai. NSE and BSE are the two most significant stock exchanges in India.

The National Stock Exchange was set up by Government of India on the recommendation of Pherwani Committee in 1991.
Promoted by leading financial institutions essentially led by IDBI at the behest of Government of India, it was incorporated in November 1992 as a tax paying company.

In April 1993, it was recognized as a Stock Exchange under "Securities Contracts Regulations Act, 1956".

The National Stock Exchange (NSE) operates a nationwide, electronic market offering trading in Capital Market, Derivatives Market and Currency Derivatives segments including equities, ETFs, Retain Government Securities.
NSE currently has about 1400 companies listed with it.

S&P CNX Nifty

NSE's Key Index the "S&P CNX Nifty" is an index of fifty major stocks weighted by market capitalization.
It is a benchmark index for Indian Equity Market.

Nifty is owned and managed by India Index Services & Products Ltd. (IISL), which is a joint venture between NSE and CRISIL (Credit Rating & Information Services of India Ltd.).

IISL is India's first specialised company focussed upon the Index as a core product.
IISL has a marketing and licensing agreement with "Standard & Poor's" for co-branding equity indices.

CNX in its name stands for 'CRISIL NSE Index'.
The CNX Nifty covers 22 sectors of Indian economy and offers investment managers exposure to Indian market in one portfolio.

The NIFTY currently consists of the following 30 major Indian companies as of May-2013


Sr. No. Company Name Industry
1 ACC Ltd. CEMENT AND CEMENT PRODUCTS
2 Ambuja Cements Ltd. CEMENT AND CEMENT PRODUCTS
3 Asian Paints Ltd. PAINTS
4 Axis Bank Ltd. BANKS
5 Bajaj Auto Ltd. AUTOMOBILES - 2 AND 3 WHEELERS
6 Bank of Baroda BANKS
7 Bharat Heavy Electricals Ltd. ELECTRICAL EQUIPMENT
8 Bharat Petroleum Corporation Ltd. REFINERIES
9 Bharti Airtel Ltd. TELECOMMUNICATION - SERVICES
10 Cairn India Ltd. OIL EXPLORATION/PRODUCTION
11 Cipla Ltd. PHARMACEUTICALS
12 Coal India Ltd. MINING
13 DLF Ltd. CONSTRUCTION
14 Dr. Reddy's Laboratories Ltd. PHARMACEUTICALS
15 GAIL (India) Ltd. GAS
16 Grasim Industries Ltd. CEMENT AND CEMENT PRODUCTS
17 HCL Technologies Ltd. COMPUTERS - SOFTWARE
18 HDFC Bank Ltd. BANKS
19 Hero MotoCorp Ltd. AUTOMOBILES - 2 AND 3 WHEELERS
20 Hindalco Industries Ltd. ALUMINIUM
21 Hindustan Unilever Ltd. DIVERSIFIED
22 Housing Development Finance Corporation Ltd. FINANCE - HOUSING
23 I T C Ltd. CIGARETTES
24 ICICI Bank Ltd. BANKS
25 IDFC Ltd. FINANCIAL INSTITUTION
26 IndusInd Bank Ltd. BANKS
27 Infosys Ltd. COMPUTERS - SOFTWARE
28 Jaiprakash Associates Ltd. CONSTRUCTION
29 Jindal Steel & Power Ltd. STEEL AND STEEL PRODUCTS
30 Kotak Mahindra Bank Ltd. BANKS
31 Larsen & Toubro Ltd. ENGINEERING
32 Lupin Ltd. PHARMACEUTICALS
33 Mahindra & Mahindra Ltd. AUTOMOBILES - 4 WHEELERS
34 Maruti Suzuki India Ltd. AUTOMOBILES - 4 WHEELERS
35 NMDC Ltd. MINING
36 NTPC Ltd. POWER
37 Oil & Natural Gas Corporation Ltd. OIL EXPLORATION/PRODUCTION
38 Power Grid Corporation of India Ltd. POWER
39 Punjab National Bank BANKS
40 Ranbaxy Laboratories Ltd. PHARMACEUTICALS
41 Reliance Industries Ltd. REFINERIES
42 Reliance Infrastructure Ltd. POWER
43 Sesa Goa Ltd. MINING
44 State Bank of India BANKS
45 Sun Pharmaceutical Industries Ltd. PHARMACEUTICALS
46 Tata Consultancy Services Ltd. COMPUTERS - SOFTWARE
47 Tata Motors Ltd. AUTOMOBILES - 4 WHEELERS
48 Tata Power Co. Ltd. POWER
49 Tata Steel Ltd. STEEL AND STEEL PRODUCTS
50 UltraTech Cement Ltd. CEMENT AND CEMENT PRODUCTS
  

Bombay Stock Exchange (BSE)

Bombay Stock Exchange (BSE)

BSE established in 1875 is Asia's first Stock Exchange. Over the past 137 years, BSE has facilitated the growth of the Indian corporate sector by providing it an efficient capital-raising platform.

BSE provides an efficient and transparent market for trading in equity, debt instruments, derivatives, mutual funds. It also has a platform for trading in equities of small and medium enterprises (SME).

More than 5000 companies are listed on BSE making it the World's No.1 exchange in terms of listed members. 
BSE also operates one of the most respected capital market education institutes in the country (The BSE Institute Ltd.)

BSE's popular equity index - "The S&P BSE Sensex" is India's most widely tracked stock market benchmark index. It is traded internationally on the EUREX as well as leading exchanges of the BRCS nations (Brazil, Russia, China, South Africa)

Sensex - Sensex refers to Sensitive Index and is generally associated with the BSE Stock Market Indices.

BSE Sensex is the stock market index of 30 well established and financially sound companies listed on BSE Ltd. The 30 component companies which are some of the largest and most actively traded stocks are representative of various industrial sectors of the Indian economy.

The BSE Sensex currently consists of the following 30 major Indian companies as of May-2013

Sr. No. Company Industry
1 Housing Development Finance Corporation Ltd. Consumer Finance
2 Cipla Ltd. Pharmaceuticals
3 Bharat Heavy Electricals Ltd. Electrical Equipments
4 State Bank of India Banking
5 Dr. Reddy's Laboratories Ltd. Pharmaceuticals
6 HDFC Bank Ltd. Banking
7 Hero Motocorp Ltd. Automotive
8 Infosys Ltd. Information Technology
9 Oil & Natural Gas Corporation Ltd. Oil & Gas
10 Reliance Industries Ltd. Oil & Gas
11 Tata Power Company Ltd. Power
12 Hindalco Industries Ltd. Metals & Mining
13 Tata Steel Ltd. Steel
14 Larsen & Toubro Ltd. Conglomerate
15 Mahindra & Mahindra Ltd. Automotive
16 Tata Motors Ltd. Automotive
17 Hindustan Unilever Ltd. Consumer Goods
18 ITC Ltd. Conglomerate
19 Sterlite Industries (India) Ltd. Metals & Mining
20 Wipro Ltd. Information Technology
21 Sun Pharmaceutical Industries Ltd. Pharmaceuticals
22 Gail (India) Ltd. Oil & Gas
23 ICICI Bank Ltd. Banking
24 Jindal Steel & Power Ltd. Steel & Power
25 Bharti Airtel Ltd. Telecommunication
26 Maruti Suzuki India Ltd. Automotive
27 Tata Consultancy Services Ltd. Information Technology
28 NTPC Ltd. Power
29 Bajaj Auto Ltd. Automotive
30 Coal India Ltd. Metals & Mining