Assignment # 2: (Department of Business Administration) Business Forecating (5566)

2ND ASSIGNMENT BUSINESS FORECASTING
(Department of Business Administration)

Assignment # 2
BUSINESS FORECATING (5566)
Topic:
BUSINESS FORECATING
Roll #
CELL #
Submitted by: SYED TAHIR ALI SHAH
Submitted to:
ACKNOWLEDGEMENT
All praises to Almighty Allah, the creator of the
Universe who blessed me with the knowledge
and enabled me to complete this research. I feel
great pleasure and honor to express my
sincere gratitude and heartfelt thanks to my
worthy subject faculty members , for their
guidance, encouragement and friendly attitude
during the present study
and throughout the period of M.B.A (Semester I).
I pay my thanks to all the Faculty of the

Department & AIOU Islambad Campus Staff for
their
kind support, constructive criticisms and real
encouragement. I wish to thank to all my teachers
for valuable discussions and knowledge sharing
during the completion of this project.
I further wish to record my thanks to all my
students, class fellows, well wishers and
Finally, I owe all my academic success and

progress in life to my loving wife and daughter,
whose affection, endless prayers, good wishes and
inspiration remained with me for higher
ideals of life.
Syed Tahir Ali Shah
ABSTRACT
The study had been carried out by keeping in

mind about the internal and external
benchmarking techniques for the sake of an
organizational, in which the planning
strategy should be adopted as input that can
help us out for continues progress of that
firm
WAPDA has been selected for the sake of the
data analysis and working
on its merits and demerits, the methodology
includes the evaluation of the different
benchmarking techniques and evaluation on
the basis of the bench marking solutions.
Merits and de-merits had been carried out
and conclusion followed by recommendations
had
been made in this regards.
WHAT IS BUSINESS FORECASTING

Forecasting is the process of making statements about events whose actual outcomes (typically) have not
yet been observed. A commonplace example might be estimation of the expected value for some variable
of interest at some specified future date. Prediction is a similar, but more general term. Both might refer to
formal statistical methods employing time series,cross-sectional or longitudinal data, or alternatively to
less formal judgemental methods. Usage can differ between areas of application: for example
in hydrology, the terms "forecast" and "forecasting" are sometimes reserved for estimates of values at
certain specific future times, while the term "prediction" is used for more general estimates, such as the
number of times floods will occur over a long period. Risk anduncertainty are central to forecasting and
prediction; it is generally considered good practice to indicate the degree of uncertainty attaching to
forecasts. The process of climate change and increasing energy prices has led to the usage of Egain
Forecasting of buildings. The method uses Forecasting to reduce the energy needed to heat the building,
thus reducing the emission of greenhouse gases. Forecasting is used in the practice of Customer Demand
Planning in every day business forecasting for manufacturing companies. The discipline of demand
planning, also sometimes referred to as supply chain forecasting, embraces both statistical forecasting and
a consensus process. An important, albeit often ignored aspect of forecasting, is the relationship it holds
with planning. Forecasting can be described as predicting what the future will look like, whereas planning
predicts what the future should look like.There is no single right forecasting method to use. Selection of a
method should be based on your objectives and your conditions (data etc.). A good place to find a
method, is by visiting a selection tree. An example of a selection tree can be found here
Why Forecasting Is Important

There are a number of fairly obvious reasons why good forecasting is an important part of good
management.
There can be no intelligent or effective planning for a business enter- prise without the preliminary step
of forecasting. The planned objectives of management can be realized only when there is a
reasonably accurate forecast of the trend of general business and of the sales in-come of the specific
company. The businessman cannot act on the spur of the moment. Successful management requires that
the businessman look ahead and make plans. In short, he must plan, and he must fore-
cast in order that he can plan.
Successful budgeting of expenses, costs, and profits depends on good forecasting of sales income. Some
well-conceived and executed budget plans have failed and have been discarded because they were
not backed up by good sales forecasts. A forecast of annual sales and prices is the necessary foundation of
the control of a business through a budgetary program. 1
Categories of forecasting methods

(b) important sub topic
Time series methods

Modeling the Causal Time Series:
With multiple regressions, we can use more than one predictor. It is always best, however, to be
parsimonious, that is to use as few variables as predictors as necessary to get a reasonably accurate
forecast. Multiple regressions are best modeled with commercial package such as SAS or SPSS. The
forecast takes the form:
Y=
0 + 1X1 + 2X2 + . . .+ nXn,
where 0 is the intercept, 1, 2, . . . n are coefficients representing the contribution of the
independent variables X1, X2,..., Xn.
Forecasting is a prediction of what will occur in the future, and it is an uncertain process. Because of the
uncertainty, the accuracy of a forecast is as important as the outcome predicted by forecasting the
independent variables X1, X2,..., Xn. A forecast control must be used to determine if the accuracy of the
forecast is within acceptable limits. Two widely used methods of forecast control are a tracking signal,
and statistical control limits.
The methods use historical data as the basis of estimating future outcomes.
Rolling forecast is a projection into the future based on past performances, routinely
updated on a regular schedule to incorporate data.
Moving average
weighted moving average
Exponential smoothing
Autoregressive moving average (ARMA)

Autoregressive integrated moving average (ARIMA)
e.g. Box-Jenkins
Extrapolation
Linear prediction
Trend estimation
Growth curve
Causal / econometric forecasting methods

Some forecasting methods use the assumption that it is possible to identify the underlying factors that
might influence the variable that is being forecast. For example, including information about weather
conditions might improve the ability of a model to predict umbrella sales. Such methods include:
Regression analysis includes a large group of methods that can be used to predict future values of a
variable using information about other variables. These methods include both parametric (linear or non-
linear) and non-parametric techniques.
Autoregressive moving average with exogenous inputs (ARMAX)
Forecasting accuracy
The forecast error is the difference between the actual value and the forecast value for the corresponding
period.
where E is the forecast error at period t, Y is the actual value at period t, and F is the forecast for period t.
Measures of aggregate error:
Mean Absolute Error (MAE)
Mean Absolute Percentage Error (MAPE)
Percent Mean Absolute Deviation (PMAD)
Mean squared error (MSE)
Root Mean squared error (RMSE)

Forecast skill (SS)
Please note that business forecasters and practitioners sometimes use different terminology in the
industry. They refer to the PMAD as the MAPE, although they compute this volume weighted MAPE.
For more information see Calculating Demand Forecast Accuracy
Reference class forecasting was developed to increase forecasting accuracy.
Tracking signal
It is computed by dividing the total residuals by their mean absolute deviation (MAD). To stay within 3
standard deviations, the tracking signal that is within 3.75 MAD is often considered to be good enough.
Statistical control limit

These are calculated in a manner similar to other quality control limit charts, however, the residual
standard deviation are used.
Multiple regressions are used when two or more independent factors are involved, and it is widely used
for short to intermediate term forecasting. They are used to assess which factors to include and which to
exclude. They can be used to develop alternate models with different factors.
Trend Analysis:
Uses linear and nonlinear regression with time as the explanatory variable, it is used where pattern over
time have a long-term trend. Unlike most time-series forecasting techniques, the Trend Analysis does not
assume the condition of equally spaced time series.
Nonlinear regression does not assume a linear relationship between variables. It is frequently used when
time is the independent variable.
You may like using Detective Testing for Trend JavaScript.
In the absence of any "visible" trend, you may like performing the Test for Randomness of Fluctuations,
too.
Modeling Seasonality and Trend:

Seasonality is a pattern that repeats for each period. For example annual seasonal pattern has a cycle that
is 12 periods long, if the periods are months, or 4 periods long if the periods are quarters. We need to get
an estimate of the seasonal index for each month, or other periods, such as quarter, week, etc, depending
on the data availability.
1. Seasonal Index:
Seasonal index represents the extent of seasonal influence for a particular segment of the year. The
calculation involves a comparison of the expected values of that period to the grand mean.
A seasonal index is how much the average for that particular period tends to be above (or below) the
grand average. Therefore, to get an accurate estimate for the seasonal index, we compute the average of
the first period of the cycle, and the second period, etc, and divide each by the overall average. The
formula for computing seasonal factors is:
Si = Di/D,
where:
Si = the seasonal index for ith period,

Di = the average values of ith period,
D = grand average,
i = the ith seasonal period of the cycle.
A seasonal index of 1.00 for a particular month indicates that the expected value of that month is 1/12 of
the overall average. A seasonal index of 1.25 indicates that the expected value for that month is 25%
greater than 1/12 of the overall average. A seasonal index of 80 indicates that the expected value for that
month is 20% less than 1/12 of the overall average.
2. Deseasonalizing Process:
Deseasonalizing the data, also called Seasonal Adjustment is the process of removing recurrent and
periodic variations over a short time frame, e.g., weeks, quarters, months. Therefore, seasonal variations
are regularly repeating movements in series values that can be tied to recurring events. The
Deseasonalized data is obtained by simply dividing each time series observation by the corresponding
seasonal index.
Almost all time series published by the US government are already deseasonalized using the seasonal
index to unmasking the underlying trends in the data, which could have been caused by the seasonality
factor.
3. Forecasting:
Incorporating seasonality in a forecast is useful when the time series has both trend and seasonal
components. The final step in the forecast is to use the seasonal index to adjust the trend projection. One
simple way to forecast using a seasonal adjustment is to use a seasonal factor in combination with an
appropriate underlying trend of total value of cycles.
4. A Numerical Application:
The following table provides monthly sales ($1000) at a college bookstore. The sales show a seasonal
pattern, with the greatest number when the college is in session and decrease during the summer months.
M Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
T
1 196 188 192 164 140 120 112 140 160 168 192 200 1972
2 200 188 192 164 140 122 132 144 176 168 196 194 2016
3 196 212 202 180 150 140 156 144 164 186 200 230 2160
4 242 240 196 220 200 192 176 184 204 228 250 260 2592
Mean: 208.6 207.0 192.6 182.0 157.6 143.6 144.0 153.0 177.6 187.6 209.6 221.0 2185
Index: 1.14 1.14 1.06 1.00 0.87 0.79 0.79 0.84 0.97 1.03 1.15 1.22 12
Suppose we wish to calculate seasonal factors and a trend, then calculate the forecasted sales for July in
year 5.
The first step in the seasonal forecast will be to compute monthly indices using the past four-year sales.
For example, for January the index is:
S(Jan) = D(Jan)/D = 208.6/181.84 = 1.14,
where D(Jan) is the mean of all four January months, and D is the grand mean of all past four-year sales.
Similar calculations are made for all other months. Indices are summarized in the last row of the above
table. Notice that the mean (average value) for the monthly indices adds up to 12, which is the number of
periods in a year for the monthly data.
Next, a linear trend often is calculated using the annual sales:
Y = 1684 + 200.4T,
The main question is whether this equation represents the trend.
Determination of the Annual Trend for the Numerical Example

