16. Block Diagram Classification of Demand SEASONAL UNCERTAIN BASE demand Which is there less than 80% but more than 30% of the year (30-40% of specified goods) Predictable Which is there for less than 30 % in an Year (0-10 % of specified goods) Uncertain Demand which is there more than 80% of times. (50-60 % of Specified goods) Known in advance
18. Marketing Diagram Offset Profit/Loss Problem for Seasonal Demand Develop a model to fix the timing of future contracts Hence previous strategy will not serve objective. Demand No offsetting of losses possible. Demand is not round the year Futures loss/ gain will occur every month
21. Uncertain Demand Highly sporadic in nature Quantity needed is low Can be purchased at SPOT from the market. An Extra Quantity contract with Suppliers Make contract at today’s price Pay them a high margin Demand will be short and uncertain
42. How to practice in Real world… Indian Team (Using Primary Surveys of Commodity Traders) Sharekhan has least commission of 0.03%. Daily Trading in commodity futures contract Central Procurement team London metal Exchange trades in all commodities Payment mode is $
43. RBI Guidelines for commodity futures trading in india After negotiations their commission is 0.03%
44. Present Practices in Procurement Risk Management Vs Our Modelling Just like Whirlpool This will effect their bottom-line, Our model prevents that LG India Direct trading at Market decided prices They Predict, not hedge, so a risk is there We already have a Hedging team