Tactica

Purvodaya 2K16 |
VGSoM IIT - Kharagpur
Supply Chain & Operations Club
(ScOpe)

Tactica
Guidelines for the case analysis:

The document involves three case lets. It is mandatory to submit the analysis for all three of
them.

The following case lets test your knowledge on operational concepts and logical reasoning
ability. Weightage will be given to
1. Problem identification.
2. Ingenuity and applicability of ideas.
3. Concrete solutions and recommendations with implementation strategy.
4. Mathematical analysis of the case and the appropriate mathematical models used
(wherever applicable).
5. Unnecessary theories or explanations will not invite any attention.
6. Analysis on the basis of various parameters.

The rational assumptions, if any, have to be explicitly listed.

The case analysis must be submitted for the cases in form of presentation (.ppt) in a single .ppt
file (Tactica_[Team Name].ppt). Please include the team name, college name and name of the
members in the title slide.
The second round of the TACTICA will be campus round on 7th February 2016.
Please make use of information only from the case; any external information cannot be used.
Try to be precise and to the point in analysis.
Please adhere to the timelines.
In case of any disputes the decision of the team SCOPE will be final.
Please submit your analysis by 24th January 2016, Sunday [EOD] to
scope.tactica2016@gmail.com with the subject line as Tactica_[Team Name]_College Name.

Vinod Gupta School of Management

1
Thursday, 21 January 2016

Tactica
CASE 1:
With an annual consumption of Rs.6 Crores, Sulphuric Acid is one of the important purchased items for XYZ
Mining Company. On analysis of the demand and the Book of Stock for Sulphuric Acid by a team of internal
auditors
of
the
company,
the
following
were
observed:

Maximum Consumption on a day 54 tons

Minimum Consumption on a day 0 tons
Average Consumption per day 30 tons
The average price - Rs 2525/ton

The team observed that there have been regular receipts every month which equals the consumption for
the month. The team is aware of the practice of booking consumption equal to the receipts irrespective of
the actual consumption. On physical verification of the inventory the team found that there has been huge
mismatch
between
actual
and
month-end
closing
inventory.
The team collected sample inventory data for the last six-months from MIS and carried out an analysis. The
analysis revealed the following:

Average monthly inventory - 753 tons

The stock has fallen below 200 tons only on very rare occasions.
On an average a weeks consumption is being maintained as safety stock.

For, XYZ Mining Company, the major supplier for Sulphuric Acid is HCL. HCL is also the cheapest source
which supplies daily. XYZ Mining Company also involves few backup suppliers, who are relatively costly.
However, these suppliers can deliver the material at a very short notice. Based on its analysis the team
recommended the following inventory policy for Sulphuric Acid:
There company should maintain a safety stock of about 2 weeks consumption.
The average total stock level should be around 400 to 450 tons.
Procurement of Sulphuric Acid should be organized in a manner such that the daily receipt matches
with the consumption.
Although HCL is the cheapest source but highly unreliable. As Sulphuric Acid is a widely available
commodity in India, in case of exigencies the item can be made available within a very short notice.
However, the landed cost is substantially higher in case of other suppliers

It is recommended that the purchase department should work with few other vendors and develop them as
a more reliable and cheaper source for Sulphuric Acid

The Company has decided to take second opinion on the recommendation given. As a consultant what is
your advice to the XYZ Company. Give justifications for your answer.

Vinod Gupta School of Management

2
Thursday, 21 January 2016

Tactica
CASE 2:
Bangladesh Railways is considering introducing catering services in their long distance trains. They have
decided to use the Indian model of catering services in trains but the authorities are of the opinion going by
the lowest bid for selecting caterers might not be the best solution. Bangladesh has reputed caterers that
service at government events. They operate in large volumes and have the financial capability to cater to
such widely spread operations as warranted by railways. There are fast food chains, who think they can,
based on the chain network advantage, cater to railways. There are small caterers in the city ready to be
feeders to these caterers. Since this is a new initiative there is no quantitative data to back up claims by any
of the parties.
Indian experience shows that running catering services in long distance trains is not easy. Even large
business houses have opted out after catering for a year or so, because they did not have any earlier
experience in this sector. One has to have employees 24X7X365. There should be sourcing bases in smaller
towns. Sometimes if the train is delayed local procurement is to be done. Imagine procuring 2000 eggs
from a village. Irrespective of the profits to be earned by the catering service provider, Railways have to be
paid upfront a sizable amount of fees. These entire make the proposition challenging.
a. Discuss ways Bangladeshi Railways services can go about selecting Railways catering service
providers.
b. How would you allot routes or trains to catering service providers?
c. Considering Bangladesh Railways is similar to Indian railways, provide a holistic approach to
cater the travellers during various contingency situations.

Vinod Gupta School of Management

3
Thursday, 21 January 2016

Tactica
CASE 3:
SK Warehousing Ltd. rents warehouse space to different companies. For this purpose, SKW themselves
either buy warehouse space from market or lease them from other giant warehouses. The products that
are normally stored in warehouses operated by SKW in this manner normally occupy 1sqft area for 1 unit of
product. The current demand faced by SKW is 100000 units per year. SKW feels that the demand faced by
them for warehouse space may go up by 20% with a probability of 0.5 or may go down by 20% with a
probability of 0.5. The probabilities of the two outcomes are independent of each other.
SKW can sign a three-year lease at a price of Rs.1 per sqft per year. The spot market rate for warehouse
space is Rs.1.20 per sqft per year. From one year to the next, the spot prices may go up or down by 10%
with a probability of 0.5. The probabilities of the two outcomes are independent of each other.
SKW feels that they can earn revenue at price of Rs.1.22 per sqft. Discount rate is 0.1. SKW assumes that all
costs are incurred at the beginning of the year.
SKW also has the option to pay upfront Rs.10000 and avail the flexibility of using between 60000 to 100000
sqft of warehouse space at Rs.1 per sqft. SKW must pay Rs.60000 for the 1st 60000sqft and can use up to
another 40000sqft on demand at Rs.1 per sqft. Decide whether SKW should:
a. Get all warehouse space from the spot market when required
b. Sign a three-year lease for a fixed amount of space and get additional space form spot market
c. Sign a flexible lease with minimum charge that allows variable usage of warehouse space up to a
limit with additional requirement from the spot market.

Vinod Gupta School of Management

4
Thursday, 21 January 2016