Year No: Actual Sales Linear Regression Quadratic Regression
1 1972 1884 1981
2 2016 2085 1988
3 2160 2285 2188
4 2592 2486 2583
Often fitting a straight line to the seasonal data is misleading. By constructing the scatter-diagram, we
notice that a Parabola might be a better fit. Using the Polynomial Regression JavaScript, the estimated
quadratic trend is:
Y = 2169 - 284.6T + 97T2
Predicted values using both the linear and the quadratic trends are presented in the above tables.
Comparing the predicted values of the two models with the actual data indicates that the quadratic trend is
a much superior fit than the linear one, as often expected.
We can now forecast the next annual sales; which, corresponds to year 5, or T = 5 in the above quadratic
equation:
Y = 2169 - 284.6(5) + 97(5)2 = 3171

sales for the following year. The average monthly sales during next year is, therefore: 3171/12 = 264.25.
Finally, the forecast for month of July is calculated by multiplying the average monthly sales forecast by
the July seasonal index, which is 0.79; i.e., (264.25).(0.79) or 209.
You might like to use the Seasonal Index JavaScript to check your hand computation. As always you
must first use Plot of the Time Series as a tool for the initial characterization process.
For testing seasonality based on seasonal index, you may like to use the Test for Seasonality JavaScript.
Trend Removal and Cyclical Analysis:

The cycles can be easily studied if the trend itself is removed. This is done by expressing each actual
value in the time series as a percentage of the calculated trend for the same date. The resulting time series
has no trend, but oscillates around a central value of 100.
Decomposition Analysis:
It is the pattern generated by the time series and not necessarily the individual data values that offers to
the manager who is an observer, a planner, or a controller of the system. Therefore, the Decomposition
Analysis is used to identify several patterns that appear simultaneously in a time series.
A variety of factors are likely influencing data. It is very important in the study that these different
influences or components be separated or decomposed out of the 'raw' data levels. In general, there are
four types of components in time series analysis: Seasonality, Trend, Cycling andIrregularity.
Xt = St . Tt. Ct . I
The first three components are deterministic which are called "Signals", while the last component is a
random variable, which is called "Noise". To be able to make a proper forecast, we must know to what
extent each component is present in the data. Hence, to understand and measure these components, the
forecast procedure involves initially removing the component effects from the data (decomposition). After
the effects are measured, making a forecast involves putting back the components on forecast estimates
(recomposition). The time series decomposition process is depicted by the following flowchart:
Definitions of the major components in the above flowchart:
Seasonal variation:
When a repetitive pattern is observed over some time horizon, the series is said to have seasonal behavior.
Seasonal effects are usually associated with calendar or climatic changes. Seasonal variation is frequently
tied to yearly cycles.
Trend:
A time series may be stationary or exhibit trend over time. Long-term trend is typically modeled as a
linear, quadratic or exponential function.
Cyclical variation:
An upturn or downturn not tied to seasonal variation. Usually results from changes in economic
conditions.
1. Seasonalities are regular fluctuations which are repeated from year to year with about the same
timing and level of intensity. The first step of a times series decomposition is to remove seasonal
effects in the data. Without deseasonalizing the data, we may, for example, incorrectly infer that
recent increase patterns will continue indefinitely; i.e., a growth trend is present, when actually the
increase is 'just because it is that time of the year'; i.e., due to regular seasonal peaks. To measure
seasonal effects, we calculate a series of seasonal indexes. A practical and widely used method to
compute these indexes is the ratio-to-moving-average approach. From such indexes, we may
quantitatively measure how far above or below a given period stands in comparison to the
expected or 'business as usual' data period (the expected data are represented by a seasonal index
of 100%, or 1.0).
2. Trend is growth or decay that is the tendencies for data to increase or decrease fairly steadily over
time. Using the deseasonalized data, we now wish to consider the growth trend as noted in our
initial inspection of the time series. Measurement of the trend component is done by fitting a line
or any other function. This fitted function is calculated by the method of least squares and
represents the overall trend of the data over time.
3. Cyclic oscillations are general up-and-down data changes; due to changes e.g., in the overall
economic environment (not caused by seasonal effects) such as recession-and-expansion. To
measure how the general cycle affects data levels, we calculate a series of cyclic indexes.
Theoretically, the deseasonalized data still contains trend, cyclic, and irregular components. Also,
we believe predicted data levels using the trend equation do represent pure trend effects. Thus, it
stands to reason that the ratio of these respective data values should provide an index which
reflects cyclic and irregular components only. As the business cycle is usually longer than the
seasonal cycle, it should be understood that cyclic analysis is not expected to be as accurate as a
seasonal analysis.
Due to the tremendous complexity of general economic factors on long term behavior, a general
approximation of the cyclic factor is the more realistic aim. Thus, the specific sharp upturns and
downturns are not so much the primary interest as the general tendency of the cyclic effect to
gradually move in either direction. To study the general cyclic movement rather than precise
cyclic changes (which may falsely indicate more accurately than is present under this situation),
we 'smooth' out the cyclic plot by replacing each index calculation often with a centered 3-period
moving average. The reader should note that as the number of periods in the moving average
increases, the smoother or flatter the data become. The choice of 3 periods perhaps viewed as
slightly subjective may be justified as an attempt to smooth out the many up-and-down minor
actions of the cycle index plot so that only the major changes remain.
4. Irregularities (I)
are any fluctuations not classified as one of the above. This component of the time series is
unexplainable; therefore it is unpredictable. Estimation of I can be expected only when its
variance is not too large. Otherwise, it is not possible to decompose the series. If the magnitude of
variation is large, the projection for the future values will be inaccurate. The best one can do is to
give a probabilistic interval for the future value given the probability of I is known.
5. Making a Forecast:
At this point of the analysis, after we have completed the study of the time series components, we
now project the future values in making forecasts for the next few periods. The procedure is
summarized below.
o Step 1: Compute the future trend level using the trend equation.
o Step 2: Multiply the trend level from Step 1 by the period seasonal index to include
seasonal effects.
o Step 3: Multiply the result of Step 2 by the projected cyclic index to include cyclic effects
and get the final forecast result.
Supply chain management –

Forecasting can be used in Supply Chain Management to make sure that the right product
is at the right place at the right time. Accurate forecasting will help retailers reduce excess
inventory and therefore increase profit margin. Accurate forecasting will also help them
meet consumer demand.
• Weather forecasting
• Flood forecasting
• Meteorology
• Transport planning
• Transportation forecasting
• Economic forecasting
• Egain Forecasting
• Technology forecasting
• Earthquake prediction
• Land use forecasting
• Product forecasting
• Player and team performance in sports
• Telecommunications forecasting
• Political Forecasting
• Sales Forecasting
Practical Study of the Organisation

My STUDY IS ON WAPDA
COMPANY PROFILE
WAPDA, the Pakistan Water and Power Development Authority, was created in 1958 as a Semi-
Autonomous Body for the purpose of coordinating and giving a unified direction to the development of
schemes in Water and Power Sectors, which were previously being dealt with, by the respective
Electricity and Irrigation Department of the Provinces.
Since October 2007, WAPDA has been bifurcated into two distinct entities i.e. WAPDA and Pakistan
Electric Power Company (PEPCO). WAPDA is responsible for water and hydropower development
whereas PEPCO is vested with the responsibility of thermal power generation, transmission, distribution
and billing. There is an independent Chairman and MD (PEPCO) www.pepco.gov.pk replacing Chairman
WAPDA and Member (Power) who were previously holding the additional charges of these posts.
WAPDA is now fully responsible for the development of Hydel Power and Water Sector Projects.
PEPCO has been fully empowered and is responsible for the management of all the affairs of corporatized
nine Distribution Companies (DISCOs), four Generation Companies (GENCOs) and a National
Transmission Dispatch Company (NTDC). These companies are working under independent Board of
Directors (Chairman and some Directors are from Private Sectors).
The Companies are administratively autonomous and leading to financial autonomy by restructuring their
balance sheets by bringing their equity position to at least 20 percent, required to meet the prudential
regulations and to facilitate financing from commercial sector (approved by ECC).
The Loan Liability Transfer Agreements (LLTA) have been signed with Corporate Entities and execution
of loan transfer is complete.
All Entities have the physical possessions of all their operational assets.
On 24th Feb. 2007 Ministry of Water & Power notified NEPRAapproved Tariff for all Distribution
Companies replacing unified WAPDA Tariff.
Legal Agreements such as Business Transfer Agreements, Operation Development Agreement, Energy
Supply Agreement, Business Supplementary Agreement and Fuel Supply Agreement etc. were executed
between WAPDA and Corporate Entities to facilitate commercial operations.
Regulatory instruments like Grid Code, Distribution Codes, Performance Standard for Distribution
Companies and Transmission Companies were drafted and got approved from (www.nepra.org.pk) in
2007.
All major lenders gave their consent for transfer of their loan from WAPDA to Corporate Entities, thus
326 loan assumption agreement were signed amongst respective Companies, WAPDA and EAD
(Economic Affairs Division) GOP.
CPPA is established under the coverage of NTDC for payments from DISCOs to IPPs, GENCOs and
NTDC. Ultimately, it will function independently under Federal Govt. and all forthcoming IPPs will be
under CPPA.
The Charter of Duties of WAPDA is to investigate, plan and execute schemes for the following fields:
Generation,
Transmission and Distribution of Power.
Irrigation,
Water Supply and Drainage.
Prevention of Water logging and Reclamation of Waterlogged and Saline Lands.

