GyanClan

OSDC Group Project the questions so far...

2009-04-22T07:09:00.002+05:30

Discuss the way in which chosen organization creates the value. Focus on its inputs, throughputs, output and environment.

How will you measure the effectiveness of the chosen organization?

Draw a stakeholder map that identify your organization’s major and fringe stakeholder groups.

What kind of conflicts between its stakeholder groups would you expect to occur most?

Identify the stakeholder conflicts that need to be managed by a management graduate (during the first two years)

How has your organization responded to four design challenges−Extent of Differentiation (Entire organization)
−Integrating mechanisms used in your organization
−Is it centralized or decentralized?
−Is behavior in your organization is very much standardized? Whether mutual adjustment play an important role in coordinating the activities?

How many levels are there in your organization’s hierarchy? Is it tall or flat? Are you facing any problem associated with tall hierarchies?

How do the centralization, standardization and horizontal differentiation affect the shape of your organization?

What kind of structure (for example, functional, product division, multidivisional) does your organization have? Draw a diagram showing its structure and identify the major subunits or divisions in the organization.

Why does the company uses this kind of structure? Provide a brief account of the advantages and disadvantages associated with the structure of your organization.

Steps to use Solver Add-In in Excel 2007

2008-09-20T23:18:00.000+05:30

[Click] Office Button -> [Click] Excel Options -> [Select] Add-Ins -> [Click] Go... -> [Select] Solver Add-in -> [Click] Ok
Now the add-in would be available in Data -> Analysis

Solving Basic Graphical Problems without Graphs, may be with them too

2008-08-31T23:33:00.001+05:30

Lets take a function maximize profit 7x + 5y (Flair Furniture Example)
Subject to,
4x + 3y <= 240
2x + y <= 100

To solve these equations, let’s first name them and please note that we will strip off any <> sign to solve these simultaneous equations to arrive at the value of x and y.
4x + 3y = 240… (a)
2x + y = 100… (b)

Since (b) looks simpler, lets break that up
2x + y = 100
Taking 2x on the right hand side (RHS)
y = 100 – 2x… (c)

From (a)
4x + 3y = 240
Substituting the value of y from (c) to (a)
4x + 3(100 – 2x) = 240
4x + 300 – 6x = 240
4x – 6x = 240 – 300
-2x = -60
x = 30… (d)

From (b)
2x + y = 100
Substituting the value of x from (d) to (b)
2(30) + y = 100
60 + y = 100
y = 40

Now, if you insist that aapko line maarna hi hai, lets see the Graph Drawing approach too.

Lets again take
4x + 3y = 240… (a)
2x + y = 100… (b)

In (a), let x = 0
4(0) + 3y = 240
3y = 240
y = 80
You arrive at the point (0, 80)
In (a), let y = 0
4x + 3(0) = 240
4x = 240
x = 60
You arrive at the point (60, 0)
Now, draw a line from (0, 80) to (60, 0)

In (b), let x = 0, y would arrive to 100
In (b), let y = 0, x would arrive to 50
Now, draw a line from (0, 100) to (50, 0)

Both these lines will intersect and then do all the shading stuff as the professor taught, depending on whether the constraints are >= or <=

Operations Research: MTNL Problem

2008-08-31T23:13:00.003+05:30

Given:
Time of the Day Operators Required
0200 – 0600 hrs 2
0600 – 1000 hrs 8
1000 – 1400 hrs 10
1400 – 1800 hrs 5
1800 – 2200 hrs 4
2200 – 0200 hrs 1
Each operator works for 8 hours.

Solution:
Let,
a = number of operators working from 0200 – 0600 hrs
b = number of operators working from 0600 – 1000 hrs
c = number of operators working from 1000 – 1400 hrs
d = number of operators working from 1400 – 1800 hrs
e = number of operators working from 1800 – 2200 hrs
f = number of operators working from 2200 – 0200 hrs

Since each operator works for 8 hours, there can be an overlap in terms of shifts because an operator who starts work at 0200 hrs may leave only at 1000 hrs, one who starts at 0600 hrs may leave at 1400 hrs.

