Assigning Pit Heads to Power Plants

The Director of M/s Trident Logistics was in a serious dilemma. The increasing cost of
fuel and manpower; and highly competitive transport business was seriously affecting their
bottom line of performance. To stay afloat in the business, the only way forward in front of
them was to improve the efficiency and effectiveness in the way they operate; and handle
greater volume to generate more revenue.

M/s Trident has recently participated in the e-auctions conducted by M/s Vedanta
Aluminium Ltd for transportation of coal from Pit Heads of SECL located in Korba and
Raigarh Districts of State Chhattisgarh to their power plants situated in Chhattisgarh and
Odisha. M/s Trident won e-auctions for all four pit heads as their bids were accepted based
on L1 and for being technically competent. As per the award conditions and quantity awarded,
each pit had had 50,000 MT of coal each to be transported within 2 months. Cost per MT/KM
was fixed at Rs 2.5, and all four power plants of M/s VAL require continuous coal supply and
shall accept a minimum of 50,000 MT of coal at each location but had no quantity limits in
receiving as they were running with a very less coal stock in respective yards. As per the
award condition, after 2 months the DO will expire, and M/s Trident will be liable to cover a
part of the cost of loss of M/s VAL on account of DO expiry. On such an event, it will be a
huge loss to M/s Trident in terms of penalty levied as well as debarring from participating in
future auctions with M/s VAL.

M/s Trident had sufficient resources within the company to cater this requirement,
however, the Director of M/s Trident has understood that the resources should be allocated
such that TAT (turnaround time between pithead and power plant) is kept at the best to ensure
transportation of assigned quantity (50,000 MT) to each plant. M/s Trident realized that the
profitability of this award is dependent on the speed of execution of the order (i.e., maximum
quantity is lifted within minimum time. This was possible only if resources are established
such that each Pit Head is supplied to its nearest power plant.

Distance between source (Pit Head) and destination (Power Plant) is given in the table
below:

BALCO BALCO VAL VAL-

-CPP1 -CPP2 -JSG LNG
Deepka (PH1) 8 15 240 330
Kushmunda (PH2) 11 11 235 324
Manikpur (PH3) 12 10 220 300
Raigarh (PH4) 110 95 100 180

The Director must decide which Pit Head should be assigned to which plant to complete
the task with least possible time.