Flood Management.
Inland Navigation.
The Authority comprises of a Chairman and three (3) Members working through a Secretary.
WAPDA is one of the largest employers of human resources in Pakistan. Over the years WAPDA has
built-up a reservoir of Technical know-how and expertise which has made it a modern and progressive
organization.
The primary development role of WAPDA has been revived. It is now focusing only on Hydel
Development and Water Sector Projects to support the national economy and poverty
alleviation through improved Hydel-Thermal mix of Power Generation, provision of electricity
at affordable price and most pertinently perspective planning and timely execution of Projects
to meet the Water and Power demand of the growing population, agriculture and industry of the
country.
*Installed Capacity of WAPDA System (as of June 2007)

Hydel 6444 MW
GENCOs 4675 MW
IPPs 5772 MW (including 30 MW Hydel)
Nuclear IPP (Chashnup) 325 MW
Rental 150 MW
Total 17366 MW
WAPDA has now undertaken Vision 2025 Programme comprising a comprehensive integrated
Water Resources and Hydro Power Development.
Five Mega Hydropower Projects have been announced by President of Pakistan which are to be
completed by 2016 with Generation Capacity of 9,500 MW. The total cost of these Projects
will be US$20.3 Billion. Two Projects are ready for awarding construction works whereas three
Projects are in the stage of feasibility studies and preparation of tender documents.
In addition to above, there are 14 new Projects which are under study for construction with
Generation Capacity of 20,770 MW with expected construction cost US$ 32.15 Billion. The
Projects will be located on River Indus and its Tributaries.
WAPDA USES OF BUSINESS FORECASTING

For the purpose of forecasting wapda is using for both financial and operational purpose and using all of
the techniques such as
Moving average
What is moving average
Wapda uses moving average method for their financial needs A moving average, also called rolling average, rolling
mean or running average, is a type of finite impulse response filterused to analyze a set of data points by
creating a series of averages of different subsets of the full data set
A simple moving average (SMA) is the unweighted mean of the previous n data points. For example, a
10-day simple moving average of closing price is the mean of the previous 10 days' closing prices. If
those prices are then the formula is
Weighted moving average

A weighted average is any average that has multiplying factors to give different weights to different data points.
Mathematically, the moving average is the convolution of the data points with a moving average function in
technical analysis, a weighted moving average (WMA) has the specific meaning of weights that decrease
arithmetically] In an n-day WMA the latest day has weight n, the second latest n − 1, etc, down to one.
WMA weights n = 15
The denominator is a triangle number, and can be easily computed as
When calculating the WMA across successive values, it can be noted the difference between the
numerators of WMAM+1 and WMAM is npM+1 − pM − ... − pM−n+1. If we denote the sumpM + ... + pM−n+1 by
Total M, then
The graph at the right shows how the weights decrease, from highest weight for the most recent data
points, down to zero. It can be compared to the weights in the exponential moving average which
follows..
Exponential moving average
Further information: EWMA chart
EMA weights N=15

An exponential moving average (EMA), also known as an exponentially weighted moving

average (EWMA), is a type of infinite impulse response filter that applies weighting factors which
decrease exponentially. The weighting for each older data point decreases exponentially, never reaching
zero. The graph at right shows an example of the weight decrease.
The formula for calculating the EMA at time periods
t > 2 is
Where:
The coefficient α represents the degree of weighting decrease, a constant smoothing factor between 0 and
1.
A higher α discounts older observations faster.
Alternatively, α may be expressed in terms of N time periods, where α = 2/(N+1).
For example, N = 19 is equivalent toα = 0.1. The half-life of the weights (the interval over which the
weights decrease by a factor of two) is approximately N/2.8854 (within 1% ifN > 5).
Yt is the observation at a time period t.

St' is the value of the EMA at any time period t.
S1 is undefined. S2 may be initialized in a number of different ways, most commonly by setting S2 to Y1,
though other techniques exist, such as setting S2 to an average of the first 4 or 5 observations. The
prominence of the S2 initialization's effect on the resultant moving average depends on α; smaller α values
make the choice of S2 relatively more important than larger α values, since a higher α discounts older
observations faster.
This formulation is according to Hunter (1986). By repeated application of this formula for different
times, we can eventually write St as a weighted sum of the data points Yt, as:
for any suitable k = 0, 1, 2, ... The weight of the general data point Yt − i is α(1 − α)i − 1.
An alternate approach uses Yt in lieu of Yt−1
This formula can also be expressed in technical analysis terms as follows, showing how the EMA steps
towards the latest data point, but only by a proportion of the difference (each time):
Expanding out EMAyesterday each time results in the following power series, showing how the weighting
factor on each data point p1, p2, etc, decreases exponentially:
This is an infinite sum with decreasing terms.

The N periods in an N-day EMA only specify the α factor. N is not a stopping point for the calculation in
the way it is in an SMA or WMA. For sufficiently large N, The first N data points in an EMA represent
about 86% of the total weight in the calculation:
simplified, tends to .
The power formula above gives a starting value for a particular day, after which the successive days
formula shown first can be applied. The question of how far back to go for an initial value depends, in the
worst case, on the data. If there are huge p price values in old data then they'll have an effect on the total
even if their weighting is very small. If one assumes prices don't vary too wildly then just the weighting
can be considered. The weight omitted by stopping after k terms is
which is
i.e. a fraction
= (1 − α)k
out of the total weight.

For example, to have 99.9% of the weight, set above ratio equal to 0.1% and solve for k:
terms should be used. Since approaches as N increases[9], this simplifies to

approximately[
for this example (99.9% weight).

Modified moving average
A modified moving average (MMA), running moving average (RMA), or smoothed moving
average is defined as:
In short, this is exponential moving average, with α = 1 / N.
Application to measuring computer performance
Some computer performance metrics, e.g. the average process queue length, or the average CPU
utilization, use a form of exponential moving average.
Here α is defined as a function of time between two readings. An example of a coefficient giving bigger
weight to the current reading, and smaller weight to the older readings is
where time for readings tn is expressed in seconds, and W is the period of time in minutes over which the
reading is said to be averaged (the mean lifetime of each reading in the average). Given the above
definition of α, the moving average can be expressed as
For example, a 15-minute average L of a process queue length Q, measured every 5 seconds (time
difference is 5 seconds), is computed as
Moving median
From a statistical point of view, the moving average, when used to estimate the underlying trend in a time
series, is susceptible to rare events such as rapid shocks or other anomalies. A more robust estimate of the
trend is the simple moving median over n time points:
where the median is found by, for example, sorting the values inside the brackets and finding the value in
the middle.
Statistically, the moving average is optimal for recovering the underlying trend of the time series when
the fluctuations about the trend are normally distributed. However, the normal distribution does not place
high probability on very large deviations from the trend which explains why such deviations will have a
disproportionately large effect on the trend estimate. It can be shown that if the fluctuations are instead
assumed to be Laplace distributed, then the moving median is statistically optimal[12]. For a given
variance, the Laplace distribution places higher probability on rare events than does the normal, which
explains why the moving median tolerates shocks better than the moving mean.
When the simple moving median above is central, the smoothing is identical to the median filter which
has applications in, for example, image signal processing.
Merits and De-Merits of Business Forecasting with respect

of WAPDA
Merits
1) Accurate estimates for the demand and supply of the
electricity through good forecasting.
2) Through forecasting a better utilization of the organizational
financial resources.
3) It is better able to handle the unforeseen event in future.
4) Appropriate forecasting will help wapda to draw new
planning for upcoming needs of consumer.
5) Now Wapda is taking a lot measures to handle the gap
between demands and supply troughs forecasting.
6) Wapda is using ERP Forecasting for their financial needs.
De-Merits
During the current condition of the country demerits of
business forecasting with relating to the Wapda is many more
because now a day’s wapda is the main source which badly
effect the economics growth of the country according to my
study I observe the following de-merits in wapda with
reference to the Business forecasting.
1) Because of wrong forecasting Wapda is facing Gap between

demand and supply of electricity.
2) Recourses of the organization is wrongly utilizing with out
any forecasting.
3) Main cause of shortage of electricity is because of
inappropriate Business forecasting in Wapda.
4) Financial losses of the organization because of wrong
forecasting.
5) Wapda faces daily million rupee financial losses because of
wastage
6) Our dams which may be stared in early 90,s those are in
pipe lines up till now because of wrong forecasting
7) Political influence in Wapda causes lot difficulties in
completion of their programmes such as Kala Bagh Dam.
Conclusion and Recommendations
During my study of the Wapda I observe that and reach upon

following conclusion that
Wapda is one of the largest public sector organizations of our
country but now a days it became a white elephant for our
drowning economy because of
Inappropriate management,
Large number of employees,
Corruption inside the organization,
Operation inefficiency,
Electricity theft,
Line losses, political influence,
No research upon new resources of generation of power and
bad forecasting
But it is only the organization that handling all the power
needs of the country
My recommendation to the Top management of the

organization is that they must control their
Recourses uses effectively and efficiently and they must take a
strict action against the corrupt official of organization and line
losses and theft of the electricity must be controlled so they
are able to have more resources to run their organization
affectively and they must adopt new method of power
generation such as wind power, and the public at large are
allowed to privately set up their own limited capacity power
plant, and most importantly they are allowed to do forecasting
about the demand of the country needs and supply forecasting
is an appropriate ay so they be better able to handle the crises
of the electricity in future.
ACKNOWLEDGEMENT
All praises to Almighty Allah, the most Gracious, the most Beneficent and the most Merciful, who
enabled me to complete this assignment.
I feel great pleasure in expressing my since gratitude to my teacher, for his guidance and support for
providing me an opportunity to complete a productive research study of my topic
“PROCEDURE OF MATERIAL PROCUREMENT AND USE”.
My special thanks and acknowledgments to Mr. Muhammad Noman, Assistant Manager (Procurement),
PTCL H/Qs, G-8/4, Islamabad for providing me all relative information, guidance and support to compile
the practical study on PTCL PAKISTAN.
I will keep my hopes alive for the success of given task to submit this report to my honorable teacher
Mr. SADAR AYUB SB, whose guidance; support and encouragement enable me to complete this
assignment.
EXECUTIVE SUMMARY
This assignment is a research-oriented activity, which represents both the theoretical and practical
implication of the topic. In the first section of this assignment, I explain the theoretical aspect of the topic
and all major parts has been explained which are involved in the procedure of material procurement and
us in business in cost and management. For empirical study, I select PTCL Pakistan. And compare their
ways of the procedure of material procurement and use in business instruments.
Topic- procedure of material procurement and use.