This can be represented as,

According to the first table, the number of operators required are constraints, however we have understood that there can be more than the ‘required’ number of operators because of a minimum shift time of 8 hours per operator. This can be represented as below (the ‘subject to’ conditions):

a + b >= 2
b + c >= 10
c + d >= 5
d + e >= 4
e + f >= 1
f + a >= 2

The objective function would hence be:
Minimize a + b + c + d + e + f

Great Men (and Women) who influenced Operations and Production Strategy

2008-08-19T22:00:00.001+05:30

Adam Smith, commonly known as the father of modern economics, division of labour, free market and of course the 'invisible hand'
Charles Babbage, mathematician, philosopher, inventor and mechanical engineer who originated the concept of a programmable computer
Eli Whitney, the inventor of the cotton gin and standardization
Frederick Winslow Taylor who said there is one best way to do a job
Frank and Lillian Gilbreth who popularized a business efficiency technique called time and motion study
Henry Laurence Gantt, a mechanical engineer and management consultant who is most famous for developing the Gantt chart
Ford Whitman Harris who developed the Economic Order Quantity model in 1913
Elton Mayo, examined the effects of social relations, motivation and employee satisfaction on factory productivity
William Edwards Deming, Joseph Moses Juran, Philip Bayard Crosby and their contribution to quality management

Hints for Ameritrade Cost of Capital Solution

2008-08-17T17:35:00.002+05:30

The below hints are limited to my little knowledge of CF, please feel free to post your comments or improvisations for the benefit of all!

Get inspired from Page 211 of Financial Management 7e by Prasanna Chandra and calculate Beta
Calculate average Beta of CS, QR and WIS, this will be estimated Beta for Ameritrade
Based on your assumption, pick up a risk free return % from Exhibit 3
Based on your assumption, pick up a market rate of return % from Exhibit 3
Calculate WACC

Depending on the assumptions it could be any where from 15 to 30 or even more!

Supply

2008-08-16T15:50:00.002+05:30

(Content: Prof. Vishwa Ballabh)

Any firms objective is to maximize profit and therefore they offer to sell more when the price of good rises, when input prices fall or when technology improves. MC curve above the minimum of AVC in the short run and above the minimum point of AC in the long run is supply curve of the firm. Because firm equates P = MC for the profit maximization. The market supply is a horizontal summation of supplies of the firm.

Elasticity of Supply

Price Elasticity of Supply is a measure of how much the quantity supplied of a good responds to a change in the price of that good. It is computed as (Percentage Change in Quantity Supplied / Percentage Change in Price). The price elasticity of supply determines whether the supply curve is steep or flat. Note that all percentage changes are calculated using the midpoint method.

Since firms often have a maximum capacity for production, the elasticity of supply may be very high at low levels of quantity supplied and very low at high levels of quantity supplied.

Costs of Production

2008-08-16T14:48:00.004+05:30

(Content: Prof. Vishwa Ballabh)

What are costs?

Total Revenue is the amount a firm receives for the sale of its output
Total Cost is the market value of the inputs a firm uses in production
Profit is total revenue minus total cost
Costs are those input costs that require and outlay of money by the firm
Implicit Costs that do not require an outlay of money by the firm (Example of implicit cost could be a store owner who could earn a salary if he / she had worked elsewhere)

Economic Profit versus Accounting Profit

Economic Profit is total revenue minus total cost, including both explicit and implicit costs where as Accounting Profit is total revenue minus total explicit cost. Economists include all opportunity costs when analyzing a firm, whereas accountants measure only explicit costs. Therefore, economic profit is always smaller than accounting profit.

Production and Costs

Marginal Product is the increase in output that arises from an additional unit of input. Diminishing Marginal Product is the property where by the marginal product of an input declines as the quantity of the input increases.

Measures of Costs

Total Cost (TC) is the sum of fixed and variable costs
Total Variable Cost (TVC) is cost which varies with level of output
Total Fixed Cost (TFC) is cost which remain invariant to level of output
Average Cost (AC) is (TC / Output) Example: how much does it cost to make a cup of tea
Average Variable Cost (AVC) is (TVC / Output)
Marginal Cost (MC) is (Change in Total Cost / Change in Output) or (Change in TVC / Change in Output) Example: How much does it cost more to increase my
output of tea by one cup.

Though AC and MC sound similar, there is a subtle difference between them because MC is related to the 'change' and not the absolute value.

Average Total Cost is (Total Cost / Output)Average Fixed Cost is (Fixed Cost / Output)

Cost Functions and decision making Rules

So long as marginal costs decline both AC and AVC will decline. These costs keep on declining even when MC is rising. MC cuts from the below both AVC and AC at their respective minimum. After that both AVC and MC rise and MC > AC or AVC. The difference between AC and AVC will reduce as we expand production. This is because proportionately the fixed cost declines relative to variable costs in total costs. Since FC are variable in the long run, the ATC curve in the short run differs from the ATC cost curve in the long run.

