A PROJECT ON TRANSPORTATION

PROBLEM

Submitted To:-Prof. B. K. Soam

Submitted by:-
Amit Kumar Verma(TL)
Sudhanshu Singh
Isha 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.

We sincerely thank help provided by my institute “Accman Institute of

Management” 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 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.

Table of Contents

Topic Page No.

1.History of transportation 3
2. mode of transportation 4-6
3. Preface 7
4. Acknowledge 8
5. Executive summary 9
6, Objective of study 10-11
7. Introduction of Yamaha motors 11-13
8. Industrial Profile 13-15
9. Collected Primary Data 16
10.General Mathematical Model of Transportation Problem 17-18
11.Calculation of transportation cost 19
11. a. North west corner rules 19-21
11.b. Least Cost Method 21-22
11.c. Vogel’s Approximation Method 22-24
12.Cost of different Depot to Dealer of Yamaha Motors 24-25
12.a. Cost calculated by North West Method 26
12.b. Cost calculated by Least Cost Method 27
12.c. Cost calculated by Vogel’s method 28
13.Conclusion 30
14. Recommendation 30

Lists of Respondents 30

What is 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

2000BC Horses are domesticated and used for transportation
181-234 The wheelbarrow is invented.
770 Iron horseshoes improve transportation by horse
1492 Leonardo da Vinci first to seriously theorize about flying machines -
with over 100 drawings that illustrated his theories on fligh

1620 Cornelis Drebbel invented the first submarine - an human oared

submersible
1662 Blaise Pascal invents the first public bus - 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 The Montgolfier brothers invent the first hot air balloons
1787 Steamboat invented
1790 Modern bicycles invented
1801 Richard Trevithick invented the first steam powered locomotive
(designed for roads)
1807 Isaac de Rivas makes a hydrogen gas powered vehicle - first with
internal combustion power - however, very unsuccessful design
1807 First steamboat with regular passenger service - inventor Robert
Fulton's Clermont.
1814 George Stephenson invents the first practical steam powered railroad
locomotive
1862 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 fail-safe accuracy
1871 First cable car invented
1885 Karl Benz builds the world's first practical automobile to be powered
by an internal combustion engine
1899 Ferdinand von Zeppelin invents the first successful dirigible - the
Zeppelin
1903 The Wright Brothers invent and fly the first engined airplane.
1907 Very first helicopter - unsuccessful design
1908 Henry Ford improves the assembly line for automobile
manufacturing
1908 Hydrofoil boats co-invented by Alexander Graham Bell & Casey
Baldwin - boats that skimmed water
1926 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 First jumbo jet
1981 Space shuttle launched

MODE OF TRANSPORTATION
Broadly speaking, transportation means can be classified as under:-

1. Land transport
2. Water transport
3. Air transport

Land Transport:-

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 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 named Jean
Joseph Etienne Lenoir – 1860 AD
 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.
With the advent of automation in 19 th century, water transportation changed
forever. Ships shed their sails. Now more goods and people could be
transported 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,
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 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 bj (j=1,2,3,4,………,n) units of
demand (or requirement ) respectively. Let Cij be the cost of shipping one unit
of the commodity from source i to destination j for each route. If Xij 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= ∑𝑛𝑖=1 ∑𝑛𝑗=1 𝐶𝑖𝑗 𝑋𝑖𝑗 (1)

Subject to the constraints

∑𝑛𝑗=1 𝑋𝑖𝑗 = 𝑎𝑖, 1 = 1,2, … . . 𝑚 (Supply constrains) (2)

∑𝑚
𝑖=1 𝑋𝑖𝑗 = 𝑏𝑗, 𝑗 = 1,2,3, … … , 𝑛 (Demand Constrains) (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

Existence of Feasible Solution:-

A necessary and sufficient condition for the existence of a feasible solution to

the transportation problem (1) and (4) is

Total supply= Total Demand

∑𝑚 𝑛
𝑖=1 𝑎𝑖 =∑𝑗=1 𝑏𝑗
General Transportation Table
To D1 D2 …………. Dn Supply
From Ai
S1 C11 C12 ……….. C1n

X11 X12 X1n

a1
S2 C21 C22 ……….. C2n a2

X21 X22 X2n

… … … ……… … …
… … … … …

Sm Cm1 Cm2 ……….. Cmn Am

Xm1 Xm2 Xmn

Demand b1 b2 ………. Bn ∑𝑚 𝑛
𝑖=1 𝑎𝑖 =∑𝑗=1 𝑏𝑗
Bj

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 Transportation Cost

 Transportation cost are calculated by three methods, they are:
1. North East Corner Method
2. Lowest Cost Entry Method
3. Vogel’s 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-
 W1 W2 W3 W4 SUPPLY
F1 11 13 17 14 250
F2 16 18 14 7 300
F3 21 20 13 10 400
DEMAND 200 225 275 250 950

Solution

BY NORTH-WEST CORNER METHOD :

W1 W2 W3 W4 SUPPLY

F1 11 13 17 14 250
200 50

F2 16 18 14 7 300
175 125

F3 21 20 13 10 400
150 250
DEMA 200 225 275 250 950
ND
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 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 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

W1 W2 W3 W4 SUPPLY

F1 11 13 17 14 250
200 50
F2 16 18 14 7 300

50 250
F3 21 20 13 10 400

250 275

DEMA 200 225 275 250 950

ND
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 W2 W3 W4 SUPPL P1 P2 P3 P4 P5 P6
Y
F1 11 13 17 14 250
2 2 2 11 11 11
25 225
F2 16 18 14 7 300
7 2 2 16 16 ---
250
50
F3 21 20 13 10 400
3 7 1 21 --- ---
125 275
DEM 200 225 275 250 950
AND

R1 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

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

Type Public BSE: 532538

Industry Building materials

Founded 1983

Headquarters Mumbai, Maharashtra, India

Key people O P Puranmalka, Director

Products Cements

Revenue 14,068 crore (US$3.09 billion)

(2010-2011)[1]

Profit 1,404 crore (US$308.88 million)

(2010-2011)[1]

Parent Grasim Industries

Website www.ultratechcement.com

Financial Auditors: GP Kapadia & Co (2011)

Total Employees: 11,509

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 Andhra Pradesh Cement Works

Gujarat Cement Works Plant II
1999 Narmada Cement Company Limited acquired
Ratnagiri Cement Works
2000 Bulk cement terminals at Mangalore,
Navi Mumbai and Colombo

2001 Grasim acquires 10 per cent stake in L&T.

Subsequently increasesstake to 15.3 per cent
2002 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)
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
business of L&T and completion of open 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  Arakkonam Cement Works

 Awarpur Cement Works  Jharsuguda Cement Works

 Gujarat Cement Works  Maggalla Cement Works

 Hirmi Cement Works  Ratnagiri Cement Works

 Jafrabad Cement Works  West Bengal Cement Works

 Ginigera Cement

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 outbound 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:-

Identified problem or the objective of the research discussed in the report are:--

1. Developing the research 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.

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-

Demand Capacity
Delhi 1500 mt 10000sq (1000mt)
Harayana 2000 mt 13000 sq(1300mt)
Agra 1850 mt 18000sq(1800mt)
Ghaziabad 1200 mt 12000sq(1200mt)

Delhi Haryana G. bad Agra

Delhi 250 420 350 700

Harayana 420 600 500 800

All the
cost
G. bad 350 500 500 700 are
given
Agra 700 800 700 450 in mt.