Procurement is the acquisition of goods and/or services at the best possible total cost of
ownership, in the right quantity and quality, at the right time, in the right place and from the right source
for the direct benefit or use of corporations or individuals, generally via a contract.
Material procurement is a very effective and important tool of material management which is designed to
provide the best services to customers, produce at maximum efficiency and to manage inventories at
predetermined levels to stabilize investments in inventories.
Material management and specially the procurement procedure is always required a integrated and
coordinated system having keen observation of the following:-
i. Sales Forecasting.
ii. Purchasing
iii. Receiving
iv. Storage
v. Production
vi. Shipping
vii. Actual Sales
Procedure used in converting requirements or requisitions into purchase orders or contracts.
Three common MOPs are
(1) Competitive bidding,

(2) Direct negotiations,
(3) Single-source acquisition.
A purchase order (PO) is a commercial document issued by a buyer to a seller, indicating

types, quantities, and agreed prices for products or services the seller will provide to the buyer. Sending a
PO to a supplier constitutes a legal offer to buy products or services. Acceptance of a PO by a seller
usually forms a once-off contract between the buyer and seller, so no contract exists until the PO is
accepted.
Structure
POs usually specify terms of payment, in co-terms for liability and freight responsibility required delivery
date, and specifications and reference or part numbers of the items to be purchased, with quantities and
prices. When accepted by the seller, it forms an agreement between the buyer and seller.
From an internal control perspective, Purchase Orders are the end result of an authorization process that is
traditionally triggered by the creation of a Purchase requisition. An internally authorized Purchase
requisition is normally converted into a PO.
Contract:
Voluntary, deliberate, and legally enforceable (binding) agreement between two or more competent
parties. A contractual relationship is evidenced by (1) an offer, (2) acceptance of the offer, and a (3) valid
(legal and valuable) consideration. Each party to a contract acquires rights and duties relative to the rights
and duties of the other parties. However, while all parties may expect a fair benefit from the contract
(otherwise courts may set it aside as inequitable) it does not follow that each party will benefit to an equal
extent. Existence of contractual-relationship does not necessarily mean the contract is enforceable, or that
it is not void (see void contract) or voidable (see voidable Contract). Contracts are normally enforceable
whether or not in a written form, although a written contract protects all parties to it. Some contracts,
(such as for sale of real property, hire purchase agreements, insurance policies) must be in writing to be
legally binding and enforceable. Other contracts (see implied in fact contract and implied in law contract)
are assumed in, and enforced by, law whether or not the involved parties desired to enter into a contract.
Competitive Bidding:
Transparent' procurement method in which bids from competing contractors, suppliers, or vendors are
invited by openly advertising the scope, specifications, and terms and conditions of the proposed contract
as well as the criteria by which the bids will be evaluated. Competitive bidding aims at obtaining goods
and services at the lowest prices by stimulating competition, and by preventing favoritism. In (1) open
competitive bidding (also called open bidding), the sealed bids are opened in full view of all who may
wish to witness the bid opening; in (2) closed competitive bidding (also called closed bidding), the sealed
bids are opened in presence only of authorized personnel. See also competitive negotiation
Negotiation:
Definition 1
General: Bargaining (give and take) process between two or more parties (each with its own aims, needs,
and viewpoints) seeking to discover a common ground and reach an agreement to settle a matter of
mutual concern or resolve a conflict.
Definition 2
Banking: Accepting or trading a negotiable instrument.
Definition 3
Contracting: Use of any method to award a contract other than sealed bidding.
Definition 4
Trading: Process by which a negotiable instrument is transferred from one party (transferor) to another
(transferee) by endorsement or delivery. The transferee takes the instrument in good faith, for value, and
without notice of any defect in the title of the transferor, and obtains an indefeasible title.
Procedures for Materials Procurement and Use:

Material requirements or all the production units are not same and equal, due to difference in their
production processes, the materials requirements vary unit to unit. The following steps involve in
procurement procedure and the use of the materials:
• In every organization the Engineering and Planning departments designs the product, the materials
specifications, and the requirements at each stage of operations. This department not only fixes the
maximum and minimum quantities of material for the designed products but also coordinate with
the other departments in developing standards where applicable.
• Materials requirements are developed with the help of master plan alongwith the production
budget provided for the production of the product.
• The quantity and the type of material required for the production is informed to the procurement
department through the purchase requisition.
• To ensure the smooth production function and operation, supply date / time and quantities are
mentioned in purchase order.
• 5The receiving report certifies quantities received and may report results of inspection and testing
for quality.
• The materials requisition notifies the storeroom or warehouse to deliver specified time or is the
authorization for the storeroom to issue material to departments.
• The materials ledger cards record the receipt and the issuance of each class of materials and
provide a perpetual inventory record.
Accounting procedures for materials procurement and use involve forms and records necessary for
general ledger financial accounting as well as those necessary for costing a job, process or department,
and for maintaining perpetual inventories and other statistical summaries. The purchase requisition,
purchase order, receiving report, materials requisition, bill of materials, scrap report, returned materials
report, materials ledger cards, and summary of materials used are some of the forms used for materials
control under a cost system. The purchases journal, the cash payments journal, the general journal, and the
general ledger control accounts are also used.
Purchases of productive material.

The material is actually purchased by Procurement Department of any organization or production
company and this department is headed by Purchase Manager in small companies and by GM Purchase in
large organizations. In small and medium size companies, these department heads have authority to
purchase materials as per the current requirement of the production unit. To keep the full record of
receiving and ordered and usage of the material should be in writing form to fix responsibility. Invoices
are also verified by the purchase department when these invoices received from the vendor / supplier in
response to the purchase orders. The advantage of this procedure is that the procurement department has
the knowledge about the prices, quantities ordered, terms and conditions shipping instructions, so this
department can check either the supply is according the terms or otherwise. But in some cases this
procedure is not favorable of the company as the ordering and receiving and approving / verifying
authority is the same some audit objections can be rise at the end of the period. Furthermore, the
centralization of invoice approval in the accounting department helps avoid delaying payments beyond
the discount period.
Purchases of supplies, services, and repairs.

The procedure followed in purchasing productive materials should apply to all departments and divisions
of a business. Purchase requisitions, purchase orders, and receiving reports are appropriate for accounting
department supplies and equipment, the company cafeteria, the first aid unit, the treasurers office, the
building service department, and the public relations, personnel, sales and engineering departments, as
well as all other departments. If, for example, the accounting department needs new forms printed, a
requisition should be sent to the purchasing department in the usual manner, and a purchase order should
be prepared and sent to the printer.
Purchase Requisition Form:

The purchase requisition originates with (1) stores or where house clerk who observes that quantity on
hand is at a set ordering minimum, (2) a materials ledger clerk who may be responsible for notifying the
purchasing agent when to buy , (3) a works manager who foresees the need for special materials or
unusual quantities, (4) a research or engineering department employee who needs materials or supplies of
a special nature, or (5) a computer that has been programmed to produce replenishment advice for the
purchasing department. Below is an example of the purchase requisition:
Example of purchase requisition:

The originating department has one copy of the purchase requisition and the original sends to the purchase
department for further execution of the request.
Purchase Order Form:

After the signatures of the The purchase order, signed by the purchasing agent or other official, is a
written authorization to a vendor to supply specified quantities of described goods at agreed terms and at a
designated time and place.
The complete description of the goods and services desired, the terms, the prices, and the shipping
instruction should be incorporated in the Purchase Order (PO) and should be supported by the attached
blueprints and specification pages if so required.
Receiving Materials:
The function of the receiving department is to: unload and unpack incoming materials; check quantities
received against the shippers packing list; identify goods received with descriptions on the purchase order;
prepare a receiving report; notify the purchasing department of descriptions discovered; arrange for
inspection when necessary; notify the traffic department and the purchasing department of any damage in
transit; and rout accepted materials to the appropriate factory location. The receiving report shows the
purchase order number, the account number to be charged, the name of the vendor, details relating to
transportation, and the quantity and type of the goods receive. The form also provides a space for the
inspection department to note either the complete approval of the shipment or the quantity rejected and
the reason for the rejection, in inspection does not take place immediately after receipt of the materials,
the receiving report is distributed as follows:
1. The receiving department keeps one copy and sends another copy to the purchasing department as
notice of the arrival of the materials
2. All other copies go to the inspection department, and are distributed when inspection is completed.
After inspection, one copy of the receiving report, with the inspection result noted thereon, is sent
to the accounting department, where it is matched with the purchase order and the venders invoice
and the paid. Other copies go to various departments such as materials and production planning.
One copy accompanies the materials, so that the storekeeper knows the quantity and the kind of
materials received.
Invoice Approval and Data Processing:

By the time materials reach the receiving department, the company unusually will have received the
invoice from the vendor. This invoice and a copy of the purchase order are filled in the accounting
department. When the receiving report with its inspection reports arrives, the receiving report and the
invoice are compared to see that materials received meet purchase order specifications as to items,
quantities, price extensions, discount and credit terms, shipping instruction, and other possible conditions.
I the invoice is found to be correct or has been adjusted because of rejects as noted by the inspection
department, the invoice clerk approves it, attaches it to the purchase order and the receiving report, and
sends these papers to another clerk for the preparation of the voucher.
Invoice approval is an important step in materials control procedure, since it certifies that the goods have
been received as ordered and the payment can be made. The invoice approval information is often
built into a rubber stamp and each invoice is stamped.
The verification procedure is handed by responsible invoice clerks, thus assuring systematic examination
and handling of the paper work necessary for adequate control of materials purchases. The preparation of
the voucher is based on the information taken from the invoice approval stamp.
The voucher data are entered first in the purchases journal and are posted to the subsidiary records. They
are then entered in the cash payments journal according to the due date for payment. The original voucher
and two copies are sent to the treasurer for issuance of the check. The treasurer mails the check with the
original voucher to the vendor, files a voucher copy, and returns one voucher copy to the accounting
department for the vendors file. Purchase transactions entered in the purchases journal affect the control
accounts and the subsidiary records as shown in the chart below:
General Ledger Control