Cost Curves

Economics and Diseconomies of Scale

Economies of Scale means the property whereby long-run ATC falls as the quantity of output increases. Example: ATC of manufacturing 100 bicycles will be higher than ATC of manufacturing 100000 bicycles
Diseconomies of Scale means the property whereby long-run ATC rises as the quantity of output increases. Example: ATC of mining 100 MT of coal will be lesser than ATC of mining 100000 MT coal
Constant Returns to Scale means the property whereby long-run ATC stays the same even as the quantity of output changes. Example: No matter how much you produce, the cost of product Z will remain Re. 1 for a very long time :)

Production Theory

2008-08-16T08:24:00.005+05:30

(Content: Prof. Vishwa Ballabh)

The Production Function specifies the maximum output that can be produced for given amount of inputs, it can be denoted as Q = f(X1,X2……Xn)

Some of the most important questions related to production would be:

how much to be produced to maximize profit once the quantity of production is decided
how to use the available resources to produce the intended quantity
if the resources are limited, what should be the ideal combination in which they are used and what should be the output
how to increase / decrease production in the short / long run

A production table shows the quantity of output generated against the units of inputs employed in production. For the sake of simplicity, let us take X and Y as inputs for producing Z. There may be several combinations of inputs X and Y that produce N quantity of the output Z. If we plot these combinations in a graph, the resultant curve is called as an Isoquant.

Short run Production Function

It is the maximum output that can be obtained by combining various levels of variable inputs to a given level of fixed resources. You can denote it as Q = f(X1, / X2, X3...Xn) where X1 is the variable input and all others are fixed inputs. Our intention is to find out how the production changes when we keep on increasing X1 and therefore how much X1 should be used in order to maximize profit.

Productivity Concepts

Total Product is the maximum output for a given level of variable input, Q = f(X1/...)
Marginal Product is the additional output produced by one additional unit of input while other inputs are held constant, MP = (change in TP / Change in level of input)
Average Output is the total output divided units of variable input, AP = TP / Number of variable inputs

Law of Diminishing Returns

This law states that the additional output from successive increase of one input will eventually decline when other inputs are held constant. This means marginal product of the varying input declines after a point. Example: Lets take a simple example of making N pieces of Z with O pieces of X, if we increase the input to O + 1, output may become N + 1, however if the input is increased to O + 2, the output may not be N + 2, instead it will be N + 1.75 and so on.

Demand

2008-08-15T19:59:00.006+05:30

(Content: Prof. Vishwa Ballabh)
Quantity demanded means the amount of a goods that buyers are willing and able to purchase.

The law of demand states that other things equal (ceteris paribus), the quantity demanded of a good falls when the price of the good rises.

Demand schedule is a table that shows the relationship between the price of a good and quantity demanded. Example: Price of Gulab Jamun in Rs. / Demand in Pieces, 5 / 5, 6 / 5, 7 / 4, 8 / 3, 9 / 1, 10 / 0, and so on.

Demand Curve

A demand curve is a graph showing the relationship between the price and demand of a particular good.

Sample Demand Curve

Shifts in Demand Curve

The sum of individual demands form the market demand. Any change that raises the quantity that buyers wish to purchase at a given price shifts the demand curve to the right. Any change that lowers the quantity that buyers wish to purchase at a given price shifts the demand curve to the left.

Other things equal:

In case of normal goods, an increase in income leads to an increase in demand. Example: increase in salary of a BPO executive increases demand for pizza ;)

In case of inferior goods, an increase in income leads to a decrease in demand. Example: substantial increase in salary of railway coolie may decrease demand for bidis, he may prefer cigarettes instead

In case of substitutes, an increase in the price of one leads to an increase in the demand for the other. Example: increase in price of Britannia Marie may increase demand for ITC Marie

In case of complements, an increase in the price of one leads to a decrease in the demand for the other. Example: increase in price of tea leaves may decrease demand for sugar

Prices of Related Goods

A change in the goods price represents a movement along the demand curve, whereas a change in one of the other variables (income, price of related goods, tastes, expectations, number of buyers) shifts the demand curve itself.

