Assignment 1

Q1. A tier-I supplier ABC collects material requirements from different smaller sites and
gives bulk orders to the manufacturers. Total annual requirement of steel from 4 sites is 250
MT each and from another 2 sites as 120 MT each. The listed price of steel for projects is Rs.
40000/ MT. ABC assures each site for supply of steel at a 15% discount from this listed
price. Due to bulk orders, ABC is able to procure from manufacturers at a rate of Rs 30000/
MT. Per order cost for ABC is Rs. 2000 and the holding cost is 20% of the material cost.
Calculate:
A. The quantity of steel that should be ordered by ABC in each lot.
B. The total cost of procurement and handling of total requirement for ABC.
C. Total profit for ABC.

Q2. A developer XYZ is working on 4 different sites simultaneously. The contractor has a
centralized warehouse for cement and from here cement is supplied to different sites. Site A
for residential apartment project and Site B of a commercial complex project are in the same
direction. Site C of a school building project and Site D of a hospital building project are in
different directions. Details for each site are shown below.
Bigger trucks costing Rs. 40/km can carry 250 bags/trip and smaller trucks costing Rs. 30/km
can carry 150 bags/trip.
Annual Lead Safety Storage Distance from
Req. Time Stock Space warehouse (km.)
(bags) (days) (days) (bags)
Site 5000 2 1 500 37
A
Site 20,000 3 2 2000 72
B
Site 2,000 1 0 500 20
C
Site 5,000 2 1 1000 30
c
Calculate:
1. EOQ for the warehouse
2. ROP for each site considering each site orders for the storage capacity
3. Schedule of delivery from warehouse
4. Transportation cost
Q.3 Two suppliers are supplying plywood formwork to a site. Their performance is being
evaluated and the collected information is as below:

Supplier 1 Supplier 2
Material Quality (weight = 60)
Acceptable delivered lots 9 8
Total lots received 12 11
Service (weight = 20)
On-time deliveries 10 10
Total lots received 12 11
Price (weight = 20)
Lowest price (per sq. m) 630
Price submitted 650 640

Evaluate and decide which supplier would be eligible for further orders. If the weightage
of evaluation parameters changes to Material Quality:Service:Price as 30:20:50, would it
change the results?

5. A contractor is doing quarterly evaluation of vendors. Comparative evaluation results of

two vendors are as below. Do the calculation and state which vendor rates better. Also,
make a short report for the vendor and your senior management to inform about the results
and areas of improvement for both the vendors.

Vendor 1 Vendor 2

Weightage Performance Ratings Performance Ratings

Area of Performance
(Poor-1,Excellent-10) (Poor-1,Excellent-10)

Compliance to time schedule 20 6 8

Adherence to safety standards 20 7 7
Ability to mobilize at short 5
notice 4 2
Coordination with other 5
agencies 4 2
Response to changes 10 3 3
Efficient utilisation of 15
contractors P&M &
Materials 6 4
Compliance to labour laws 10 7 8
Site maintenance and 15
logistics 8 8
Q.5 Piling work is going on at a site. Site remains closed on Sunday. Total contract value is
Rs. 30 lakhs. During the work five site visits were conducted by two HO structural
engineers of the lead contractor. Work happened in total 30 working calendar days, out of
which one day work could not happen due to internal issues in the contracting company.
Since piling activity is on the critical path, it resulted in project delay of one day. Apart
from regular inspection at site, site supervisor of lead contractor conducted weekly
inspection of the batching plant of the piling contractor and each inspection consumed half
day. Piling contractor submitted a bill at the end of work completion, but it could not be
processed as there were some issues with figures shown. Later the billing engineer of the
lead contractor called the piling contractor for a day long meeting and resolved the issue.
As per the contract, piling contractor was scheduled to submit weekly progress reports
which were to be forwarded to the client. But, only fortnightly reports were submitted and
rest of the times lead contractors team had to prepare the reports which is a full one day
work for each report. As per the LD clause of lead contractors contract with the client,
delay of one week leads to penalty of 0.5% of the project contract value i.e Rs. 10 crores
and as per the Incentive clause if project is completed on time bonus of 0.5% of the project
value would be paid. Structural engineers are in the pay grade of Rs. 20 lakhs per annum
and remaining project site and office staff is at the pay grade of Rs. 10 lakhs per annum.
Calculate cost of piling contract to the lead contractor.