Transaction Subsidiary Records
Debit Credit
Accounts Entry in the received section in the
Materials purchased for stock Materials
Payable materials ledger card
Materials purchased for a Accounts Entry in the direct materials section of

Work in process
particular job or department Payable the production or the job order
Materials and supplies

Accounts Entry in the received section of the
purchased for factory Materials
Payable materials ledger card
overhead purposes
Materials
Entry in the received section of the
Supplies purchased for Marketing
Accounts materials ledger card or in the proper
marketing and administrative expenses control
Payable columns of the marketing or
office Administrative
administrative expenses analysis sheets
expenses control
Factory
Overhead
Marketing
Purchases of services or expenses control Accounts Entry in the proper account columns of
repairs Administrative Payable the expenses analysis sheet
expenses control
Accounts
Purchase of equipment Equipment Entry on the equipment ledger card
Payable
Correcting Invoices:
When the purchases order, receiving report, and invoice are compared, various adjustments may be
needed as a result of the circumstances described below:
1. Some of the materials ordered are not received and are not entered on the invoice. In this case no
adjustment is necessary, and the invoice may be approved for immediate payment. On the
purchase order the invoice clerk will make a notation of the quantity received in place of the
quantity ordered. If the vendor is out of stock or otherwise unable to deliver specified
merchandise, and immediate ordering from other sources may be necessary.
2. Items ordered are not received by are entered on the invoice. In this situation the shortage is noted
on the invoice and is deducted from the total before payment is approved. A letter to the vendor
explaining the shortage is usually in order.
3. The seller ships a quantity larger than called for on the purchase order. The purchaser may keep
the entire shipment and add the excess to the invoice, if not already invoiced; or the excess may be
returned or held, pending instructions from the seller. Some companies issue a supplementary
purchase order that authorizes the invoice clerk to pay the over shipment.
4. Materials of a wrong size are quality, defective parts, and damaged items are received. If the items
are returned, a correction on the invoice should be made before payment is approved. It may be
advantageous to keep damaged or defective shipments if the seller makes adequate price
concessions, or the items may be held subject to the seller's instructions.
5. It may be expedient for a purchaser to pay transportation charges, even though delivered prices are
quoted and purchases are not made on this basis. The amount paid by the purchaser is deducted on
the invoice, and the paid freight bill is attached to the invoice as evidence of payment.
Electronic Data Processing System (EDP System) for

Materials Received and Issued:
The preceding description of invoice approval and payment was for a manual operation performed by an
accounts payable clerk or an invoice clerk. In an electronic data processing system (EDP system), the
computer--to a great extent--replaces the clerk. Upon receipt of the invoice (the source document), the
accounts payable clerk enters the account distribution on the invoice. The data are then directly inputted
from the invoice to the computer data bank via a terminal device. The data are edited, audited, and
merged with the purchase order and the receiving order data, both of which have been stored in the
computer data bank. The common matching criterion on all documents in the purchase order number.
Quantities, monetary values, due dates, terms, and unit prices are matched. When in agreement, the cost
data are entered in the accounts payable computer file with a date for later payment.
The above procedure deals with the accounts payable phase of a purchase transaction. Of equal
importance is the need for posting the data in quantities and dollar values to the materials inventory file in
the electronic data processing system (EDP system). The information enters the EDP system from either
the invoice or the invoice approval form, which would have to include all computer-necessary data. The
internal computer program updates the materials inventory file. The withdrawal of materials could also be
programmed, so that manual posting to the materials inventory file would be eliminated.
Cost of Acquiring Materials:

A guiding principle in accounting for the cost of materials is that all costs incurred in entering a unit of
materials into factory production should be included. Acquisition costs, such as the vendor's invoice price
and transportation charges, are visible costs of the purchased goods. Less obvious costs of materials
entering factory operations are costs of purchasing, receiving, unpacking, inspecting, insuring, storing,
and general and cost accounting.
Controversial concepts and certain practical limitations result in variations in implementing the principles
of costing materials even with respect to easily identified acquisition costs. Calculating a number of cost
additions and adjustments to each invoice involves clerical expenses which may be greater than benefits
derived from the increased accuracy. Therefore, materials are commonly carried at the invoice price and
paid the vendor, although all acquisition costs and price adjustments affect the materials cost. As a result,
acquisition costs are generally charged to factory overhead when it is not practical to follow a more
accurate costing procedure.
Purchase Discount: The handling of discounts on purchases is one major problem in

accounting for materials costs. Trade discounts and quantity discounts normally are not on the accounting
records but are treated as price reductions. Cash discounts should be treated as price adjustments but often
are accounted for as other income, although income is not produced by buying. A low purchase cost may
well widen the margin between sales price and cost, but it takes the sale to produce income. When the
vendor quotes term such as 2/10, n/30 on a $100 invoice, is the sale price $100 or $98? The purchaser has
two dates to make payments: on the tenth day, which allows time to receive, unpack, inspect, verify,
voucher, and pay for the goods; or twenty days later. For the additional twenty days an additional charge
or penalty of two percent is assessed. If regarded as interest, the extra charge is 36 percent per year[(360
days / 20 days) × 2%]. On these terms the seller is pricing on essentially a cash basis, and the purchaser
has no reasonable choice except to buy on cash basis.
Although the nature of a purchase discount is readily understood, for practical reasons the gross materials
unit cost of the invoice is commonly recorded in the materials account; the cash discount is recorded as a
credit account item. Otherwise it would be necessary to compute the discount on each item, with unit
costs having four or more decimal places.
Freight in: Freight or other transportation charges on incoming shipments are obviously costs of
materials, but differences occur in the allocation of these charges. A vendor's invoice for $600 may show
25 items weighing 1,700 ponds shipped in five crates, with the attached freight bill showing a payment of
$48. The delivered cost is $648. But how much of the freight belongs to each of the invoice items, and
what unit price should go on the materials ledger card? When the purchased units are not numerous and
are large in size and unit cost, computation of actual amounts of freight may be feasible; otherwise, some
logical, systematic, and expedient procedure is necessary.
If freight charges are debited to materials, the total amount should be added proportionately to each
materials card affected. This might be done by assuming that each dollar of materials cost carries an equal
portion of the freight. For example, freight of $48 on materials costing $600 would add $0.08 ($48/$600)
to each dollar on the invoice. The relative weight of each item on the invoice might be determined and
used as a basis for calculating the applicable freight. If an invoice item is estimated to weigh 300 ponds,
then $8.47 [(300 / 1,700) × $48] would be added for freight. This procedure is also likely to result in unit
costs having four or more decimal places on the materials ledger cards. To simplify procedures, all freight
costs on incoming materials and supplies may be charged to freight in. As materials are issued for
production, an applied rate for freight in might be added to the unit price on the ledger cards. The same
amount is included in the debit to work in process (WIP) or factory overhead (indirect materials), and
freight in is credited. Any balance in freight in at the end of a period is closed to cost of goods sold or
prorated to cost of goods sold and inventories.
Another often advocated method of accounting for incoming freight costs on materials is to estimate the
total for an accounting period and include this amount in computing the factory overhead rate. Freight in
then would become one of the accounts controlled by factory overhead. For materials or supplies used in
marketing and administrative departments, freight, transportation, or delivery costs should be charged to
the appropriate nonmanufacturing account.
Applied acquisition costs: If it is decided that the materials cost should include incoming
freight charges and other acquisition costs, and applied rate might be added to each invoice and to each
item instead of charging these costs directly to factory overhead. A single rate for these costs can be used
but amore accurate method is to use separate rates for each class of costs, as shown below:
• Rate per purchase or rate per dollar purchased = [Estimated purchasing department cost for budget
period / Estimated number of purchases or estimated amount of purchases]
• Rate per item = [Estimated receiving department cost for budget period / Estimated number of
items to be received during period]
• Rate per item, cubic foot, dollar stored, etc. = [Estimated materials department cost for budget
period / Estimated number of items, feet of space, dollar value, etc.]
• Rate per transaction = Estimated accounting department cost for budget period / Estimated number
of transaction
This procedure results in the following accounting treatment:
Materials xxx
Applied purchasing department expensexxx
Applied receiving department expensesxxx
Applied materials department expensesxxx
Applied accounting department expenses xxx
Actual expenses incurred by each of the departments for which applied rates are used will be debited to
the applied accounts. Differences between the expenses incurred by the departments during the period and
the expenses applied to the materials cost would represent over or under applied expenses and would be
closed to cost of goods sold or prorated to cost of goods sold and inventories.
Imputed interest: A company making an inventory purchase with a non interest bearing not or a
note with an interest rate that varies from prevailing interest rates should classify the effective interest
imputed to the note as interest expenses, rather than as a cost of the materials. For example, assume that a
$100,000, six months, non interest bearing note is used to purchase materials. If the company can borrow
at a short term credit rate of 80%, the inventory should be costed at $96,154 ($100,000 × 0.96154, the
present value of one dollar at 8% for six months). The differences of $3,846 should be debited to interest
expense.
Storage and Use of Materials:

Materials, together with copy of the receiving report, or forwarded to the storeroom from the receiving or
inspection department. The storekeeper and assistants are responsible for safeguarding the materials,
which means that materials and supplies are placed in proper bins or other storage spaces, that they are
kept safely until required in production, and that all materials taken from the storeroom are properly
requisitioned. It is good policy to restrict admittance to the storeroom to employees of that department
only and to have these employees work behind locked doors, issuing materials through cage windows.
Since the cost of storing and handling materials may be a substantial amount, careful designs and
arrangement of storerooms can result in significant cost savings. Materials can be stored according to:
1. The materials account number.

