TRANSPORTATION PROBLEM CASE STUDY :

ULTRATECH CEMENT

A report submitted in partial fulfillment of the

requirements for the course

of

MEE1024 - OPERATIONS RESEARCH

by
VEDANT KARNATAK -17BEM0049

SCHOOL OF MECHANICAL ENGINEERING

JUNE 2020

1
 CONTENTS
CHAPTER 1 LITERATURE REVIEW

1.1 Land Transport

1.2 Water Transport

1.3 Air Transport

1.4 General Mathematical Model of Transportation

Problem

1.5 Calculation of Transportation Cost : Vogel’s

Approximation Method (VAM)

1.6 Company Introduction

1.7 Company Analysis

CHAPTER 2 OBJECTIVE OF STUDY

CHAPTER 3 PROBLEM STATEMENT

CHAPTER 4 SOLUTION

CHAPTER 5 RESULTS AND DISCUSSION

5.1 Results and its significance
5.2 Advantages - Applications

CHAPTER 6 CONCLUSIONS

CHAPTER 7 REFERENCES

2
LITERATURE REVIEW

MODE OF TRANSPORTATION

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

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

2.1 Land Transport

Sometime around the late Neolithic age, man learned how to domesticate animals. He used horse
and other beasts of burden to not only help him till the soil but also for transportation purposes.
However, the invention of Wheel, around 4000-3500 BC, entirely changed man’s outlook
towards life. Transportation became faster. Not only could man himself travel faster but also take
loads of goods along with him to distant places. Thus, was also born the idea of trade and
exchange.

The land mark inventions that followed are as under:

• Two-wheel chariot - world’s first form of wheeled transportation - invented in Sumeria,
……….around 3500 BC. This eventually led to invention of four-wheel chariot in due course.
• Cart driven by a steam turbine, build by a Jesuit missionary in China– 1670 AD
• Modern bicycles invented – 1790 AD
• Richard Trevithick invented the first steam powered locomotive (for roads) -1801 AD
• George Stephenson invented the first practical steam powered railroad locomotive – 1814 AD
• Jean Lenoir made a gasoline engine automobile – 1862 AD
• Invention of Internal Combustion Enginebya Frenchman named Jean Joseph Etienne Lenoir –
ppppppp1860 AD
• 1867- First motorcycle invented
• 1885 - Karl Benz builds the world's first practical automobile to be powered by an internal
iiiiiiiiiiiiicombustion engine

3
• First experiment of electric powered trains – 1895 AD
• Henry Ford improves the assembly line for automobile manufacturing – 1908 AD
iiiiiiiiiiiiiDuring World War II, the diesel engine came into widespread use, and steam was almost
iiiiiiiiiiiiicompletely forgotten. Advancements have continued to be made in the time since.

2.2 Water Transport

It is interesting to note that man had developed means of traveling on water even before he had
domesticated the horse. Though the origin of the dugout boat still remains one of history’s great
mysteries, but it does indicate that man had known how to travel on water long before other
means of transport developed. This historians point may have been due to an accidental invention.
Nevertheless, the addition of the boat changed the face of water transportation.

At first, Simple boats evolved to include a large square of cloth mounted on a central pole. This
cloth was called a sail. The sail aided in navigation and wind pressure propelled the boat. Soon
this gave way to sail-propelled ships. Later, these sail-propelled ships grew bigger in size while
sleeker in design. First the oars and rudders and then the deck covers were also included in the
ship’s design.

With the advent of automation in 19th century, water transportation changed forever. Ships shed
their sails. Now more goods and people could be transported faster.

The landmark inventions in water transportation are as under:

• Cornelis Drebbel invented the first submarine in 1620 AD
• First practical steamboat demonstrated by Marquis Claude -1783 AD
• Steamboat invented – 1787 AD
• First diesel-powered ship – 1912 AD
• Hovercraft invented – 1956 AD
• First nuclear powered ship launched – 1958 AD

4
2.3 Air Transport

Man’s next stride in transportation looked not to the land, or even to the seas, but to the sky.
Although many people had toyed with the idea of flight,
but the first sustained, controlled flight took place only in December 17, 1903, at Kitty Hawk,
North Carolina. The inventors of this new flying machine were brothers Orville and Wilbur
Wright, two bicycle makers. They invented a bicycle propelled contraption which later evolved
into jet-propelled aircraft capable of world-wide mass transfer. It came to be called the aeroplane.
Aeroplane made it easier for people to travel great distances in less time.