Elasticity of Demand

Elasticity a measure of the responsiveness of quantity demanded one its determinants

Price Elasticity of Demand

It is a measure of how much the quantity demanded of goods responds to a change in the price of that good. It is calculated as (Percentage change in quantity demanded / Percentage change in price). Since price and quantity demanded are inversely related, price elasticity of demand is negative for all but Griffins goods (the set of Griffins goods keep changing with respect to time and place, to get more confused about this topic, check out http://freakonomics.blogs.nytimes.com/2008/05/05/the-indiana-jones-of-economics-part-i/). All percentage changes are calculated using the midpoint method

The price elasticity of demand depends on: availability of close substitutes, necessities versus luxuries, definition of the market and time horizon

Total Revenue

It is the amount paid by buyers and received by sellers of a good, computed as the price of the good times this quantity sold.

Total Revenue

General Rules:

When demand is inelastic (a price elasticity less than 1), price and total revenue move in the same direction
When demand is elastic (a price elasticity greater than 1 ), Price and total revenue move in opposite directions
If demand is unit elastic (a price elasticity exactly equal to 1), total revenue remains constant when the price changes

Income Elasticity of Demand

It is a measure of how much the quantity demanded of a good responds to a change in consumers income, computed (Percentage change in quantity demanded / Percentage change in income)

Cross-Price Elasticity of Demand

It is a measure of how much the quantity demanded of one good responds to a change in the price of another good. It is calculated as (Percentage change in quantity demanded of good 1 / Percentage change in the price of good 2).

10 Major Principles of Economics

2008-08-15T19:29:00.002+05:30

(Content: Prof. Vishwa Ballabh)

People face tradeoffs. Example: if I have Rs. 7 with me and I'm hungry, I can either buy a vada pav or a chocolate bar
The cost of something is what you give up to get it. Example: cost of PGCBM14 is 1.8 lacs + the value of time spent with family + the value of extra sleep + the value of all the reference material we buy + the value of the time you spent on the internet reading blogs like these + ... Opportunity Cost of an item is what your give up to get that item.
Rational people think at the margin. Here we are talking of comparison of marginal benefits against the marginal costs. Example: if I plan to spend Rs. 400 to buy a 2GB Flash Drive but there is an offer that if I spend Rs. 100 extra, I will get a 4GB Flash Drive. In such a case, I can compare the additional benefit derived against the additional cost incurred and a decision can be taken accordingly.
People respond to incentives. Everyone knows what we are talking about here :) Example: Usually, if there is no salary people may not like to work at all!
Trade can make everyone better off. Example: If each person trades his / her best services and gets rewarded in some form or the other for it, it will be an ideal situation. This will ensure that there is a huge variety of goods and sevices that you can buy or subscribe to, at various costs.
Markets are usually a good way to organiza economic activity. For what we discussed in the previous point, there has to be a market place where all the goods and services can be exchanged. If each person works in isolation, there will be no exchange. A market will also create healthy competition.
Governments can sometimes improve market outcomes. Governments have the power to regulate market factors by way of rules and regulations and mass scale change in economic drivers. Market failure is a term used to refer to a situation in which the market on its own fails to produce an efficient allocation of resources.
A country’s standard of living depends on its ability to produce goods and services. Productivity of the population plays a major role in this case.
Prices rise when the Government prints too much money. We can vaguely relate this to inflation. The more currency notes we have in the country, the value per note falls down. Hence, the purchasing power per note also becomes lesser.
Society faces a short-run tradeoff between inflation and unemployment. The cycle goes like this... increase in the amount of money in the economy -> people have more money -> people spend more -> demand for goods and services increase -> due to increase in demand, firms rise prices and production -> hire more resources to produce more -> thus unemployment decreases

Managerial Economics

2008-08-15T19:03:00.002+05:30

(Content: Prof. Vishwa Ballabh)
The root cause of all economic problems are:

Wants/ desires are unlimited
Resources are limited
We can prioritize wants
Resources have alter native uses

Hence, economics is also called science of choice. Organizations to choose how to allocate limited resources in their competing uses so as to maximize it goals.
Microeconomics is the study and analysis of the behavior of individual segments of the economy where as Managerial economics provides a systematic, logical way of analyzing business decision

There is a circular flow of goods and money in the economy between firms and households via markets.

The Economic System of every society must answer the following key questions:

What to produce?
How to produce?
How to distribute?

Historically there were three types of economic systems:

Command & Control
Market economy
Mixed economy

'Price' is the key factor that acts as a signal to the producers and consumers. Due to the inherent nature that producers and consumers will always act so as to maximize their self interest, decentralized decisions are taken and this produces maximum good to maximum people.