2. The frequency of use of the item.
3. The factory area where the item is used.
4. The nature, size, and shape of the item.
In practice, no single base is likely to be suitable, but the size and shape of materials usually dictate the
basic storeroom arrangement variations can then be introduced, such as placing most frequently used
items nearest the point of issue and locating materials used primarily in one factory area nearest that area.
Bin cards or stock cards are effective ready references that may be attached to storage bins,
shelves, racks, or other containers. Bin cards usually show quantities of each type of materials received,
issued, and on hand. They are not a part of the accounting records as such, but they show the quantities on
hand in the storeroom at all times and should agree with the quantities on the materials ledger cards in the
accounting department.
Issuing and Costing Materials into Production:

To control the quantity and cost of materials, supplies, and services requires a systematic and efficient
system of purchasing, recording, and storing. Equally necessary is a systematic and efficient procedure for
issuing materials and supplies.
Materials Requisitions:
The materials requisition, illustrated below, is a written order to the storekeeper to deliver materials or
supplies to the place designated or to give the materials to the person presenting a properly executed
requisition. It is drawn by someone who has the authority to requisition materials for use in the
department. The authorized employee may be a production control clerk, or department head, a
supervisor, a group leader, an expeditor, or a materials release analyst. In a computerized system, the
computer program will often prepare the requisition in the form of a tabulating card.
The materials requisition is the basic form used to withdraw materials from the storeroom. Its preparation
results in entries in the issued section of the materials ledger card and in postings to the job order cost
sheets, production reports or the various expense analysis sheets for individual departments. All
withdrawals result in debits to work in process or to control accounts for factory overhead, marketing
expenses, or administrative expenses, and in credits to materials.
Materials Requisitioned Journal:

With the posting to the materials ledger cards, the job order cost sheets, the production reports, and the
expense analysis sheets completed, it is still necessary to post the materials withdrawals to the proper
ledger control accounts. This task is greatly facilitated by the use of a materials requisitioned journal. This
journal is a form of materials summary, an example of which is shown below:
Example of materials requisitioned journal:

At the end of the month, the total of the various columns are posted directly to the ledger accounts, except
for the sundries column from which items are posted individually.
Tabulating cards as materials requisitions:

Tabulating cards are convenient input or output devices for computer operations to produce the card, the
computer is instructed by the console operator to perform certain materials issuance transactions for jobs
or products. The card serves as authority for the storekeeper to issue the materials, internal computer
operations will update the material data bank and eventually produce output reports including totals that
will be entered in the general ledger accounts, unless those accounts are also part of the EDP system.
Indirect materials or supplies for factory or office use will also be stored in the inventory data bank of the
computer. When such materials are needed, a request will inform the computer as to type, quantity, and
requesting department. Supplies requisitioned for marketing and administrative departments would be
charged to their respective departments.
Bill of Materials:
The bill of materials, a kind of master requisition, is a printed or duplicated form that lists all the materials
and parts necessary for a typical job or production run. Time is saved and efficiency is promoted through
the use of a bill of materials. When a job or production run is started, all the materials listed on the bill of
materials are sent to the factory or are issued on a prearranged time schedule. As the bill of materials is a
rather cumbersome medium for posting purpose, however, data processing improves the procedure by
simultaneously. Preparing tabulating cards for materials requisitions. While the storekeeper issues the
materials as stated on the bill of materials, the tabulating cards can be processed in the materials ledger
section and in the cost department at almost the same time as the materials are used in the factory. A
computer program will provide the print outs of the bill of materials and process the information
internally to update the accounting records.
.
Practical study
PTCL INTRODUCTION
Company Profile
Pakistan Telecommunication Company Limited is the largest telecommunications provider in Pakistan.
PTCL also continues to be the largest CDMA operator in the country with 0.8 million V-fone customers.
The company maintains a leading position in Pakistan as an infrastructure provider to other telecom
operators and corporate customers of the country. It has the potential to be an instrumental agent in
Pakistan’s economic growth. PTCL has laid an Optical Fibre Access Network in the major metropolitan
centers of Pakistan and local loop services have started to be modernized and upgraded from copper to an
optical network.
On the Long Distance and International infrastructure side, the capacity of two SEA-ME-WE submarine
cables is being expanded to meet the increasing demand of International traffic.
Vision
To be the leading Information and Communication Technology Service Provider in the region by
achieving customer satisfaction and maximizing shareholders' value'.
The future is unfolding around us. In times to come, we will be the link that allows global
communication. We are striving towards mobilizing the world for the future. By becoming partners in
innovation, we are ready to shape a future that offers telecom services that bring us closer.
Mission
To achieve our vision by having:
• An organizational environment that fosters professionalism, motivation and quality
• An environment that is cost effective and quality conscious
• Services that are based on the most optimum technology
• "Quality" and "Time" conscious customer service
• Sustained growth in earnings and profitability
Core Values
• Professional Integrity
• Customer Satisfaction
• Teamwork
• Company Loyalty
REVIEW OF THEORETICAL & PRACTICAL SITUATION

PROCEDURES
Procurement Department shall process the tenders submitted by the interested bidders, in response to the
tender invitation of the company, in accordance with the following guidelines. Process for tender opening,
evaluation and awarding of tenders has been broadly divided into the following areas:-
i. Tender submission and opening.
ii. Tender opening committee.
iii. Technical evaluation committee.
iv. Commercial evaluation committee.
v. Negotiation committee.
vi. Contract drafting.
vii. Contract signing, issuance and distribution.
viii. Contract amendments and cancellations.
ix. Memorandum of understanding.
x. Performance bond.
Procurement activities at regions shall be performed by the respective GM and EVP at the Regional
Offices as per their authority limits by following the same guidelines as mentioned below for
Headquarters. Procedures relating to tender opening and evaluation at regions shall be implemented by
the respective GM and EVP at the Regional Offices.
TENDER SUBMISSION AND OPENING

Committee Formation
Four types of committees shall be involved in the process of tender opening, evaluation and negotiation.
These shall be as follows:-
i. Tender Opening Committee (TOC)

ii. Technical Evaluation Committee (TEC)
iii. Commercial Evaluation Committee (CEC)
iv. Negotiation Committee (NC)
The nomination of these committees shall be approved, on a case by case basis.

These committees shall not have any permanent members and shall be formed each time a new tender is
invited. However, the Chairman of the committee may remain the same in the Technical and Commercial
Evaluation Committees for a particular tender only.
The concerned committee Chairman in conjunction with the respective Procurement Manager (i.e.
Manager Turnkey Contracts - Headquarters, Manager Supply Contract -
Headquarters, Manager Purchasing - Headquarters, Admin Manager - Headquarters or designated
Manager at the Regional Offices) shall coordinate all meetings and related activities, including the
appointment of a Committee Secretary, with replacement in case of absence. Committee Secretary shall
assist in handling backup duties, preparing minutes of meetings, reports, and all other essentials to ensure
that proceedings are properly documented.
Offer Submission
A) Sealed Offers
Bidders participating in tenders shall be requested to make two separate submissions in two separate
sealed envelopes. One sealed envelope shall contain the technical offer (unpriced bid) along with
specifications and all other technical details. This envelope shall be clearly marked as “Technical Offer”.
Second sealed envelope shall contain the commercial offer (priced bid) with the cost breakdown as per the
company price schedule / bill of quantity (BOQ). This envelope shall be clearly marked as “Commercial
Offer”
Both of the above mentioned sealed envelopes must bear PTCL request for proposal
(RFP)/ request for quotation (RFQ) reference number. No other details such as name of tenderer or any
other reference shall be mentioned on these envelopes.
Identification of bidder on the sealed envelopes shall be made by assigning number (e.g. 1,2,3,4 etc.) as
an additional code to the tender / RFQ reference which shall be maintained in strict confidence by the
procuring / tendering section.
In case of ‘Specialised Project’ or ‘New Technology’ where the vendor has been pre-qualified with
respect to goods / services requested by the end user, only commercial offers shall be invited from such
vendors and their technical evaluation shall not be performed at the time of tender processing
B) Delivery of Offers
Procurement Department shall provide instructions to the bidders in the Invitation to Tender (ITT) to
ensure that sealed offers are deposited in the relevant tender box located at
procurement Division, PTCL Headquarters, Sector G-8/4, Islamabad or at Regional Offices as stipulated
hereunder:-
Headquarters:
Three tender boxes shall be available for receipt of tenders in Headquarters. The opening, closing and
safeguarding of these boxes shall be the responsibility of the respective Procurement Managers.
i. Tender box No.1 allocated for ‘Purchasing’ section (values up to Rs. 20 million)
ii. Tender box No. 2 allocated for ‘Supply Contracts’ section (values exceeding Rs. 20 million)
iii. Tender box No. 3 allocated for ‘Turnkey Contracts’ section (values exceeding Rs. 20 m)
iv. Tender box No. 4 allocated for ‘Admin Purchases’ (values up to Rs. 2 million)
Regional Offices: One tender box of same design as that in Headquarters shall be available at each region.
Respective Procurement Manager shall assign two staff assisted with a trolley, if necessary, to collect the
offers from the relevant tender box and ensure their safe receipt by the Tender Opening Committee.
C) Less than “Three” Offers Situation

i. If only two offers are received, then EVP Procurement - Headquarters / EVP Admin
Headquarters / respective EVP at the Regional Offices approval shall be obtained to
proceed with the opening of two bids based on justification from end user’s EVP.
ii. If only one offer is received, the tender shall be re-floated as a Public Tender if participation
has not been made by registered vendors.
iii. If for the second time, still one offer is received, the offer shall be opened after obtaining SEVP
Proc&Admin - Headquarters / respective EVP at the Regional Offices approval on justification
from end user.
D) Purchasing and Contract Limits

Purchases under Rs. 100,000 shall be made on the basis of quotations . Therefore ,tenders shall be called
for all purchases over Rs. 100,000.
A) Purchasing Range
Purchase order shall be issued for procurement up to the value of Pak Rs.20 million against ‘Request for
Quotation’ (RFQ) terms and conditions. In this case, no contracts shall be entered into with the vendor
B) Contract Range
Contracts (supply and turnkey) shall be finalized for any procurement of value exceeding Pak Rs.20
million. These contracts shall be made against ‘Request for Proposal’ terms and conditions. However,
purchase orders shall be raised for these in the system by the respective Procurement Managers.
C) Conversion of RFQ to RFP / RFP to RFQ Terms and