The land mark inventions in air transportation

are as under:-
• Leonardo da Vinci - first to seriously theorize about flying machines - with over 100
iiiiiiiidrawings that illustrated his theories on flight – 1492 AD
• The Montgolfier brothers invent the first hot air balloons – 1783 AD
• The Wright Brothers invent and fly the first engine airplane – 1903 AD
• Very first helicopter – though an unsuccessful design – 1907 AD

2.4 General Mathematical Model of Transportation Problem

Let there be m sources of supply, S1, S2, ……….,Sm having ai (i=1,2,3,4…..n) unit of supply
(or capacity) respectively, to be transported among n destination D1, D2,………Dn with bj
(j=1,2,3,4,………,n) units of demand (or requirement ) respectively. Let Cij be the cost of
shipping one unit of the commodity from source i to destination j for each route. If Xij represent
number of units shipped per route from source i to destination j, the problem is to determine the
transportation schedule so as to minimize the total transportation cost satisfying supply and
demand conditions.
Mathematically, the problem is general may be started as follows;

5
 n n

Minimize (total cost) Z=∑ ❑ ∑ Cij Xij (1)

i=1 j=1

Subject
n
to the constraints
∑ Xij=ai , 1=1,2 , ….. m (Supply constrains) (2)
j=1

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

i=1

And Xij ≥ 0 for all i and j

For easy presentation and solution, a transportation problem data is generally

presented as shown in table

Existence of Feasible Solution:-

A necessary and sufficient condition for the existence of a feasible solution to the
transportation problem (1) and (4) is

Total supply = Total Demand

m n

∑ ai=∑ bj
i=1 j=1

6
 General Transportation Table

To D1 D2 ……… Dn Supply
From …. Ai

S1 C11 C12 ……….. C1n a1

X11 X12 X1n

S2 C21 C22 ……….. C2n a2

X21 X22 X2n

… … … ……… … …
… … … … …

Sm Cm1 Cm2 ……….. Cmn Am

Xm1 Xm2 Xmn

Demand b1 b2 ………. Bn m n

∑ ai=∑ bj
Bj i=1 j=1

7
9

In this problem, there are (m+n) constrains one for each source of supply and distinction and m ×
n variables. Since all (m+n) constraints are equations, since the transportation model is always
balanced ( total supply= total demand), one of these equation is extra (redundant). The extra
constraints equation can derive from the other constraint equations without affecting the feasible
solution. It follows that any feasible solution for a transportation problem must have exactly
(m+n-1) non negative basic variables (or allocations)

2.5 Calculation of Transportation Cost : Vogel’s Approximation Method (VAM)

The Vogel approximation method is an iterative procedure for computing a basic feasible
solution of the transportation problem.

Steps

1.Identify the boxes having minimum and next to minimum transportation cost in each row and
write the difference (penalty) along the side of the table against the
Corresponding row.

8
 2. Identify the boxes having minimum and next to minimum transportation cost in each column
and write the difference (penalty) against the corresponding column

3. Identify the maximum penalty. If it is along the side of the table, make maximum allotment
to the box having minimum cost of transportation in that row. If it is
below the table, make maximum allotment to the box having minimum cost of
transportation in that column.

4. If the penalties corresponding to two or more rows or columns are equal, select the top most
row and the extreme left column

W1 W2 W3 W4 SUPPL P1 P2 P3 P4 P5 P6
Y
F1 11 13 17 14 250
225 2 2 2 11 11 11
25
F2 16 18 14 7 300
7 2 2 16 16 ---
250
50
F3 21 20 13 10 400
125 275 3 7 1 21 --- ---

9
DEM 200 225 275 250 950
AND
R1 5 5 1 3

R2 5 5 1 -----

R3 5 5 ---- -----

R4 5 ----- ----- -----

R5 5 ------ ----- -----

R6 11 ------ ------ -----

T = 11 × 25 + 13 × 225 + 16 × 50 + 7 × 250 + 13 × 275 + 7 × 250

= 11575

10
2.6 Company Introduction

UltraTech Cement Limited is leading cement company and the country is largest exporter of
cement clinker based in Mumbai, India. It has an annual capacity of 23.1 million tonnes. It
manufactures and markets Ordinary Portland Cement, Portland Blast Furnace Slag Cement and
Portland Pozzalana Cement. It also manufactures ready mix concrete (RMC). The export markets
span countries around the Indian Ocean, Africa, Europe and the Middle East. It is part of Grasim
Group.
UltraTech Cement Limited has five integrated plants, six grinding units and three terminals two
in India and one in Sri Lanka.
UltraTech is subsidiaries are Daksh in Cement Limited, UltraTech
Cement Lanka (Pvt.) Ltd. And UltraTech Cement Middle East Investments Limited.

Vision of the company:-

• To be a premium global conglomerate with a clear focus on each business.
• To become world most big company of cement and concrete.