Conditions
In case at the time of opening RFQ related offers, it is established that offers are exceeding Rs. 20 million,
then the offers shall be forwarded to the concerned Contracts Section under covering memo where bidders
shall be requested to revise their offers based on the company’s ‘Supply’ or ‘Turnkey’ contract terms and
conditions in order to finalise a contract.
If at the time of opening RFP related offers, it is established that offers are less than Rs. 20
million, then the case should be forwarded to the Purchasing Section for issuance of a PO instead of a
contract. PO terms and conditions shall apply in this case.
TENDER OPENING COMMITTEE (TOC)

The bidders shall not be allowed to attend any TOC meetings. TOC meetings shall be conducted in strict
confidence by the concerned committee members / Procurement Department and thus must not be
revealed to any external party of any kind whatsoever.
Nomination of TOC
The TOC shall be nominated and approved, on a case by case basis. Constitution of the committee shall
be as follows:-
Procurement Chairman
End User Member
Finance Member
The members of the TOC shall be of Manager/ Senior Engineer level or above.
Functions of TOC
The function of this committee shall be the opening of the bid envelopes, technical and commercial on
two separate occasions / dates and would include the following responsibilities:-
i. In case where bid bond is a pre requisite, ensure that bid bonds have been received and if not, the
tender shall be rejected.
Alternatively, the bidder shall submit a letter from their bank confirming that the bid bond is under
preparation and shall be submitted within one week time, in which case the bid shall be accepted
subject to receipt of the bid bond.
ii. The bid bond shall be requested to be included in the commercial bid (priced offer), with only a
confirmation from the bidder, included in the technical bid (un-priced offer), stating that the bid
bond has been submitted and included with the commercial bid.
iii. TOC shall prepare a tender opening report with main details of offers and bidders with any
remarks pertaining to the tender conditions.
iv. Tenders shall be submitted on or prior to the closing date / time. Any tenders received after the
closing date / time shall be rejected and returned to the bidder un-opened.
Technical Submissions
The technical offers shall be opened and an opening report providing details of bidders from whom
submissions were received, shall be prepared and signed by the TOC members. Thereafter, technical
offers shall be forwarded for technical evaluation to the Chairman of the TEC.
Commercial Submissions
i. The commercial offers shall remain in the safe custody of respective GM (i.e. GM
Turnkey Contracts - Headquarters, GM Supply Contract - Headquarters, GM Purchasing -
Headquarters, GM Admin - Headquarters or respective GM at the
Regional Offices) and kept in specially allotted cabinets for ‘Turn-key Contracts’,
‘Supply Contracts’ and ‘Purchasing’ respectively with keys under the direct control
of the respective GM until completion of the technical evaluation.
ii. Commercial offers shall only be opened for those bidders who have been classified as
technically competent by the TEC. Sealed commercial offers of bidders, who have
failed the technical evaluation, shall be forwarded to the respective Procurement
Manager. Respective Procurement Manager shall contact the bidders and request
them to collect their sealed commercial offers from the company Headquarters /
Regional Offices. A letter shall be provided to the rejected bidders stating the reasons
for rejection of their technical bid.
iii. Upon completion of the technical evaluation, the TOC shall open the commercial
offers of short listed bidders who have passed the technical evaluation and forward
them to the CEC for evaluation. All pages of the original bids containing prices and
commercial terms shall be duly signed by all members of TOC.
Timeframe
Taking into account that constitution/ nomination of the committee members shall be planned well ahead
of the tender closing date, the TOC shall open the technical offers on the closing date of the bid.
TECHNICAL EVALUATION COMMITTEE (TEC)

Nomination of TEC The TEC shall be nominated and approved, on a case by case basis, as per the
authorities mentioned in Section C.1 above. Constitution of the TEC members shall be as follows:
End User Chairman

End User Member
Technical / Development / IT Department Member (relevant member)
The TEC members shall also include the following, where applicable:
Operations Department Member
Technology & Standards Member
Special Project Member (Member relevant to works/Project shall be nominated)

The members of the TEC shall be of Manager/ Senior Engineer level or above.
Functions of TEC
A) Technical Evaluation
The TEC shall evaluate the technical aspects of the tender taking into account the following criteria:
i. Technical specifications of the offer as compared to the required company technical specifications.
ii. Technical capabilities.
iii. Relevant experience and market reputation of the product/ materials/ systems.
iv. Previous experience with the company, if applicable.
v. Technical support.
vi. Results of the technical tests if applicable. The TEC shall request further tests to ascertain
performance of the equipment/ systems.
Vii Quality of technical training required training sessions, training duration and facilities.
viii. Delivery schedules / completion period.
Clarification
During the technical evaluation, offers shall be considered incomplete in case of any missing information
and other ambiguities. The TEC shall request the bidder through Procurement Department to provide any
required details or clarify ambiguous issues.
The response from the bidder shall be requested in sealed envelops which shall be opened at a pre-
specified time/ date by the TEC who shall include the response into their evaluation for technical
conclusion. In case of projects involving new technologies, technical clarifications can be requested more
than once and in other forms of communications as the project may demand, but shall be coordinated and
conducted through the Procurement Department.
TEC shall not approach any bidder directly for meetings, presentations or any kind of clarifications during
the evaluation period.
In case presentations are required from the bidders, the same shall be arranged by formal notification
through Procurement Department - Headquarters or respective GM at the Regional Offices. In this case all
the bidders shall be given a chance to present their respective proposals to the TEC.
Technical Evaluation Conclusion and Report

Upon completion of all clarifications, the TEC shall highlight the advantages and disadvantages of
offered technical aspects giving short concise comments on the same in a form of a report. The short
listed bidders shall be ranked, in the report, in terms of technical excellence for further commercial
evaluation of their offers.
At least three bidders should be short listed. If two bidders are short listed, then approval of EVP
Procurement - Headquarters / GM Admin - Headquarters / respective GM at the Regional Offices shall be
obtained on justifications from the end user’s EVP, where applicable. If one bidder is short listed, then
approval of SEVP Proc&Admin - Headquarters / respective EVP at the Regional Offices shall be obtained
on justifications from end user’s EVP, where applicable.
The TEC shall prepare a ‘Technical Evaluation Report’ and forward the same to EVP Procurement -
Headquarters / EVP Admin - Headquarters or respective GM at the Regional Offices with copy to SEVP
Proc&Admin - Headquarters / respective EVP at the Regional Offices respectively requesting opening of
commercial bids for bidders who have been technically approved. The report shall highlight the
recommendation and comments along with the evaluation statement reflecting the final ranking and
conclusion. Structure of the report shall be flexible but should include all elements of evaluation reflected
by the technical criteria.
Decision of TEC shall be final and no complaints from the bidders regarding their technical evaluation
shall be entertained by the company.
The commercial bids opening date shall be fixed by the Procurement Department after clearance of
technical evaluation, thereafter the TOC shall proceed with opening of commercial offers.
Timeframe
The TEC shall complete its technical evaluation including clarifications within a maximum time period of
14 days from the date of receiving tender documents from the TOC. In case clarifications are not required,
technical evaluation shall be completed within 7 days the date of receiving tender documents from the
TOC.
COMMERCIAL EVALUATION COMMITTEE (CEC)

Nomination of CEC
The CEC shall be nominated and approved , on a case by case basis.

CEC members constitution shall be as follows:
Finance Chairman
Finance Member
Procurement Member
Technical / Special Project / IT Member (Member relevant to works/ project shall be nominated) as
applicable for clarification purposes only CEC may request for assistance from TEC members for any
technical clarifications. The members of the CEC shall be of Manager/ Senior Engineer level or above.
Functions of CEC
A) Commercial Evaluation
i. For bidders who have been declared successful after the technical evaluation, the CEC shall
check and verify their compliance with the commercial terms of tender document. Any non-
compliance shall be highlighted and resolved by respective bidder.
ii. Price comparison shall be prepared from the offer document based on the established quantity
required, by identifying the cost comparison as quoted by different bidders in a matrix. Attached
specimen formats shall be followed when compiling prices.
In the case of turnkey projects, a comprehensive evaluation shall be carried out to include all
elements of costs required for the project such as materials, tools, installation cost, survey charges,
system design/interface, supervision, training, man days/ hours etc.
iii. Price adjustments shall be taken into account when offers are not fully compliant/ or below
specifications in order to arrive at a comparative price. Such price adjustment shall be clearly
explained by additional notes. Price adjustment shall not be considered if offers are
technically of higher specifications/ include additional items or features not requested in the
tender. Also spare parts as well as test equipment shall not be considered for price adjustment.
iv. Local bidders shall quote their offers in Pak. Rupees delivered duty paid (DDP) whereas
International bidders shall quote their offers in U.S. currency (dollars) DDU/CIF for supply and
DDP local currency for services or otherwise as requested in the tender document. Thus the CEC
shall convert US/ foreign currency at the appropriate exchange rate for accurate evaluation. For
imported procurement, the estimate for freight and insurance shall be included in the overall cost.
Further, local taxes and other levies by local authorities shall also be included in the evaluation to
arrive at the overall cost.
v. The comparison shall show the cost of individual items and total cost of the project for the
company.
vi. Optional items shall not to be evaluated unless they are required and needed to be procured for the
intended project, in which case they shall be evaluated technically and financially as part of the
whole evaluation.
vii. Price escalation of any formula particularly copper LME rates shall be considered and compared
by the financial member, for the relevant date on which such formula/rates are effective
viii. Quoted spare parts shall be compared and evaluated and the price escalation clause for
future supply of spare parts shall be agreed upon to cover the life span of the equipment.
ix. In case of increase or decrease of the equipment quantity, the installation cost factor shall be
clarified and obtained from the bidders.
x. The evaluation shall highlight the percentage of installation cost to equipment cost, Delivered
Duty Paid (DDP) cost to basic equipment cost, cost and comparison to expected life, training cost
per week per individual, spare parts cost and repair charges as applicable.
xi. Prices offered, against tenders called in past for similar materials / services, by invited bidders
shall be compared with current offers taking into account fluctuations, exchange rate and market
conditions.
xii. A reconciliation statement between tender opening prices and evaluated prices / equalization after
clarification shall be made, where applicable.
xiii. Once accuracy is checked and evaluation is verified by the committee, financial ranking of each
bidder shall be established and agreed upon by all the members.
xiv. Based on the lowest price offers for the various items, CEC shall consider recommendation for
award of ‘Contracts’/ ‘Purchase Order’(s) to one or more bidders on the basis of their offered
lowest prices of such different items, as per the need/ requirement, taking into account the
feasibility of such award in terms of the overall cost and urgency impact.
Clarification
In case any further clarification is required on the commercial offer, the same shall be conducted as
indicated above (under technical evaluation) through Procurement Department as a central point.
Commercial Evaluation Conclusion and Report