Mission of the company:-

• To deliver superior value to the customers, shareholders, employees and society

• Values of the company:-

People contribute when they relate to an organization and they relate, when they understand the
organization. People understand an organization through its values by experiencing the culture
that values create and by using the systems and processes that values define. In large
organizations, such shared understanding cannot be created through leadership of individuals
alone; it requires leadership of principles, of beliefs, of conviction. Integrity, Commitment,
Passion, Seamlessness, Speed. These together constitute what they call their Value.

11
2.7 Company Analysis

According to the Consolidated - Audited financial statement for the ear of 2017, total net
operating revenues increased with 93.20%, from INR 7,281.76 tens of millions to INR 14,068.35
tens of millions. Operating result increased from INR 1,991.26 tens of millions to INR 2,589.33
tens of millions which means 30.03% change. The results of the period increased 12.65% reaching
INR 1,235.55 tens of millions at the end of the period against INR 1,096.84 tens of millions last
year. Return on equity (Net income/Total equity) went from 23.75% to 11.61%, the Return On
Asset (Net income / Total Asset) went from 15.51% to 6.87% and the Net Profit Margin (Net
Income/Net Sales) went from 15.06% to 8.78% when compared to the same period of last year.
The Debt to Equity Ratio (Total Liabilities/Equity) was 169.02% compared to 153.11% of last
year. Finally, the Current Ratio (Current Assets/Current Liabilities) went from 1.16 to 1.13 when
compared to the previous year.

 Andhra Pradesh Cement  Arakkonam Cement Works

Works
 Awarpur Cement Works  Jharsuguda Cement Works

 Gujarat Cement Works  Maggalla Cement Works

 Hirmi Cement Works  Ratnagiri Cement Works

 Jafrabad Cement Works  West Bengal Cement Works

 Ginigera Cement

12
OBJECTIVE OF STUDY

The main objective of transportation is Physical distribution of goods and services from several
supply centers to demand centers. Delivery the goods at right time at right place.
Objective of the transportation is to minimize the overall costs by increasing operational
efficiency of the manufacturing process.
1) Increased efficiency
2) Improved customer service
3) Increased sales
4) Improved relationships

1. Increased Efficiency
To increase efficiency, a company must develop cost-effective transportation rates while reducing
overhead, total inventory, and overall cost-per-order processing. You can improve your warehouse
operations, including processes, layout, and flow, by working closely with your transportation
provider. Establish a two-way relationship with your carrier to frequently share best practices,
issues, and opportunities.

2. Improved Customer Service

In direct marketing enterprises, fulfilment operations are in partnership with marketing and
merchandising. This partnership is like a three-legged stool — without all three legs the stool
cannot stand. Fulfilment operations’ inbound and outbound transportation is key to delivering
marketing’s promise to the customer to get the shipment delivered on time and in good condition.

3. Increased Sales
Several opportunities exist for improving service, and those in turn can be used to marketing’s
advantage. Look at inbound and outbound freight as separate operations with separate
requirements. Bundle the volumes wherever possible with your carriers, but recognize the
differences between the channels.

13
4. Improved relationships
True two-way collaboration between retailer and carrier is key to the success of logistics
execution. Measures of success are total cost, time in transit, and responsiveness of the carrier
representative.

PROBLEM STATEMENT

Optimizing the transportation cost from Different warehouses to different dealers of UltraTech.

We are taking four ware house i.e. Delhi, Agra, Harayana, and Ghaziyabad their respective dealer
i.e. Delhi, Agra, Harayana, and Ghaziyabad and cost for each combination is given below-

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

Delhi G. Agra
Haryana
bad
Delhi 250 420 350 700
420 600 500 800
Harayana
G. bad 350 500 500 700
Agra 700 800 700 450
All the cost are given in mt.

14
SOLUTION

15
RESULTS AND DISCUSSION

By using the Vogel’s Approximation Method (VAM) we were able to minimize the
transportation cost for the wheat transportation. After an iteration the total transportation cost
was approximated to be Rs. 2676000. This method can not only be used in cement industry,but
also can be used in various industries to significantly reduce the transportation cost.

Advantages – Applications

a. This methods is very effective as it provide step by step solution.

b. It is very simple to obtain optimum solution through this method.

16
CONCLUSION

On optimizing the transportation cost from Different warehouses to different dealers of

UltraTech, namely that of Delhi, Agra, Harayana, and Ghaziabad, we obtain an optimal cost of
trasportation as Rs. 26,76,000. Thus the objective of the transportation problem i.e, to minimize
the overall costs by increasing operational efficiency of the manufacturing process has been met
successfully.

17
REFERENCES

18