The final evaluation shall summarize the technical, commercial and financial assessment, clearly
indicating the order of preference, highlighting those rejected bidders with reasons.
The final costing of the project/ supply shall be shown in the evaluation to indicate the total cost that shall
be incurred by the company. A report shall be prepared by the CEC summarizing the above mentioned
details
Two copies of final evaluation report shall be prepared and submitted to:-
i. SEVP Proc&Admin - Headquarters / respective EVP at the Regional Offices for information.
ii. EVP Procurement - Headquarters / EVP Admin - Headquarters/ respective GM at the Regional
Offices who shall be responsible for arranging of ’Negotiation Committee’ meeting.
Approval of SEVP Proc&Admin - Headquarters / respective EVP at the Regional Offices shall be
obtained for any changes subsequent to submission of final evaluation report. The functions of CEC shall
not be considered conclusive until the contract is signed or purchase order is issued.
Timeframe
The CEC shall complete its evaluation including clarifications with bidders within a maximum time
period of one week from the date of receiving tender documents from the TOC, after the completion of
technical evaluation. In case clarifications are not required, evaluation shall be completed within four
working days from the date of receiving tender documents from the TOC, after the completion of
technical evaluation.
NEGOTIATION COMMITTEE (NC)
Nomination of NC
The Chairmen of TEC and CEC shall continue to be the members of the NC. SEVP Proc&Admin -
Headquarters or EVP Procurement - Headquarters / EVP Admin -Headquarters / respective EVP or GM at
the Regional Offices shall be the Chairman of NC to conduct the negotiation with the selected bidders.
Respective Procurement Manager shall be the coordinator of related activities.
Functions of NC
The coordinator of the committee (concerned GM from Procurement Department - Headquarters /
respective GM at the Regional Offices) shall within three days of receipt of the commercial evaluation
report arrange a negotiation meeting with the 1st three lowest bidders during which negotiation shall
address the following agenda;
i. Price discount.
ii. Validity of offers.
iii. Improved delivery schedule.
iv. Any other related issues.
Price negotiation shall be held with the 1st three lowest bidders to request and receive discount and
improved contract terms during negotiation meeting. Any negotiated discounts / improved terms shall be
confirmed through proper communication from the authorized representative of the bidder in the form of
proposal or letter on their letterhead. This can also be considered during the negotiation meeting, by
requesting the bidder to state the negotiated terms on the offer in writing and sign there upon. A
comparison shall be made with the discounted prices at the end of negotiations and contract shall be
awarded to the lowest bidder. In case of regions, negotiations can either be conducted with the lowest
bidders only, or three of the lowest bidders as seen fit by Regional GM.
Conclusion and Report

On completion of the negotiation, a final report shall be prepared with recommendations of award to
selected bidder(s). Decision to award the tender shall be finalised by the NC within three days of
negotiations and shall not be left pending.
Final Approval
Final report of the NC shall be forwarded, to relevant authority in Headquarters/ Regions as per
delegation of authority matrix, for final approval and awarding of tender.
If the value of tender award is up to Rs.20 million, a PO shall be issued by the company to the selected
bidder. Contract shall be entered with the successful bidder if the value of tender award is in excess of
Rs.20 million, as per the procedures mentioned below in Section
In order to execute the contract, a PO shall subsequently be issued against the contract by the respective
Procurement Manager.
Emergency Procurement
In the event of unforeseen situation where emergency procurement becomes vital / essential for the
company’s network and operations, the specific case deliberation giving full justification for such an
emergency shall be raised by the concerned SEVP to the President and CEO for approval.
In the circumstances, finalization of the emergency transaction, in terms of technical evaluation,
commercial evaluation and urgent negotiation shall be conducted jointly by SEVP Proc&Admin -
Headquarters / or EVP Procurement - Headquarters, EVP of end user department and SEVP Finance -
Headquarters / or EVP Finance - Headquarters on priority basis. Technical and commercial offers
received from bidders may be opened at the same time.
The recommendation for award, based on the joint decision made by SEVP Proc&Admin - Headquarters /
or EVP Procurement - Headquarters, EVP of end user department and SEVP Finance - Headquarters / or
EVP Finance - Headquarters shall be presented to the President and CEO for approval.
Emergency Procurement shall be capped at a maximum limit of Rs. 100 million beyond which normal
procurement procedures shall be adopted.
As procurement procedures shall not be used in an emergency situation, this should not be made a
practice and should only be pursued in real emergency cases.
CONTRACT SIGNING, ISSUANCE AND DISTRIBUTION

PROCESS
After contract has been reviewed by the successful bidder, all issues shall be resolved and thereafter the
bidder shall confirm their acceptance of the form of contract. Process of contract signing shall be
coordinated by the Manager Turnkey Contracts - Headquarters or Manager Supply Contract -
Headquarters. Contracts shall be approved on behalf of the company by the representatives, as per the
authority limits mentioned below:
Headquarters Contract Signing Limits

i. Up to Rs.50 Millions Witness: Respective GM Signatory: EVP Procurement
ii. Above Rs.50 Millions Witness: EVP Procurement Signatory: SEVP Proc&Admin
All the frame contracts shall be approved by SEVP Procurement and Admin based on the
recommendations of Price Negotiation Committee, approval of orders issued against the frame contract
shall be done according to the authority matrix
Manager Turnkey Contracts - Headquarters or Manager Supply Contract – Headquarters shall be

responsible for distribution of contract copies as follows:-
i. End user / project owner.
ii. Finance.
iii. Legal.
iv. Audit
v. Any other Regional Office / Headquarter departments, if applicable.
PURCHASE REQUISITION FORM
PR Number__________________ Requisitioning Department ______________________
PR Date ____________________ Plant _______________________________________
Remarks ___________________ Created by __________________________________
A/A No. ___________________ A/A Name ___________________________________
S. No SIC Description Qty Units Delivery Delivery Remarks

Date Location
Prepared by Authorized by
Online Approvals:
i.
ii.
iii.
iv.
CONCLUSION & RECOMMENDATIONS
CONCLUSION
After gone through the above narrated case study and procedure which is adopted by PTCL, I conclude
that PTCL has uniformity and consistency in the company’s procurement function with clearly defined
responsibilities, authorities, and functions. All departments at Headquarters / Zones / Regions adopted
and implemented the leading procurement practices, policies and procedures uniformly.
This procedure provides the internal controls to safeguard the assets of the company which shall be
ensured during the internal audit.
RECOMMENDATIONS
I personally visited PTCL Headquarters and met the procurement executives and other relates staff
including officers. I recommended that procurement administration should be conducted throughout the
company in a more controlled and orderly manner. Guidance and instructions should be provided to the
employees of the company on the application of the procurement policies, procedures and financial
controls.

Assignment # 2: (Department of Business Administration) Business Forecating (5566)

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Assignment # 2: (Department of Business Administration) Business Forecating (5566)

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2ND ASSIGNMENT BUSINESS FORECASTING

(Department of Business Administration)

I pay my thanks to all the Faculty of the

Finally, I owe all my academic success and

Syed Tahir Ali Shah

The study had been carried out by keeping in

been made in this regards.

WHAT IS BUSINESS FORECASTING

Why Forecasting Is Important

Categories of forecasting methods

Time series methods

Autoregressive moving average (ARMA)

Causal / econometric forecasting methods

Mean Absolute Error (MAE)

Mean Absolute Percentage Error (MAPE)

Percent Mean Absolute Deviation (PMAD)

Mean squared error (MSE)

Root Mean squared error (RMSE)

Forecast skill (SS)

Statistical control limit

You may like using Detective Testing for Trend JavaScript.

Modeling Seasonality and Trend:

Si = the seasonal index for ith period,

S(Jan) = D(Jan)/D = 208.6/181.84 = 1.14,

Next, a linear trend often is calculated using the annual sales:

Determination of the Annual Trend for the Numerical Example

Y = 2169 - 284.6T + 97T2

Y = 2169 - 284.6(5) + 97(5)2 = 3171

Trend Removal and Cyclical Analysis:

Definitions of the major components in the above flowchart:

Supply chain management –

Practical Study of the Organisation

Prevention of Water logging and Reclamation of Waterlogged and Saline Lands.

*Installed Capacity of WAPDA System (as of June 2007)

WAPDA USES OF BUSINESS FORECASTING

Weighted moving average

The denominator is a triangle number, and can be easily computed as

EMA weights N=15

An exponential moving average (EMA), also known as an exponentially weighted moving

Yt is the observation at a time period t.

This is an infinite sum with decreasing terms.

out of the total weight.

terms should be used. Since approaches as N increases[9], this simplifies to

for this example (99.9% weight).

In short, this is exponential moving average, with α = 1 / N.

Application to measuring computer performance

Merits and De-Merits of Business Forecasting with respect

1) Because of wrong forecasting Wapda is facing Gap between

Conclusion and Recommendations

During my study of the Wapda I observe that and reach upon

My recommendation to the Top management of the

“PROCEDURE OF MATERIAL PROCUREMENT AND USE”.

Topic- procedure of material procurement and use.

Procedure used in converting requirements or requisitions into purchase orders or contracts.

Three common MOPs are

(1) Competitive bidding,

A purchase order (PO) is a commercial document issued by a buyer to a seller, indicating

Procedures for Materials Procurement and Use:

Purchases of productive material.

Purchases of supplies, services, and repairs.

Purchase Requisition Form:

Example of purchase requisition: