Dubai Police Website (Fines Section) and Privacy Concern Statistics Project

Dubai Police Website (Fines Section) and Privacy Concern - Statistics Project Example Incidentally, such monitoring is not exclusive to Dubai. Traffic monitoring in England and the USA is done through the use of cameras. Furthermore automated toll collection methods and traffic law enforcements have been carried out through an online system (Blumberg, Keeler, & Shelat, 2005). In effect, massive public surveillance is regularly and extensively being done on the road. However, while intentions for publicly exposing details of traffic violations and fine impositions are not malicious, certain individuals find that such an exposure is an invasion to their privacy. The negative reactions are common in many aspects of the motorist hierarchy, and complaints that such a system invades people’s privacy are abundant. Some people are wary that strangers or ill-thinking people will track them down with the use of the online system of the Dubai Police. However, there are also those who approve of the system because it allows for an easier and more effective form of tracking down one’s violations and paying for these violations. Out of these, 57.8% were male (n = 185) and 42.2% were female (n = 135). In terms of distribution by age group, 10.3% were 18 to 22 years old (n = 33), 25.3% were 23 to 26 years old (n = 81), 23.2% were 27 to 30 years old (n = 74), 21.2% were 31 to 40 years old (n = 68), 11.9% were 41 to 50 years old (n = 38), and 8.2% were 51 to 60 years old (n = 26). The study wishes to find the demographics of those committing traffic violations. Table 1 shows the frequency and percentage distribution of the respondents who received a traffic violation. A total of 66% (n = 212) of the respondents received a traffic violation, with 124 males and 88 females. For both males and females, more respondents received a traffic violation than those who did not receive a traffic violation, n = 124 and n = 88, respectively. For the

Fashion is dress in which the key feature is rapid changing of style Essay

Fashion is dress in which the key feature is rapid changing of style - Essay Example The essay "Fashion is dress in which the key feature is rapid changing of style" discusses the role of fashion in the changing of style. Irrespective of the degree of change in style; we are going through a phase of fashion revolution. The following factors are responsible for the continual change in fashion. The change in the society or social trends is highly evident if we focus on the dress of women. Over the years the style of dressing of women has undergone a considerable change. This can be attributed to the emancipation, equality and independence of women. There has been a remarkable change in the attitudes of and towards women and this attitudinal change is directly linked with their dresses. The past century has experienced the change in the dress of women the most. Before 1920’s women used to be confined indoors. Slowly they started venturing outside. They started attending social events and their past time included outdoor games in the early part of 20th century. So their dresses underwent changes providing them freedom in movement. Some even started moving out of homes for becoming career women. The outcome was a further change in their attitudes and style of their dresses. Emphasis was given on their comfort as they started spending long hours outside. Another indication of changing times and changing fashions was the vogue for the tango. Tango teas and tango parties became all the rage well before 1914†¦slinky dresses with their slit hems were ideally suited to the fashionable contortions. of the new dance, for which the traditional tea-gown would have been utterly incongruous. (p.77) While researching the style during 1930's, Ewing (1975) has observed: Where all kinds of women were leading busy, active lives, simple fashions were desirable for ordinary daily comings and goings, with the luxury of long low-cut gowns reserved for evenings. At this time evening dress were worn very widely in Britain on a great variety of occasions and by the working girl and the middle class housewife as well as by the Duchess and debutante. (p.111) With the advent of beach custom, fashion changed again as the favorite past time drifted from games to sun tanning on the beach. During the 1950's the most remarkable change in the swimming costume was the introduction of bikinis. The new independent superwomen of the 21st century, with their jobs, their money and secure futures are following new fashion with leaps and bounds. They are choosing dresses that enhance their personality as well as enable them to carry out the responsibilities of their jobs with ease. Since they are financially strong they are always in look of something different and this is one of the reasons why fashion is changing rapidly and continually. Other social trend that brought a change in fashion was the growing self-sufficiency of the middle class and men's interest in looking better. Gone are the days when fashion was considered to be the domain of only rich and famous or those belonging to the fairer sex. Today fashion has no barriers. Rich and not so rich, men and women, young and old and even children are becoming fashion conscious. So whatever style, the rich are following, are being followed by the poor also. The same designs are being copied on shoestring budgets by compromising a little on the quality

Tonnage of the world Essay Example for Free

Tonnage of the world Essay A View From The Bridge is about a family, who live in Red Hook, the gullet of New York, which swallows the tonnage of the world. This family of three, comprising of an Uncle, Aunty and niece, are ordinary working class citizens who try to deal with some common, and uncommon problems in their lives. These problems include growing up and learning to let go, and conflicts with other relatives. From the first few lines of dialogue, I thought that Eddie and Catherine had a boyfriend and girlfriend relationship because when Catherine says Hi, Eddie! the stage directions tell us that Eddie is pleased and therefore shy about it To me, it seems that one would not be shy when ones niece said Hi, and also Eddie was pleased about it which led me to believe that the nature of their relationship was of that sort. Catherine buys a new skirt, which Eddie thinks is too short. Catherine tells Eddie that its the style now and that it isnt too short when she stands up. Eddie retaliates by saying that shes gotta sit down sometimes. Catherine carries on by saying if you see me walkin down the street to which Eddie quickly reacts by saying that shes walkin wavy. Catherine is adamant that shes not walking wavy, but then Eddie says that he dont like the looks theyre givin her in the candy store. This conflict is caused at the beginning of the play by Catherine growing up, and attracting the attention of male admirers, something that Eddie doesnt seem to like. Beatrice thinks that Eddie treats Catherine like a baby, as when she has the opportunity to become a stenographer, Eddie comes out with a feeble excuse to persuade her to not to take the job; I know that neighbourhood, B. I dont like it. Beatrice then says to Eddie that if nothin happened to her in this neighbourhood it aint gonna happen no place else, and makes a personal attack on him by saying shes seventeen years old, you gonna keep her in the house all her life? Beatrice doesnt understand Eddie as she thinks that he wants Catherine to have a good job, earning good money, but then he treats her like a child, so I think that Beatrice views Eddies relationship with Catherine as a father-daughter relationship; Eddie acting overprotective, and trying to make Catherines decisions for her. Rodolfo and Marco arrive in America, which has a dramatic impact on Eddies and Catherines relationship. As soon as Rodolfo arrives, we see that Catherine is attracted to him. She is enthralled by his singing and wondrously in love with his hair. When Catherine and Rodolfo go to the Brooklyn Paramount, Eddie tries to have a private conversation with Catherine, hinting at Rodolfo to go away. Catherine sticks up for Rodolfo saying, why dont you talk to him Eddie? He blesses you, and you dont talk to him hardly. This gives Eddie the chance to be ironic by saying, I bless you and you dont talk to me. Eddie feels that Catherine is running away from him, hence making their relationship together drift further and further apart. There is strong evidence that Eddie doesnt like Catherine going out with Rodolfo when they go to see a film at the Brooklyn Paramount. Eddie tells Beatrice that Rodolfo gives him the heebie-jeebies, and that he sings on the ships. Beatrice asks Eddie why he doesnt want Catherine Rodolfo to get married, as hes a nice fella, hard workin, and that hes good lookin. Also, Eddie seems to have a problem with Rodolfos wacky hair and that he just hopes thats his regular hair. Eddie is trying to insinuate that Rodolfo is gay or homosexual. Beatrice thinks Eddies crazy or sumpm, and tries to ignore his ridiculous remarks. Eddie also is very paranoid as he waits for Rodolfo and Catherine outside the house, treating them as little children; Its after eight. In the boxing scene, Eddie shows Rodolfo couple a passes, whilst everyone else watches them. Rodolfo dont know how to, but Eddie insists that he does. Beatrice asks Eddie whats he got to learn that for? and Eddies response is that somebodys liable to step on his foot or sumpm. Beatrice then tells Rodolfo to go ahead, as Eddies a good boxer and that he could learn from him. Meanwhile, in the kitchen, Catherine is making coffee, unaware what is going on in the other room. When Catherine does come in the room, she asks Beatrice what are they doin? with alarm. Beatrice replies by telling her that hes teachin him, and that hes very good! in a calm and relaxed way, as she only senses the comradeship, until Eddie mildly staggers Rodolfo, causing Marco to rise and Catherine to panic, shouting Eddie! After this incident, Rodolfo asks Catherine to dance, to the song, Paper Doll, which he sang when he arrived in the flat. This shows us that Rodolfo is standing up to Eddie, as when he first sang the song, Eddie told him to stop, in case he got picked up. Instead, he decided to dance to it, which is a safer option and may make Eddie a little bit angry. Meanwhile, Eddie sits down in his chair, when Marco places a chair in front of him. He asks Eddie Can you lift this chair? to which Eddie replies, What do you mean? Marco shows Eddie to lift it from the back, using only one arm. Eddie tries twice, but fails. By now, everyone is watching as Marco lifts the chair higher and higher, until the chair is raised over his head. Marco then smiles, triumphantly, leaving Eddie to absorb his look, and making him look weak and inferior; perhaps a warning telling him not to overstep the mark. In the boxing scene, each character feels differently towards Eddie, whether it is they feel threatened by Eddie, by him causing them direct anger, or by him causing anger, indirectly and vice versa. An example of direct anger being when Rodolfo was hit by Eddie, causing him anger as a result of Eddies action towards him. An example of indirect anger was when Rodolfo was hit by Eddie, causing Catherine anger, but not directly from Eddie towards her.

Importance of Supplier Relations Management

Importance of Supplier Relations Management Chapter 1: Introduction 1.1 Objective â€Å"Supply chain management (SCM) is the combination of art and science that goes into improving the way your company finds the raw components it needs to make a product or service and deliver it to customers.(Worthen., 2008)†. The main objectives of this research are to structure a supply network through multiple tiers. It extends in identifying the importance of Supplier relations management. Todays market as we know is customer driven, with extensive subcontracting, Inventory and supply chain management can make or break a deal. Good supply network emphasizes on seamless integration between Original Equipment Manufacturer (OEM) and its suppliers. It encourages in merging its design of Product, process and services. Regard to todays world, Global Supply chain Management is changing virtually every day (group, June 2006 ) Large and Small companies are keen and very likely to trade internationally and also to take advantage of low cost countrys for their sources. (group, June 2006 ). This study takes a more holistic approach in identifying issues and constraints of global supply chain management. A very rigorous approach for optimally coordinating information, material and financial flow between supplier ti ers is another objective of this study. Study is supported by mapping different models and approaches in order to provide a harmonic coordination within a closed supply network. As mentioned earlier small and large companies are turning their interest towards low cost developing countries for sources, this research intends to study current trends and opportunities among these developing nations for sustainable supply network coordination. Chapter 2 Literature Review 2.1 Summary This paper revolves around various objectives as discussed earlier. The purpose of a literature review is to describe the work that has been reported on a topic. It illustrates an individuals ability to identify vital information and sketch existing knowledge. This literature review is carried out to review current market trends and also to have a thorough knowledge correlating our main objectives. Ideas and thoughts of different authors has been analysed to demonstrate a more eccentric review of the topic. Few case studies has also been analysed to understand practical difficulties and competitive advantage of a better supply network design. Table 1 illustrates various definitions proposed by authors. 2.2 Multi Tier Supply Chain Overview and key elements In general many Manufacturing Organizations are a network production and distribution sites. They transfer raw materials to finished products and supply it to end users (billington 1992). Strategic supply chains are those in which â€Å"members are strategically, operationally, and technologically integrated†(Hult 2004) and are assumed to be a long-term stable relationships with a potential to change in accordance with the variable demands and market conditions(Hult 2004). Inventories play a very important role at both macroeconomic and microeconomic levels (Jaber 2009). According to (Jaber 2009), Current inventory costs accounts to half of total logistical expenses of a supply chain(Lancioni 2000). Improper Inventory management in a supply chain usually tends to increase conflicts between entities of the supply chain i.e., between retailer, buyer, manufacturer and suppliers, which may result to inefficiencies of the supply chain.(Jaber 2009). In a ideal supply chain every firm is considered to be unified, thus in an ideally integrated supply chain, end users or ultimate customers are the pulling force of a value chain unlike classical way of Manufactures pushing the goods out(Tan 2001). Realistically achieving full integration of a value chain is difficult with its complexity, thus strategically important business organizations are emphasized (Tan 2001). Key elements and activities of supply chain are as shown below. Key Elements Of supply chain According to (Christopher 2005), One important aspect of effective SCM is to reduce or completely eliminate Inventory issues between different entities/Organisation in a supply chain. He suggests eliminating this issue by effective information sharing of all stock levels. This concept is called ‘Co- Managed Inventory CMI.(Christopher 2005).(Tan 2001) Suggest that primary focus of a SCM is to achieve efficient end product distribution from manufacturer to customer by replacing inventories with information. Supply chain managements philosophy also suggests that its operations are not concerned only with logistics, but expands through all other operations of an organisation to achieve a greater customer satisfaction and value.(John T. Mentzer 2001).Other basic characteristics of a SCM, according to (John T. Mentzer 2001) are Considering the whole supply chain as a single entity and by this virtue, total inventory flow is managed in a SCM. Orienting Intrafirm and interfirm operations with a strategic approach and thus reinforcing its capabilities by co-operative measures. Unique/Personalized approach should be carried out for every customer to stay competitive and to achieve better customer satisfaction. For years Supply chain was considered as channels for distribution. The main intent of channel distribution was to make each organisation more productive and efficient. It emphasized on making each organisation more profitable without considering its other counter parts of the channel, i.e. like Tier1 suppliers, tier2, distributors or retailers (Lancioni 2000). Over the years with the advent of Supply chain management, focus drifted from intrafunctionaltowards a more interfunctional vision, by which co-ordination between these entities of SCM was emphasised. Interfunctional Channel distribution or termed as the modern day supply chain management considered the opportunity in supply network coordination: â€Å". . . altering the levels of the various activities, often referred to as logistical in nature (such as transportation, inventories, facility location, and order processing) may adversely affect achieving the objectives of these other functional areas†(Lancioni 2000). Thu s customer becomes the driving force of supply chain management. Supply chain analysis (SCA) deals with vertical inter dependencies between the firms; it also requires a systematic approach towards resource allocation and information exchange at every stage of production (Simchi-Levi 2000). Globalization represents cross-border flow of finished goods and increase in global competitors, identifying opportunities and competitive supply chain within its industrial sector(John T. Mentzer 2006). Realistically Supply-chain Managers identify difference between a domestic and a global supply chain even if the conditions are same. It is found that complexitys designing Global supply chain is exponentially high compared to a domestic supply chain, also its ability to stay competitive lies in understanding subtleties of GSCM that exists only during cross border trade offs(John T. Mentzer 2006). Supply chain distinguishes itself from its constituent entities with its integration of operations (Mahapatra 2004). Supply chain management goes beyond co-ordination among firms; it recognises inter dependencies among them and also delivers effective relationship management. Logistics is an integral part of effective supply chain.(Pierpaolo Pontrandolfo 2003) Suggest that Logistics operations within an organization can be related to Forward flow of goods both WIP and Finished goods Information flow feedback Management and Control Network Analysis (NA) is a technique which provides many tools to map relationship between internal organisations. NA also concerns with horizontal dependencies unlike SCA (Sergio G. Lazzarini 2001). As SCA and NA there are many other analyses methodologys suggests the importance of Interdependencies between organizations, According to (John T. Mentzer 2001) , the following activities are necessary to implement a better SCM. â€Å"Integrated Behaviour Sharing risks and rewards mutually Co-ordination Mutual sharing Information Goals and focus to serve customers Process integration Installing Long-term relations with suppliers and customers†(Mentzer 2001). The term supply chain management had an increased influence over the past decade. For instance, Annual Conference of the Council of Logistics Management 1995, 13.5% of the conference sessions posted titles concerning the words â€Å"supply chain.† At the 1997 conference, just two years later, the number of sessions about the terminology drastically increased to 22.4% (John T. Mentzer 2001). This increase has been steady all these years. This increase widely illustrates the global importance and benefits of Supply chain management. There are different types of channel relations in a supply chain as illustrated in Fig4. Supplier Organization/OEM Customer Figure3a: Direct Supply Chain Suppliers Supplier Organization Customers SupplierCustomer Figure 3b: Extended Supply Chain Third party Logistics Supplier Ultimate Supplier Organization Customer Ultimate Supplier Customer Financial Market Provider Research The figure1 identifies different degrees of supply chain complexity they are direct, extended and ultimate supply chain. A direct supply chain consists of a supplier and a customer involved in upstream and downstream flow of (Products, services, finance and information)(Figure: 4a.)(John T. Mentzer 2001) Similarly an extended supply chain includes suppliers, Immediate suppliers and customers and immediate customer, all involved in the upstream and/or downstream flows of products, finances, services and info(Figure: 4b). Thus an ultimate supply chain includes all the organizations involved in all the upstream and downstream flows of products/services/finances, and information from the ultimate supplier to the ultimate customer. (Figure: 4c) illustrates the complex functions of an ultimate supply chains. This may include 3rd Party Financial institutions; this involvement may be a cause to reduce overall risk involved. Similarly Even logistical operations are also supported by (3PL) In figure:4c , a market research firm is also seen as an entity of this complex chain. These may very well support the Manufacturer by providing vital market information about their end users.(John T. Mentzer 2001). Process of Supply chain management Many organisations believe that with process approach it is difficult to reduce/optimize their production flow in SCM (Cooper 2000). Customer relationship management Customer service management Demand management Order fulfilment Manufacturing flow management Procurement Product development and commercialization Returns. Multi Levels Explained It is necessary to understand different network analysis, methodologies to understand and resolve issues in designing a better supply chain management. Fig2 illustrates a basic model of a multi tier supply chain. Each level has its own importance and prominent influence over the chain thus making every level an integral part of the complex system. Fig2 is a sceptic of four level supply chain with centralised decision process. The different levels are as described below(Goyal 2009) First level-This Level of supply network contains multiple buyers/Distributor. Second Level- This level encompasses of Vendors or Manufacturer ie., Original Equipment Manufacturer. Third level- This level contains Tier-1 /Immediate Suppliers of the supply chain. Fourth level- This level contains different tier 2 suppliers. These suppliers support tier1 suppliers or directly to the manufacturer by providing product, service or finance.(Goyal 2009). Levels of issue The major issues at different levels that have to be addressed in a multi dimensional Supply chain are(David Simchi-Levi 2003). Strategic level: Strategic level of decisions are vital which provides and long and sustainable effect on an organization. Major decisions like factory location, storage, Plant capacity and logistic network fall under this level. Tactical level: These decision that change steadily(eg: every quarter) depending on market position, like transportation, production capacity, inventory policy, customer review etc., Operational level: These decisions are mostly day to day like scheduling, lead time, quotes, routing etc.,(David Simchi-Levi 2003). According to (David Simchi-Levi 2003), the above issues can be addresses with few strategies as follows Distribution Network Configuration Inventory Control Supply Contracts Distribution Strategies Supply Chain Integration and Strategic partnering Outsourcing and Procurement Strategies Product Design Contrastingly other author(Simon Croom 2000) looks to analyse supply chain management as different levels as addressed below. Dyadic Level: This level considers just two party relations, like Supplier-Manufacturer or Supplier-Retailer Chain Level: This level composes of relations with different dyadic levels, relations with customer-manufacturer-supplier-distributor-retailer etc., Network Level: This level is concerned with all network operations like upstream and downstream flow.(Simon Croom 2000). Areas of concern for Supply chain Literature Figure 6: Principle component bodies of supply chain literature Source: (Simon Croom 2000) 2.3 Global Supply Chain Management [GSCM] In this decade of global exploitation for raw materials, cheap and skilled labour has impounded interest towards global supply chain. Fig6 illustrates a typical Global Supply chain network. Interfunctional characteristic of a value chain has grown more complex and non feasible. Manufacturers usually set up factories in foreign to take advantages of low cost labour, trade concession, reduced logistic expense for foreign market, subsidies in capital investment it also makes manufactures more reliable to customers due to their close proximity(Gargeya 2005).Greater needs for GSCM is debated in this chapter below. Authors debate of many learning methodologies to understand framework of Global Supply chain management (GSCM). According to (Pierpaolo Pontrandolfo 2003) GSCM issues can be understood by an Artificial intelligence approach called Reinforcement learning (RL). Currently there are many such frameworks, helping different Multi National Companys as a business model. (Barry 2004), describes â€Å"An enterprise may have lowest over-all costs in a stable world environment, but may also have the highest level of risk if any one of the multiple gating factors kink up an elongated global supply chain!† In a global supply chain, supply risk should be identified, asses its possible occurrence and provided with a monetary value for better understanding, Companys should easily modify towards alternate suppliers (Barry 2004). 2.3a Current State Issues However experts believe that Global supply chain are more complex and difficult to maintain unlike domestic SC. Transportation cost tend to increase substantially due to foreign location, also complicates decision making because of increased lead time(Gargeya 2005). The other factors that dont encourage Global supply chain are listed below (Gargeya 2005) Inventory Cost Trade offs Supplier availability and Quality Different Language, Culture, practices Difficulties in Material planning and demand forecast Infrastructural incapability and non sophisticated telecommunication Inadequate skilled labour, Technology and Equipments Uncertain exchange rates Instable economics and politics Inconsistency of financial performance of supply chain. Efficient product and service distribution to upcoming markets can only be provided if an effective marketing infrastructure is developed.(Richey 2001). Globalization process should be viewed as a network embedded with contemporaneous options, constraints and events(Richey 2001). It intends to look into developing a strategic supply chain development and implementation. One of the challenge in a Global supply chain is development of a decision making model which incorporates almost every concerns of entities running across the chain(Mahapatra 2004). It is one of the biggest concerns to produce effective decisions to reduce risk. Considerable efforts has now been expended in developing this model, many conventional methodologies are adopted like, Simulation, Mathematical program, statistics etc., (Mahapatra 2004). 2.3 b Emerging Issues Numerous Global Supply chain models have been proposed consistently by researchers to tackle issues. Diffusion in multiple plant production systems, globalized market has escalated researchers interest towards this field. Fig11 illustrates one of the models that help to design a supply network. This model proposed by authors â€Å"Carlos J. Vidal† and â€Å"Marc Goetschalckx† illustrates an overlook of a decision making model to tackle transfer pricing and transport cost allocation problems. It is seen from fig6 that the suppliers are broadly classified as internal and external suppliers. For External suppliers it is clear that there is no possible decision for transfer pricing because they directly sell to organizations at market prices. Unlike external suppliers an optimal transfer pricing is determined using the model for internal suppliers (Goetschalckx 2001). A detail literature review of transfer pricing issue and its effect on Global supply chain will be discusse d later in this chapter. Table 2: Major international issues considered in selected global supply chain models Source: (Goetschalckx 1997) Market place around Global supply chain is changing continually reflecting to more emerging issues. These issues have to be resolved in a very short span to stay competitive and to make supply chain more financially effective (Gargeya 2005). First issue is dramatic increase of organizations, outsourcing its work to both domestic and international locations. Secondly many industries outsourced with a unidirectional and enterprise level motive, but now strive to coordinate its decision process across different levels of suppliers (Gargeya 2005). Third issue is recent development in the field of supply chain resulting in expanded definition of â€Å"supply chain performance, as mission, strategy and objectives can vary considerably based on value of the product offered to the customer† (Gargeya 2005). Even with extreme significance and necessity for Global Supply chain management, the subject is complex and diffuse. Many technique and methods have emerged from different areas like operations, logistics, sociology, International relationship, marketing, management, economics et,. But still due to its significant growth and complexity it becomes hard to keep abreast with current development in the field of GSCM (John T. Mentzer 2006). Cementing is the fact that many of these methodologies has evolved with little interdependency, considering little attention in relating with existing models (John T. Mentzer 2006). Outsourcing and Global Supply chain management focus to cost reduction, improved quality; thus increasing its overall competitiveness through structure and process that increase managerial commitment and competencies (Richey 2001). On other hand increased outsourcing of manufacturing to foreign locations in recent years has influenced mangers to design their supply chain considering not only in-house facilities but also to incorporate supplier capabilities and infrastructure. Broader criteria are taken into account while selecting the suppliers unlike fundamental ways. Suppliers are chosen based on customers perception of suppliers to meet demand, with suitable attributes such as quality, quantity, delivery, service, price etc.,. In some case more broader criteria as defined by total ownership cost for carrying inventory, training and repair (Meixell 2005). Supplier selection escalates structure of design problems with limitations in number of vendors in a certain geography, minimum order quantity, geographic preference and supplier capacity (Gargeya 2005). Supply network integration through a supply chain also influences Global supply chain design. Business process integration is one of the best options, coordinating decision across multiple tiers of suppliers/vendors. In reality organizations engage in coordination activities like â€Å"Vendor Managed Inventory (VMI), Collaborative Planning, Forecasting, and replenishment (CPFR)† (Gargeya 2005) by sharing sales promotion information. Advanced planning system (APS) integrate production decision making process, these systems are designed with precautions having Supplier capacity and Inventory in mind. These constraints influence Global Supply chain design in large scale (Gargeya 2005). As part of global supply chain design many factors like import duties has to be designed while framing since they contribute nearly 5-10 % of total cost (Pierpaolo Pontrandolfo 2003).Thriving through these issues, a well-coordinated and integrated design of Global Supply chain is hard to replicate thus making is very efficient and helps to achieve a competitive strategy in global scale (Gargeya 2005). 2.3c Need of Global Supply chain Management: Market Drift Global Supply chain models are complex and difficult to provide a solution compared to a domestic supply chain. In a global supply chain flow of cash and information is difficult to maintain unlike single country model. Inclusion of various taxes, Transfer pricing, duties, exchange rates, trade barriers are basic necessity to instil a real time supply system (Goetschalckx 1997). Todays market has advanced with increased globalization of supply sources and demand, drastic improvement of information transparency, innovative business models and venture capital. With such high competitive nature, Simple pursue for higher market share is no longer effective in improving profitability. Focus has drifted towards redefining their competitive profit zone; Companies now tend towards co-relationship to capture life time customer rather than mass buyers through strategic development and Management partnership (John T. Mentzer 2006). Global Market has immensely changed in these following factors Increase value of end users over mass buyers Importance of customization Emerging global consumer segment Time and quality related competition Improvements in communication Value for Information sharing Changing government policies Power shift to End users In broad spectrum of supply chain power has shifted towards End users. Customer satisfaction becomes the ultimate goal. Interfirm relation and collaboration is critical to increase customer satisfaction.(John T. Mentzer 2006). Original equipment manufacturers and supporting suppliers should be quick to react to customer requirements or else have to face prospect of losing market share. Mass Customization Mass customization results in increase in variety without compromising quality, price and efficiency i.e., customers expect better quality level and customization for low or competitive cost. This level of customization can only be achieved with full commitment of every entity of a supply chain like employees, distributors, suppliers etc,(John T. Mentzer 2006). Improved Communication Global competitive market means unit of business analysis of an organization is whole world not just a country/region. Communication revolution has offended late design or delay in delivery. In this context, â€Å"Kotler Philip† said â€Å"As firms globalize, they realize that no matter how large they are, they lackthe total resources and requisites for success.Viewing the complete supply chain forproducing value, they recognize the necessity of partnering with other organizations(John T. Mentzer 2006) â€Å". Time and Quality importance Time and Quality focused market competition can be achieved by basic Lean methodologies, reducing waste in the form of time, defects etc,. Improved quality not just means finished goods but also every area of a company.(John T. Mentzer 2006) Information Technology Influenced Most Powerful and conceptual influence is through immense improvement in the field of Information technology. Invention of modern computers superseded monolithic companies. Fast communication increased link between every member also eliminating multiple layers of people serving as information channel and control group, reducing cost and improved linkage eliminating time delays(John T. Mentzer 2006). 2.3d Benefits of Global Supply chain In this competitive world, market research is a fundamental aspect of any organizations design process. Anticipated results are an aspect of a design process, so it is necessary to understand possible benefits of Global Supply chain. Few benefits described by (Mechanic 2010), are Highest standard of quality. Increased standard expectancy from developing nations. Reduced Inventory and Transportation. Competitive advantage. Make or buy decisions simplified. Wider marker scale to target (New Market opportunity). Opportunity to learn and adapt business models around the globe. Increase in Supply chain flexibility. Surviving Economic recessions with auxiliary markets. 2.4 Supply Network design and collaboration 2.4 a General literature According to (Sheng Su 2008)†A supply chain is an integrated network of suppliers, transformation plants and distribution channels which are organized to acquire raw materials, transform the materials into final products, and deliver those products to customers(Sheng Su 2008)†. Recent developments in technology have forced typical sequential manufacturing industry into designing current ideas for business-business relationship with companies in supply networks (james B. Rice Jr 2002). (james B. Rice Jr 2002) Suggest that, Organizations which are looking for coordination across a strategic supply chain can be achieved by three independent segment coordination such as Information system Logistics Network Financial trade offs Author (Christine Harland 2003) describes the increasing complexity in supply networks. In growing market, issues can arise due to various reasons. Following table illustrates few origins of issue Table 3: Increasing Complexity in Supply network Source (Christine Harland 2003) Design of supply network can be approached as stages, Production, Procurement and distribution. Each stage can be scattered across supply network positioned anywhere in the globe as illustrated in fig11 (D.J. Thomas 1996). Designing and coordinating supply chain for a specific product usually tends to break functional and boundary barriers, resulting as a major issue. Functional boundaries can be deceiving in delivering knowledge thus a clear understanding is hard even for top management (D.J. Thomas 1996). Supply chain management is a new concept but coordinated planning has a profound history since early 1960 (D.J. Thomas 1996). Since then researchers had focused to integrate planning, scheduling and distribution (D.J. Thomas 1996), some of the early models and their functionality are review later in this chapter as illustrated in tables 7-13. Inventory Management barrier Managing Inventory is a vital and significantly increases customer satisfaction and also improves profit. According to (Billington 1992), there are 13 pitfalls in Inventory management. No Supply Chain metrics: Generally it is found that there is no strict performance metrics used to evaluate each entity of the supply chain. Usually individual organizations inside a supply network may have conflicting objectives which tends to reduce overall efficiency. This issue has to be addressed by assessing and orienting supply chain metrics which is governed by customer satisfaction criterion (Billington 1992). Inadequate definition of customer service: Usually customer service does not mean just better delivery time or quality. Many critical details like order cycle time and back order time et., these issues can be omitted by proper understand of customer and standards of expectancy (Billington 1992). Inaccurate Delivery status date: This clerical issue can result in massive impact on total efficiency of the supply chain. It can be resolved by centralized data storage under regular monitor (Billington 1992). Inefficient information systems: These issues mostly resolved with recent developments in Information Technology. Softwares like Enterprise resource planning can help to resolve this issue. Ignoring the impact of uncertainties: In a supply chain there can be different sources for uncertainties as, supplier lead time, raw material quality, process lead time, Transportation and fluctuating market etc., Implementation of Just-In-Time (PULL System) can help to resolve these issues as this system monitors uncertainties closely and react immediately (Billington 1992). Simplistic inventory stocking policies: This issue can be resolved with efficient safety stock policies (Billington 1992). Discrimination against internal customers: This is caused when Work in Progress goods are delivered and handled with your supplier unlike finished products to ultimate customer (Billington 1992). Poor coordination: as mentioned earlier in this research, harmonic network coordination is a fundamental entity of supply chain. Better coordination can be achieved by effective Supplier relationship management Incorrect assessment of Inventory costs: Occurrence of this issue is generally by omitting few inventory maintenance cost while formulating supply chain, usually An effective supply chain design helps in identifying best, Location and distribution centres, Plant Capacity, Market access and planning. Importance of Supplier Relations Management Importance of Supplier Relations Management Chapter 1: Introduction 1.1 Objective â€Å"Supply chain management (SCM) is the combination of art and science that goes into improving the way your company finds the raw components it needs to make a product or service and deliver it to customers.(Worthen., 2008)†. The main objectives of this research are to structure a supply network through multiple tiers. It extends in identifying the importance of Supplier relations management. Todays market as we know is customer driven, with extensive subcontracting, Inventory and supply chain management can make or break a deal. Good supply network emphasizes on seamless integration between Original Equipment Manufacturer (OEM) and its suppliers. It encourages in merging its design of Product, process and services. Regard to todays world, Global Supply chain Management is changing virtually every day (group, June 2006 ) Large and Small companies are keen and very likely to trade internationally and also to take advantage of low cost countrys for their sources. (group, June 2006 ). This study takes a more holistic approach in identifying issues and constraints of global supply chain management. A very rigorous approach for optimally coordinating information, material and financial flow between supplier ti ers is another objective of this study. Study is supported by mapping different models and approaches in order to provide a harmonic coordination within a closed supply network. As mentioned earlier small and large companies are turning their interest towards low cost developing countries for sources, this research intends to study current trends and opportunities among these developing nations for sustainable supply network coordination. Chapter 2 Literature Review 2.1 Summary This paper revolves around various objectives as discussed earlier. The purpose of a literature review is to describe the work that has been reported on a topic. It illustrates an individuals ability to identify vital information and sketch existing knowledge. This literature review is carried out to review current market trends and also to have a thorough knowledge correlating our main objectives. Ideas and thoughts of different authors has been analysed to demonstrate a more eccentric review of the topic. Few case studies has also been analysed to understand practical difficulties and competitive advantage of a better supply network design. Table 1 illustrates various definitions proposed by authors. 2.2 Multi Tier Supply Chain Overview and key elements In general many Manufacturing Organizations are a network production and distribution sites. They transfer raw materials to finished products and supply it to end users (billington 1992). Strategic supply chains are those in which â€Å"members are strategically, operationally, and technologically integrated†(Hult 2004) and are assumed to be a long-term stable relationships with a potential to change in accordance with the variable demands and market conditions(Hult 2004). Inventories play a very important role at both macroeconomic and microeconomic levels (Jaber 2009). According to (Jaber 2009), Current inventory costs accounts to half of total logistical expenses of a supply chain(Lancioni 2000). Improper Inventory management in a supply chain usually tends to increase conflicts between entities of the supply chain i.e., between retailer, buyer, manufacturer and suppliers, which may result to inefficiencies of the supply chain.(Jaber 2009). In a ideal supply chain every firm is considered to be unified, thus in an ideally integrated supply chain, end users or ultimate customers are the pulling force of a value chain unlike classical way of Manufactures pushing the goods out(Tan 2001). Realistically achieving full integration of a value chain is difficult with its complexity, thus strategically important business organizations are emphasized (Tan 2001). Key elements and activities of supply chain are as shown below. Key Elements Of supply chain According to (Christopher 2005), One important aspect of effective SCM is to reduce or completely eliminate Inventory issues between different entities/Organisation in a supply chain. He suggests eliminating this issue by effective information sharing of all stock levels. This concept is called ‘Co- Managed Inventory CMI.(Christopher 2005).(Tan 2001) Suggest that primary focus of a SCM is to achieve efficient end product distribution from manufacturer to customer by replacing inventories with information. Supply chain managements philosophy also suggests that its operations are not concerned only with logistics, but expands through all other operations of an organisation to achieve a greater customer satisfaction and value.(John T. Mentzer 2001).Other basic characteristics of a SCM, according to (John T. Mentzer 2001) are Considering the whole supply chain as a single entity and by this virtue, total inventory flow is managed in a SCM. Orienting Intrafirm and interfirm operations with a strategic approach and thus reinforcing its capabilities by co-operative measures. Unique/Personalized approach should be carried out for every customer to stay competitive and to achieve better customer satisfaction. For years Supply chain was considered as channels for distribution. The main intent of channel distribution was to make each organisation more productive and efficient. It emphasized on making each organisation more profitable without considering its other counter parts of the channel, i.e. like Tier1 suppliers, tier2, distributors or retailers (Lancioni 2000). Over the years with the advent of Supply chain management, focus drifted from intrafunctionaltowards a more interfunctional vision, by which co-ordination between these entities of SCM was emphasised. Interfunctional Channel distribution or termed as the modern day supply chain management considered the opportunity in supply network coordination: â€Å". . . altering the levels of the various activities, often referred to as logistical in nature (such as transportation, inventories, facility location, and order processing) may adversely affect achieving the objectives of these other functional areas†(Lancioni 2000). Thu s customer becomes the driving force of supply chain management. Supply chain analysis (SCA) deals with vertical inter dependencies between the firms; it also requires a systematic approach towards resource allocation and information exchange at every stage of production (Simchi-Levi 2000). Globalization represents cross-border flow of finished goods and increase in global competitors, identifying opportunities and competitive supply chain within its industrial sector(John T. Mentzer 2006). Realistically Supply-chain Managers identify difference between a domestic and a global supply chain even if the conditions are same. It is found that complexitys designing Global supply chain is exponentially high compared to a domestic supply chain, also its ability to stay competitive lies in understanding subtleties of GSCM that exists only during cross border trade offs(John T. Mentzer 2006). Supply chain distinguishes itself from its constituent entities with its integration of operations (Mahapatra 2004). Supply chain management goes beyond co-ordination among firms; it recognises inter dependencies among them and also delivers effective relationship management. Logistics is an integral part of effective supply chain.(Pierpaolo Pontrandolfo 2003) Suggest that Logistics operations within an organization can be related to Forward flow of goods both WIP and Finished goods Information flow feedback Management and Control Network Analysis (NA) is a technique which provides many tools to map relationship between internal organisations. NA also concerns with horizontal dependencies unlike SCA (Sergio G. Lazzarini 2001). As SCA and NA there are many other analyses methodologys suggests the importance of Interdependencies between organizations, According to (John T. Mentzer 2001) , the following activities are necessary to implement a better SCM. â€Å"Integrated Behaviour Sharing risks and rewards mutually Co-ordination Mutual sharing Information Goals and focus to serve customers Process integration Installing Long-term relations with suppliers and customers†(Mentzer 2001). The term supply chain management had an increased influence over the past decade. For instance, Annual Conference of the Council of Logistics Management 1995, 13.5% of the conference sessions posted titles concerning the words â€Å"supply chain.† At the 1997 conference, just two years later, the number of sessions about the terminology drastically increased to 22.4% (John T. Mentzer 2001). This increase has been steady all these years. This increase widely illustrates the global importance and benefits of Supply chain management. There are different types of channel relations in a supply chain as illustrated in Fig4. Supplier Organization/OEM Customer Figure3a: Direct Supply Chain Suppliers Supplier Organization Customers SupplierCustomer Figure 3b: Extended Supply Chain Third party Logistics Supplier Ultimate Supplier Organization Customer Ultimate Supplier Customer Financial Market Provider Research The figure1 identifies different degrees of supply chain complexity they are direct, extended and ultimate supply chain. A direct supply chain consists of a supplier and a customer involved in upstream and downstream flow of (Products, services, finance and information)(Figure: 4a.)(John T. Mentzer 2001) Similarly an extended supply chain includes suppliers, Immediate suppliers and customers and immediate customer, all involved in the upstream and/or downstream flows of products, finances, services and info(Figure: 4b). Thus an ultimate supply chain includes all the organizations involved in all the upstream and downstream flows of products/services/finances, and information from the ultimate supplier to the ultimate customer. (Figure: 4c) illustrates the complex functions of an ultimate supply chains. This may include 3rd Party Financial institutions; this involvement may be a cause to reduce overall risk involved. Similarly Even logistical operations are also supported by (3PL) In figure:4c , a market research firm is also seen as an entity of this complex chain. These may very well support the Manufacturer by providing vital market information about their end users.(John T. Mentzer 2001). Process of Supply chain management Many organisations believe that with process approach it is difficult to reduce/optimize their production flow in SCM (Cooper 2000). Customer relationship management Customer service management Demand management Order fulfilment Manufacturing flow management Procurement Product development and commercialization Returns. Multi Levels Explained It is necessary to understand different network analysis, methodologies to understand and resolve issues in designing a better supply chain management. Fig2 illustrates a basic model of a multi tier supply chain. Each level has its own importance and prominent influence over the chain thus making every level an integral part of the complex system. Fig2 is a sceptic of four level supply chain with centralised decision process. The different levels are as described below(Goyal 2009) First level-This Level of supply network contains multiple buyers/Distributor. Second Level- This level encompasses of Vendors or Manufacturer ie., Original Equipment Manufacturer. Third level- This level contains Tier-1 /Immediate Suppliers of the supply chain. Fourth level- This level contains different tier 2 suppliers. These suppliers support tier1 suppliers or directly to the manufacturer by providing product, service or finance.(Goyal 2009). Levels of issue The major issues at different levels that have to be addressed in a multi dimensional Supply chain are(David Simchi-Levi 2003). Strategic level: Strategic level of decisions are vital which provides and long and sustainable effect on an organization. Major decisions like factory location, storage, Plant capacity and logistic network fall under this level. Tactical level: These decision that change steadily(eg: every quarter) depending on market position, like transportation, production capacity, inventory policy, customer review etc., Operational level: These decisions are mostly day to day like scheduling, lead time, quotes, routing etc.,(David Simchi-Levi 2003). According to (David Simchi-Levi 2003), the above issues can be addresses with few strategies as follows Distribution Network Configuration Inventory Control Supply Contracts Distribution Strategies Supply Chain Integration and Strategic partnering Outsourcing and Procurement Strategies Product Design Contrastingly other author(Simon Croom 2000) looks to analyse supply chain management as different levels as addressed below. Dyadic Level: This level considers just two party relations, like Supplier-Manufacturer or Supplier-Retailer Chain Level: This level composes of relations with different dyadic levels, relations with customer-manufacturer-supplier-distributor-retailer etc., Network Level: This level is concerned with all network operations like upstream and downstream flow.(Simon Croom 2000). Areas of concern for Supply chain Literature Figure 6: Principle component bodies of supply chain literature Source: (Simon Croom 2000) 2.3 Global Supply Chain Management [GSCM] In this decade of global exploitation for raw materials, cheap and skilled labour has impounded interest towards global supply chain. Fig6 illustrates a typical Global Supply chain network. Interfunctional characteristic of a value chain has grown more complex and non feasible. Manufacturers usually set up factories in foreign to take advantages of low cost labour, trade concession, reduced logistic expense for foreign market, subsidies in capital investment it also makes manufactures more reliable to customers due to their close proximity(Gargeya 2005).Greater needs for GSCM is debated in this chapter below. Authors debate of many learning methodologies to understand framework of Global Supply chain management (GSCM). According to (Pierpaolo Pontrandolfo 2003) GSCM issues can be understood by an Artificial intelligence approach called Reinforcement learning (RL). Currently there are many such frameworks, helping different Multi National Companys as a business model. (Barry 2004), describes â€Å"An enterprise may have lowest over-all costs in a stable world environment, but may also have the highest level of risk if any one of the multiple gating factors kink up an elongated global supply chain!† In a global supply chain, supply risk should be identified, asses its possible occurrence and provided with a monetary value for better understanding, Companys should easily modify towards alternate suppliers (Barry 2004). 2.3a Current State Issues However experts believe that Global supply chain are more complex and difficult to maintain unlike domestic SC. Transportation cost tend to increase substantially due to foreign location, also complicates decision making because of increased lead time(Gargeya 2005). The other factors that dont encourage Global supply chain are listed below (Gargeya 2005) Inventory Cost Trade offs Supplier availability and Quality Different Language, Culture, practices Difficulties in Material planning and demand forecast Infrastructural incapability and non sophisticated telecommunication Inadequate skilled labour, Technology and Equipments Uncertain exchange rates Instable economics and politics Inconsistency of financial performance of supply chain. Efficient product and service distribution to upcoming markets can only be provided if an effective marketing infrastructure is developed.(Richey 2001). Globalization process should be viewed as a network embedded with contemporaneous options, constraints and events(Richey 2001). It intends to look into developing a strategic supply chain development and implementation. One of the challenge in a Global supply chain is development of a decision making model which incorporates almost every concerns of entities running across the chain(Mahapatra 2004). It is one of the biggest concerns to produce effective decisions to reduce risk. Considerable efforts has now been expended in developing this model, many conventional methodologies are adopted like, Simulation, Mathematical program, statistics etc., (Mahapatra 2004). 2.3 b Emerging Issues Numerous Global Supply chain models have been proposed consistently by researchers to tackle issues. Diffusion in multiple plant production systems, globalized market has escalated researchers interest towards this field. Fig11 illustrates one of the models that help to design a supply network. This model proposed by authors â€Å"Carlos J. Vidal† and â€Å"Marc Goetschalckx† illustrates an overlook of a decision making model to tackle transfer pricing and transport cost allocation problems. It is seen from fig6 that the suppliers are broadly classified as internal and external suppliers. For External suppliers it is clear that there is no possible decision for transfer pricing because they directly sell to organizations at market prices. Unlike external suppliers an optimal transfer pricing is determined using the model for internal suppliers (Goetschalckx 2001). A detail literature review of transfer pricing issue and its effect on Global supply chain will be discusse d later in this chapter. Table 2: Major international issues considered in selected global supply chain models Source: (Goetschalckx 1997) Market place around Global supply chain is changing continually reflecting to more emerging issues. These issues have to be resolved in a very short span to stay competitive and to make supply chain more financially effective (Gargeya 2005). First issue is dramatic increase of organizations, outsourcing its work to both domestic and international locations. Secondly many industries outsourced with a unidirectional and enterprise level motive, but now strive to coordinate its decision process across different levels of suppliers (Gargeya 2005). Third issue is recent development in the field of supply chain resulting in expanded definition of â€Å"supply chain performance, as mission, strategy and objectives can vary considerably based on value of the product offered to the customer† (Gargeya 2005). Even with extreme significance and necessity for Global Supply chain management, the subject is complex and diffuse. Many technique and methods have emerged from different areas like operations, logistics, sociology, International relationship, marketing, management, economics et,. But still due to its significant growth and complexity it becomes hard to keep abreast with current development in the field of GSCM (John T. Mentzer 2006). Cementing is the fact that many of these methodologies has evolved with little interdependency, considering little attention in relating with existing models (John T. Mentzer 2006). Outsourcing and Global Supply chain management focus to cost reduction, improved quality; thus increasing its overall competitiveness through structure and process that increase managerial commitment and competencies (Richey 2001). On other hand increased outsourcing of manufacturing to foreign locations in recent years has influenced mangers to design their supply chain considering not only in-house facilities but also to incorporate supplier capabilities and infrastructure. Broader criteria are taken into account while selecting the suppliers unlike fundamental ways. Suppliers are chosen based on customers perception of suppliers to meet demand, with suitable attributes such as quality, quantity, delivery, service, price etc.,. In some case more broader criteria as defined by total ownership cost for carrying inventory, training and repair (Meixell 2005). Supplier selection escalates structure of design problems with limitations in number of vendors in a certain geography, minimum order quantity, geographic preference and supplier capacity (Gargeya 2005). Supply network integration through a supply chain also influences Global supply chain design. Business process integration is one of the best options, coordinating decision across multiple tiers of suppliers/vendors. In reality organizations engage in coordination activities like â€Å"Vendor Managed Inventory (VMI), Collaborative Planning, Forecasting, and replenishment (CPFR)† (Gargeya 2005) by sharing sales promotion information. Advanced planning system (APS) integrate production decision making process, these systems are designed with precautions having Supplier capacity and Inventory in mind. These constraints influence Global Supply chain design in large scale (Gargeya 2005). As part of global supply chain design many factors like import duties has to be designed while framing since they contribute nearly 5-10 % of total cost (Pierpaolo Pontrandolfo 2003).Thriving through these issues, a well-coordinated and integrated design of Global Supply chain is hard to replicate thus making is very efficient and helps to achieve a competitive strategy in global scale (Gargeya 2005). 2.3c Need of Global Supply chain Management: Market Drift Global Supply chain models are complex and difficult to provide a solution compared to a domestic supply chain. In a global supply chain flow of cash and information is difficult to maintain unlike single country model. Inclusion of various taxes, Transfer pricing, duties, exchange rates, trade barriers are basic necessity to instil a real time supply system (Goetschalckx 1997). Todays market has advanced with increased globalization of supply sources and demand, drastic improvement of information transparency, innovative business models and venture capital. With such high competitive nature, Simple pursue for higher market share is no longer effective in improving profitability. Focus has drifted towards redefining their competitive profit zone; Companies now tend towards co-relationship to capture life time customer rather than mass buyers through strategic development and Management partnership (John T. Mentzer 2006). Global Market has immensely changed in these following factors Increase value of end users over mass buyers Importance of customization Emerging global consumer segment Time and quality related competition Improvements in communication Value for Information sharing Changing government policies Power shift to End users In broad spectrum of supply chain power has shifted towards End users. Customer satisfaction becomes the ultimate goal. Interfirm relation and collaboration is critical to increase customer satisfaction.(John T. Mentzer 2006). Original equipment manufacturers and supporting suppliers should be quick to react to customer requirements or else have to face prospect of losing market share. Mass Customization Mass customization results in increase in variety without compromising quality, price and efficiency i.e., customers expect better quality level and customization for low or competitive cost. This level of customization can only be achieved with full commitment of every entity of a supply chain like employees, distributors, suppliers etc,(John T. Mentzer 2006). Improved Communication Global competitive market means unit of business analysis of an organization is whole world not just a country/region. Communication revolution has offended late design or delay in delivery. In this context, â€Å"Kotler Philip† said â€Å"As firms globalize, they realize that no matter how large they are, they lackthe total resources and requisites for success.Viewing the complete supply chain forproducing value, they recognize the necessity of partnering with other organizations(John T. Mentzer 2006) â€Å". Time and Quality importance Time and Quality focused market competition can be achieved by basic Lean methodologies, reducing waste in the form of time, defects etc,. Improved quality not just means finished goods but also every area of a company.(John T. Mentzer 2006) Information Technology Influenced Most Powerful and conceptual influence is through immense improvement in the field of Information technology. Invention of modern computers superseded monolithic companies. Fast communication increased link between every member also eliminating multiple layers of people serving as information channel and control group, reducing cost and improved linkage eliminating time delays(John T. Mentzer 2006). 2.3d Benefits of Global Supply chain In this competitive world, market research is a fundamental aspect of any organizations design process. Anticipated results are an aspect of a design process, so it is necessary to understand possible benefits of Global Supply chain. Few benefits described by (Mechanic 2010), are Highest standard of quality. Increased standard expectancy from developing nations. Reduced Inventory and Transportation. Competitive advantage. Make or buy decisions simplified. Wider marker scale to target (New Market opportunity). Opportunity to learn and adapt business models around the globe. Increase in Supply chain flexibility. Surviving Economic recessions with auxiliary markets. 2.4 Supply Network design and collaboration 2.4 a General literature According to (Sheng Su 2008)†A supply chain is an integrated network of suppliers, transformation plants and distribution channels which are organized to acquire raw materials, transform the materials into final products, and deliver those products to customers(Sheng Su 2008)†. Recent developments in technology have forced typical sequential manufacturing industry into designing current ideas for business-business relationship with companies in supply networks (james B. Rice Jr 2002). (james B. Rice Jr 2002) Suggest that, Organizations which are looking for coordination across a strategic supply chain can be achieved by three independent segment coordination such as Information system Logistics Network Financial trade offs Author (Christine Harland 2003) describes the increasing complexity in supply networks. In growing market, issues can arise due to various reasons. Following table illustrates few origins of issue Table 3: Increasing Complexity in Supply network Source (Christine Harland 2003) Design of supply network can be approached as stages, Production, Procurement and distribution. Each stage can be scattered across supply network positioned anywhere in the globe as illustrated in fig11 (D.J. Thomas 1996). Designing and coordinating supply chain for a specific product usually tends to break functional and boundary barriers, resulting as a major issue. Functional boundaries can be deceiving in delivering knowledge thus a clear understanding is hard even for top management (D.J. Thomas 1996). Supply chain management is a new concept but coordinated planning has a profound history since early 1960 (D.J. Thomas 1996). Since then researchers had focused to integrate planning, scheduling and distribution (D.J. Thomas 1996), some of the early models and their functionality are review later in this chapter as illustrated in tables 7-13. Inventory Management barrier Managing Inventory is a vital and significantly increases customer satisfaction and also improves profit. According to (Billington 1992), there are 13 pitfalls in Inventory management. No Supply Chain metrics: Generally it is found that there is no strict performance metrics used to evaluate each entity of the supply chain. Usually individual organizations inside a supply network may have conflicting objectives which tends to reduce overall efficiency. This issue has to be addressed by assessing and orienting supply chain metrics which is governed by customer satisfaction criterion (Billington 1992). Inadequate definition of customer service: Usually customer service does not mean just better delivery time or quality. Many critical details like order cycle time and back order time et., these issues can be omitted by proper understand of customer and standards of expectancy (Billington 1992). Inaccurate Delivery status date: This clerical issue can result in massive impact on total efficiency of the supply chain. It can be resolved by centralized data storage under regular monitor (Billington 1992). Inefficient information systems: These issues mostly resolved with recent developments in Information Technology. Softwares like Enterprise resource planning can help to resolve this issue. Ignoring the impact of uncertainties: In a supply chain there can be different sources for uncertainties as, supplier lead time, raw material quality, process lead time, Transportation and fluctuating market etc., Implementation of Just-In-Time (PULL System) can help to resolve these issues as this system monitors uncertainties closely and react immediately (Billington 1992). Simplistic inventory stocking policies: This issue can be resolved with efficient safety stock policies (Billington 1992). Discrimination against internal customers: This is caused when Work in Progress goods are delivered and handled with your supplier unlike finished products to ultimate customer (Billington 1992). Poor coordination: as mentioned earlier in this research, harmonic network coordination is a fundamental entity of supply chain. Better coordination can be achieved by effective Supplier relationship management Incorrect assessment of Inventory costs: Occurrence of this issue is generally by omitting few inventory maintenance cost while formulating supply chain, usually An effective supply chain design helps in identifying best, Location and distribution centres, Plant Capacity, Market access and planning.

The James Bond Phenomenon :: essays research papers

The James Bond Phenomenon   Ã‚  Ã‚  Ã‚  Ã‚  James Bond has gone through a lot of changes in the years with 19 films. James Bond has been played by Sean Connery, Roger Moore, Timothy Dalton, George Lazneby, to Pierce Bronsman. All being great James Bond characters. The best of them being Sean Connery, why? I don't know why, he has always just been a better actor in every movie he has been in. Then comes Pierce Bronsman because he has been in movies for my generation and I can relate with the stuff going on in his movies. Then would come Timothy Dalton because he looks and acts a lot like Pierce Bronsman. I would guess Roger Moore comes in fourth, why? because I HATE George Lazneby and I have no where else to put him. George Lazenby comes in way last because he is not a actor, he is a talking mannequin. They have all gone through different types of adventures, well ok they were all action/spy problems but they were all different, in some ways anyway. Hey if they suck so much why can't you stop watching them? Why have they made so many of them? eh? thats what I thought. I had my doubts about watching all these James Bond movies, but they were all good. Sean Connery Played a nice cool, slick James Bond, well so did the others but he was better at it because he naturally is cool and slick. Pierce Bronsman played also as a cool, slick James Bond, he really looked like he was a spy, he kept his cool, I really liked that scene in Golden Eye when he is at the tanks of fuel where the satellite comes out of the water and they are shooting at him and there is sparks right next to his eye and he keeps on doing what he is doing. Talk bout a great and intense scene there. Timothy Dalton played as fast acting, nervous person as he played James bond. In my opinion he looked very nervous and very like hyper, he really wasn't that good, but he looked like he was a really bad acting Pierce Bronsman. Roger Moore, well he TRYED to act as a cool, slick James Bond, but he didn't really pull it off right, he just looked like a big dork in my opinion, he wasn't aggressive enough to be a good James Bond. He tryed to be aggressive but he just made a fool of him self, In his movie Live and Let die, the co-starring actors and actresses really made The James Bond Phenomenon :: essays research papers The James Bond Phenomenon   Ã‚  Ã‚  Ã‚  Ã‚  James Bond has gone through a lot of changes in the years with 19 films. James Bond has been played by Sean Connery, Roger Moore, Timothy Dalton, George Lazneby, to Pierce Bronsman. All being great James Bond characters. The best of them being Sean Connery, why? I don't know why, he has always just been a better actor in every movie he has been in. Then comes Pierce Bronsman because he has been in movies for my generation and I can relate with the stuff going on in his movies. Then would come Timothy Dalton because he looks and acts a lot like Pierce Bronsman. I would guess Roger Moore comes in fourth, why? because I HATE George Lazneby and I have no where else to put him. George Lazenby comes in way last because he is not a actor, he is a talking mannequin. They have all gone through different types of adventures, well ok they were all action/spy problems but they were all different, in some ways anyway. Hey if they suck so much why can't you stop watching them? Why have they made so many of them? eh? thats what I thought. I had my doubts about watching all these James Bond movies, but they were all good. Sean Connery Played a nice cool, slick James Bond, well so did the others but he was better at it because he naturally is cool and slick. Pierce Bronsman played also as a cool, slick James Bond, he really looked like he was a spy, he kept his cool, I really liked that scene in Golden Eye when he is at the tanks of fuel where the satellite comes out of the water and they are shooting at him and there is sparks right next to his eye and he keeps on doing what he is doing. Talk bout a great and intense scene there. Timothy Dalton played as fast acting, nervous person as he played James bond. In my opinion he looked very nervous and very like hyper, he really wasn't that good, but he looked like he was a really bad acting Pierce Bronsman. Roger Moore, well he TRYED to act as a cool, slick James Bond, but he didn't really pull it off right, he just looked like a big dork in my opinion, he wasn't aggressive enough to be a good James Bond. He tryed to be aggressive but he just made a fool of him self, In his movie Live and Let die, the co-starring actors and actresses really made

Death in Dickinsons I heard a Fly Buzz When I died Essay -- Emily Dic

Death in Dickinson's I heard a fly buzz when I died Emily Dickinson’s poem â€Å"I heard a fly buzz when I died† is a reflection on what happens when one dies. In the poem, the speaker is waiting to die. It seems as though they are expecting something spectacular to happen at the moment of their death. This spectacular event they are expecting does not happen. I heard a fly buzz when I died By Emily Dickinson I heard a fly buzz when I died; The stillness round my form Was like the stillness in the air Between the heaves of storm. The eyes beside had wrung them dry. And breaths were gathering sure For that last onset, when the king Be witnessed in his power. I willed my keepsakes, signed away What portion of me I Could make assignable,--and then There interposed a fly, With blue, uncertain, stumbling buzz, Between the light and me; And then the windows failed, and then I could not see to see. The speaker describes their situation on their deathbed. The sense of stillness in the air means that the speaker thinks something important is about to happen when they die. Their mood is very solemn, and the still air brings a feeling of tension. There is not yet a mention of the afterlife, just the speaker waiting for death. The stillness is described as â€Å"between the heaves of storm,† referring to the calm that sometimes occurs between storms. This is a very quite almost peaceful stillness, but there is a sign of more things to come. In this case, death is the storm they are waiting for after the calm. The speaker is expecting a big event to happen. As the speakers loved ones begin to mourn, there is a feeling that they too were gathering around to witness some spectacular event that would ... ...There is no large flash of light, no loud noises, just the simple buzzing of a fly. Seeing death as a natural passing places man back in nature. There is no amazing flash of light, or deafening noise, or grand revelation. The choice of a fly as the interrupting entity reinforces the anti-climactic nature of death. Man passes into death the same as anything else in nature. The â€Å"blue, uncertain, stumbling buzz† of the fly implies that not even the buzz of the fly was meant to recognize the death of the speaker. The fly buzzes by because that is the nature of the fly. It did not stop its life for the death of the speaker. This can be seen as nature (the fly) realizing that death is not some incredible event, but a natural passing. Nature moves on, accepting the dead back into the earth. This reinforces that death, even the death of a human, is a simple passing.

Financial Maths

FINANCIAL MATHEMATICS 1. RATE OF RETURN 2. SIMPLE INTEREST 3. COMPOUND INTEREST 4. MULTIPLE CASH FLOWS 5. ANNUITIES 6. LOAN REPAYMENT SCHEDULES Financial Math Support Materials Page 1 of 85 (1) RATE OF RETURN FINANCIAL MATHEMATICS CONCERNS THE ANALYSIS OF CASH FLOWS BETWEEN PARTIES TO A CONTRACT. IF MONEY IS BORROWED THERE IS AN INTIAL CASH INFLOW TO THE BORROWER BUT AFTERWARDS THERE WILL BE A CASH OUTFLOW IN THE FORM OF REPAYMENTS. A person borrows $100 and promises to repay the lender $60 after 1 year and $60 after 2 years. Show the resulting cash flows for the borrower and lender. Financial Math Support MaterialsPage 2 of 85 Time Now 1 End of 2 years Borrower 0 End of 1 year Lender 2 $100 is loaned out $120 is received back The extra $20 is the lenders compensation for foregoing current consumption to obtain future consumption. The lender requires compensation for: Financial Math Support Materials Page 3 of 85 THE â€Å"TIME VALUE† OF MONEY CONSIDER A CHOICE OF ? $100 NOW, OR ? $100 LATER ANY RATIONAL PERSON WOULD CHOOSE $100 NOW! BUT WHY? â€Å"MONEY HAS A TIME VALUE† Financial Math Support Materials Page 4 of 85 Time Value of Money (TVM) ? Refers to the difference between ? The concept enables ? Provides the means for valuing multiple cash lows that occur at different times The level of interest rates is the index used to determine prevailing TVM. Interest rates are determined by the level of †¦ For every type of financing transaction there is potentially a different interest rate. Interest rates are distinguished by the nature of the underlying transaction and focus on three characteristics: ? ? ? Financial Math Support Materials Page 5 of 85 An important aspect of valuation is applying the appropriate interest rate. For example, valuing a fixed-rate loan to a highly speculative company using a government bond rate is inappropriate; an adjustment must be made reflecting he relative creditworthiness of the borrower. While different TVMs may exist for every borrower and lender, it is the Most financial math formulae are a form of present value calculation; that is, these formulae identify the future cash flows of a financial instrument and then calculate the value at which these instruments could be exchanged for cash today. Financial Math Support Materials Page 6 of 85 RATE OF RETURN Suppose I purchase a watch for $200 and sell it a year later for $250. What is the dollar return and rate of return of this transaction? Financial Math Support Materials Page 7 of 85 Interest Interest a fee for borrowing money – about as old as civilisation itself Prime rate – the interest charged to the largest and most secure corporations. Interest is a cost to business, hence it is very important to understand how it is calculated and how it impacts on the business. There are two basic types of interest Simple Interest and Compound Interest Simple Interest Compound Interest Financial Math Support Materials Page 8 of 85 (2) SIMPLE INTEREST When a financial institution quotes an interest rate for a loan it can do so in different ways. For example, a quote 10% p. a. simple interest has different cash flows than a quote of 10% p. . compound interest payable quarterly. If the quote is offered as a SIMPLE INTEREST RATE, then the rate is taken as a proportion of the initial loan amount. eg 12% p. a. (SIMPLE), is equivalent to 1% per month, or 3% per quarter, or 6% semi-annually. * NOTE – The quoted rate is often referred to as the nominal rate. Financial Math Support Materials Page 9 of 85 SIMPLE INTEREST Suppose we lend $300 and quote a simple interest rate of 8% p. a. What will be the interest and repayment if the loan is made over: (a) six months, (b) one year, (c) three years. (a) 8% p. a. = Interest = Repayment = (b) Interest = Repayment = (c) 8% p. a. =Interest = Repayment = Financial Math Support Materials Page 10 of 85 Symbolically: Interest amount = I = P i t P ~ principal (or amount bor rowed = PV) i ~ rate of interest as a percentage t ~ time is the number of years, or fraction of a year, for which the loan is made The simple interest (I) charged on a loan of $800 for 2. 5 years at 8. 5% is: I = Pit = Simple interest is usually associated with short-term loans, that is, less than 12 months. In the formula time (t) is expressed in years, or fraction of a year. Example: $800 for 9 months at 8. 5% is: I= Financial Math Support Materials Page 11 of 85 Example: $800 for 88 days at 8. % is: I = Pit At the end of the period the amount repaid is: FV = PV(1 + t i) Where t represents the fraction of a year during which the money is borrowed. Financial Math Support Materials Page 12 of 85 SIMPLE INTEREST In general, the amount repayable, or Future Value (FV) of a loan quoted as simple interest is given by: ? ? ? ? f ? i? FV ? PV 1 ? 365 ? ? ? ? ? ? Where: FV – is the future value (amount repayable) PV – is the present value (Principle) f – is the numbe r of days i – is the annual simple interest rate PV = EQUIVALENTLY, Financial Math Support Materials FV ?f? 1+ ? ?i ? 365 ? Page 13 of 85 SIMPLE INTEREST Question 4(a) from 2001, 2nd semester final exam) Leanne buys a watch for $80 and sells it a month later for $85. What nominal annual interest rate of return does she earn? Rate of return in one month = Annual nominal rate = Financial Math Support Materials Page 14 of 85 Principal unknown A borrower can pay an interest amount of $120 at the end of 6 months. If the current interest rate for personal loans is 9% what is the maximum that can be borrowed, that is, what is PV? ? f ? i I ? PV ? ? ? 365 ? I PV ? ?f? ? ?i ? 365 ? Note: Financial Math Support Materials Page 15 of 85 Interest rate unknown A loan of $18,000 for 8 months had an nterest charge of $888. What was the annual rate of interest rate? ? f ? i I ? PV ? ? ? 365 ? I i? ?f? ? ? PV ? 365 ? Financial Math Support Materials Page 16 of 85 Rayleen’s birthday was on the 14th August last year. On this date she received a gift of $4,800 from her family which she placed in an interest earning account at a nominal rate of 5. 75% per annum. If she withdraws all funds in the account on the 8th April this year, how much will she receive? How much interest is earned? August September October November December January February March April 17 30 31 30 31 31 29 31 8 Total number of days = 237 ? ? f FV ?PV ? 1 ? ? ?i ? ? ? 365 ? ? FV = I= Financial Math Support Materials Page 17 of 85 Barns & Co Ltd. currently has a non tradable bank note with a face value of $500,000 that will mature in 85 days. Barns & Co has negotiated with its lender to obtain a loan using the note as security. The lender requires an establishment fee of $440 and charges simple interest of 9% pa. How much will Barns & Co receive, and what is the total cost of the funds? ? ? f FV ? PV ? 1 ? ? ?i ? ? ? 365 ? ? ent ? Establishm ? FV PV ? ? f? ? fee ? ? 1? ? ?i ? 365 ? Cost of funds Cost in simple interest terms Financial Math Support Materials $500,000 – $489,295. 68 = $10,704. 32 = Page 18 of 85 A bill with a face value of $500,000 and term to maturity of 180 days is sold at a yield of 8% p. a. What are the proceeds of the sale? Proceeds = PV ? PV ? FV ?f? 1? ? ?i ? 365 ? $500,000 ? 180 ? 1? ? ? 0. 08 ? 365 ? PV ? $481, 022. 67 Calculate the effective annualised return for a $100,000 investment which earned: ? 6. 5% p. a. for 90 days, then ? 7. 5% p. a. for 60 days, then ? 6. 2% p. a. for 45 days Value of investment after 90 days: 90 ? $100,000 ? 1+ ? 0. 065 = $101,602. 70 ? ? 365 ? Financial Math Support Materials Page 19 of 85 Value of investment after 90 + 60 days:Value of investment after 90 + 60 + 45 days: Value after 195 days = $103,641. 60 Annualised return = Financial Math Support Materials Page 20 of 85 APPLICATIONS OF SIMPLE INTEREST ? TREASURY NOTES ? BILLS OF EXCHANGE ? PROMISSORY NOTES – WHEN CREATED (ISSUED) – WHEN TRADED LA TER We cover these applications in greater detail in a later topic. Financial Math Support Materials Page 21 of 85 (3) COMPOUND INTEREST THE BASIC IDEA: ? PRINCIPAL GENERATES INTEREST ? RE-INVEST INTEREST TO GENERATE STILL MORE INTEREST ? RE-INVEST AGAIN TO GENERATE EVEN MORE INTEREST . . .etc Financial Math Support Materials Page 22 of 85 COMPOUND INTERESTSuppose we invest $100 000 at 10% p. a. with interest payable annually. What annual cash flows result from this investment? $100,000 Invested at 10% Compound Interest $800,000 Amount $700,000 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $0 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Time in years Financial Math Support Materials Page 23 of 85 A LGEBRAICALLY ? ? ? ? ? ? Balance at end of year ? ? ? ? ? ? ? Balance after ? ? ? ? ? n FV = Financial Math Support Materials Balance at start of year ? ? ? ? ? ? (1? i) years is: PV(1 + i) n Page 24 of 85 G ENERALISING Suppose we invest $100 000 at 10% p. a. with nterest payable annually. What is the future value of this investment after 4 years? FV = $ Financial Math Support Materials Page 25 of 85 T HE POWER OF COMPOUNDING WITH COMPOUND INTEREST, â€Å"SMALL† SUMS NOW BECOME â€Å"LARGE† SUMS LATER (a) $1000 AT 13% pa FOR 50 YEARS : FV = $ (b) $1000 AT 14% pa FOR 50 YEARS : FV = $ Financial Math Support Materials Page 26 of 85 PRESENT VALUE : REARRANGING THE COMPOUND INTEREST FORMULA: PV ? FV n (1 ? i) COMPOUNDING NOW SHOWS THAT â€Å"LARGE† SUMS TO BE PAID LATER ARE WORTH ONLY â€Å"SMALL† SUMS NOW What is the present value of $1 million to be paid in 100 years’ time if the interest rate is 15% pa?Financial Math Support Materials Page 27 of 85 PRESENT VALUE : (Question 5 from 2001 2nd semester final exam) Tran Van Ng is to receive from his parents $1,000, $1,500 and $2,500 in 1 year, 2 years and 3 years respectively if he passes all subjects in his university degree each year. (a) What is the present value of th ese cash flows assuming a discount rate of 9% over the three years? (b) What is the present value of this these cash flows assuming a discount rate of 9% in the first year, 8% in the second year and 6% in the third year? Financial Math Support Materials Page 28 of 85 Present Value (a) PV ? $1, 000 ?1. 09 ? 1 ? $1,500 ?1. 9 ? 2 ? $2,500 ?1. 09 ? 3 ? $4,110. 41 (b) The value today of $2,500 received in 3 years time? 0 1 2 3 $2,500 Financial Math Support Materials Page 29 of 85 Measuring Average Growth Rates COMPOUND INTEREST IS A SPECIAL CASE OF COMPOUND GROWTH WHERE THE GROWTH RATE IS THE SAME EACH PERIOD IN COMPOUND GROWTH GENERALLY, THE GROWTH RATE MAY CHANGE EACH PERIOD IN PRACTICE, GROWTH RATES CHANGE FROM YEAR TO YEAR. WE NEED TO BE ABLE TO CALCULATE THE FUTURE VALUE AND PRESENT WHERE VALUE RATES THROUGHOUT OF OF THE AN INVESTMENT RETURN LIFE CHANGE OF THE INVESTMENT. Financial Math Support Materials Page 30 of 85 Measuring Average Growth RatesSUPPOSE YOU INITIALLY INVEST $1,000 IN AN ASSET WHOSE VALUE CHANGED YEAR BY YEAR, AS FOLLOWS: YEAR GROWTH RATE %pa 1 2 3 4 5 35 15 9 What is the future value of this investment? What is the average annual growth rate of this investment? After 4 years, the value of the asset is : Financial Math Support Materials Page 31 of 85 Measuring Average Growth Rates AVERAGE ANNUAL GROWTH RATE (g) NOTE THAT THE ANSWER IS NOT: Financial Math Support Materials Page 32 of 85 Average Growth Rate Suppose we invest $1million in an asset whose value changes as follows, year 1 growth rate 20% 2 -8% 3 -15% 4 3% What is the future value of this nvestment? What is the average annual growth rate of this investment? Financial Math Support Materials Page 33 of 85 Average Growth Rate The average annual growth rate is : Financial Math Support Materials Page 34 of 85 Average Growth Rate (Question 6(a),(b) from 2001 2nd semester final exam) House prices in Melbourne have soared in the past four years. The median price of a house in Clayton at the end of each year is as follows: 1997 – $122,000 1998 – $135,000 1999 – $147,000 2000 – $185,000 (a) What is the annual compounding growth rate for housing prices calculated at the end of each year, that is 1998, 1999 and 2000? b) What is the average annual compound growth rate for housing prices over this period? Financial Math Support Materials Page 35 of 85 Average Growth Rate (a) 1998 – 1999 – 2000 – (b) ?1 ? r ? ? 3 Financial Math Support Materials Page 36 of 85 Calculating Average Growth rate – continued g = average growth rate The average rate of growth per period over n time periods is: n ? ? ? Value at end – Value at beginning ? 1 + g ? = ? 1 + ? ? Value at beginning ? ? ? ? Solving for g, 1 ? Value at end – Value at beginning ? n g = ? 1 + ? -1 Value at beginning ? ? 1 $185,000 – $122,000 ? 3 ? g = ? 1 + ? -1 $122,000 ? ? 1 ?3 ? g = ? 1. 16793 ? ? ? – 1 = 0. 148869 g = 14. 89% Financial Mat h Support Materials Page 37 of 85 Real (after Inflation) Interest Inflation reduces the purchasing power of money. We require a methodology to adjust rates of return for the impact of inflation. TODAY 1 box of biscuits costs $2. 00 I have $200 I can consume 100 boxes of biscuits IN ONE YEAR Inflation rate (10%) 1 box costs $2. 20 To consume the same quantity of biscuits I will require To have a real return of, say, 4% pa, I need to be able to purchase 104 boxes. Financial Math Support Materials Page 38 of 85 Real (after Inflation) Interest Real increase in consumption of 4%Financial Math Support Materials Page 39 of 85 Real (after Inflation) Interest FORMULA : (1 + q) = (1 + r)(1 + p) where : q is the quoted interest rate r is the real interest rate p is the inflation rate A lender quotes an interest rate of 18% pa for an investment. If the inflation rate is currently at 4% pa, what is the real interest rate earned by the investor ? Rearranging: Financial Math Support Materials (1 + q) = (1 + r)(1 + p) Page 40 of 85 EFFECTIVE and NOMINAL (QUOTED) Interest Rates A BANK LENDS $1,000 AND QUOTES AN INTEREST RATE OF: (a) 12% pa, payable quarterly (that is, 3% each quarter) (b) 12% pa, payable semi-annually that is, 6% each half year) (c) 12% pa, payable annually (that is, 12% at the end of the year) How much interest does the bank earn at the end of one year under each of these three scenarios? Financial Math Support Materials Page 41 of 85 EFFECTIVE and NOMINAL (QUOTED) Interest Rates ? interest rate of 12% pa, payable quarterly REPAYMENTS $30 $30 1 2 $30 3 $30 4 Quarter The value at the end of the year of the interest payment in the The bank has effectively earned : Financial Math Support Materials Page 42 of 85 EFFECTIVE and NOMINAL (QUOTED) Interest Rates ? INTEREST RATE OF 12% pa, PAYABLE SEMI ANNUALLY REPAYMENTS $60 1 $60 2 Half YearThe value at the end of the year of the interest payment in the The bank has effectively earned : Financial Math Support Materia ls Page 43 of 85 EFFECTIVE and NOMINAL (QUOTED) Interest Rates ? INTEREST RATE OF 12% pa, PAYABLE ANNUALLY REPAYMENTS $120 1 YEAR The value at the end of the year of the interest payment is $120 The bank has effectively earned : Financial Math Support Materials Page 44 of 85 EFFECTIVE and NOMINAL (QUOTED) Interest Rates So a quoted (Nominal) interest rate of, 12% pa payable = 12. 55% payable annually. quarterly 12% pa payable = 12. 36% payable annually semi annually 12% pa payable = 12. 00% payable annually nnually To compare interest rate quotations (the nominal interest rate) we refer to an effective interest rate, that is, the interest rate that we would receive if interest were paid once at the end of the year. In the above example: Nominal (Quoted Rate) 12% pa payable quarterly 12% pa payable semi annually 12% pa payable annually Financial Math Support Materials Effective Rate 12. 55% pa 12. 36% pa 12. 00% pa Page 45 of 85 Formula Development If the nominal rate is j percent pa , compounding m times pa, Then after one year the principal, P, becomes: m j? ? S = P ? 1 + ? m? ? (C1) The effective annual interest rate, i, is therefore: = S-P S = -1 P P (C2) Replacing S in (C2) with equation (C1) produces: j? ? P ? 1 + ? m? ? i= P m -1 m j? ? i = ? 1 + ? m? ? Financial Math Support Materials ?1 (C3) Page 46 of 85 Effective and Nominal Interest Rates (a) NOMINAL TO EFFECTIVE If the nominal rate is 15% p. a. payable monthly, then the effective rate is : (b) EFFECTIVE TO NOMINAL If the effective rate is 15% pa then the nominal pa, with monthly payments, is : Financial Math Support Materials Page 47 of 85 Effective and Nominal Interest Rates (Question from 2002 mid semester exam) Abdul Hafahed purchases a car for $5,000 and sells it four months later for $6,000. a) What nominal annual rate of return did Abdul receive? (b) What effective annual rate of return did Abdul receive? (c) If inflation is at 2% pa, what real annual effective rate of return did Abdul receive ? Show your calculations. Financial Math Support Materials Page 48 of 85 Effective and Nominal Interest Rates (a) Four month return Annual nominal return = (b) Effective rate (c) Real annual effective rate : (1 + q) = (1 + r)(1 + p) Financial Math Support Materials Page 49 of 85 Compound Interest Formula j? ? FV = PV ? 1 + ? m? ? n Where: FV = future value PV = principal (present value) j = interest rate per annum as a percentage = mT = total number of periods over which investment is held m = number of interest payments per annum Solving for other terms by rearranging variables: PV = FV j? ? 1+ ? ? m? ? n 1 ? ? ? FV ? n ? j = ? – 1? m PV ? ? ? Microsoft Excel functions: Future value: FV(rate, nper, pmt, pv, type) Present value: PV(rate, nper, pmt, pv, type) Financial Math Support Materials Page 50 of 85 CONTINUOUS COMPOUNDING Nominal interest rate We know j? ? FV ? PV ? 1 ? ? ? m? mT Number of years Number of compounding periods per year What if compounding takes place at every moment, that is ? m ? ? ? . It can be shown that as ? m ? ? then: m j? ? j ?1 ? ? ? e lim ? m ? m where e is the base of natural logarithms (e ? 2. 71828) The Future value formula then reduces to: FV ? PVe jT or, FV ? jT PV ? jT ? FVe e Financial Math Support Materials Page 51 of 85 COMPOUNDING FREQUENCY $1,000 invested for 1 year at 12%: Compounding frequency Payment at end of year Annual Semi-Annual Quarterly Monthly Daily Continuously ? As the compounding frequency increases for a given nominal interest rate, the higher the interest repayments. However the interest repayment reaches a maximum with continuous compounding. Financial Math Support Materials Page 52 of 85Continuously Compounded Returns Nominal interest rate Recall FV ? PVe Using the notation and r where r ? jT . pt ? 1 ? PV pt ? FV pt ? pt ? 1e then Number of years rt pt e? pt ? 1 rt and rearranging we have; ? pt ? ln? e ? ? ln? ?p ? ? ? t ? 1 ? rt and ? pt ? ? rt ? ln ? ?p ? ? ? t ? 1 ? rt is the continuously c ompounding return from time period t-1 to t. Financial Math Support Materials Page 53 of 85 Continuously Compounded Returns pt Note: the term pt ? 1 is referred as the Price Relative. It is the proportional price change from time t-1 to t. The logarithm of the price relative is the continuously compounding return.Continuously compounding returns are often easier to work with. Two important properties: (1) Continuously compounding returns over a period can be added up to give a total continuously compounding return. (2) The average continuously compounding return over a period is the arithmetic average of each individual continuously compounding return. Financial Math Support Materials Page 54 of 85 Continuously Compounded Returns A stock price has a closing price of $3. 00, $3. 25 and $2. 90 over 3 days. What is the continuously compounding return on each day? What is the total and average continuously compounding return? Time 0 1 Price 3. 00 . 25 2 Return 2. 90 Total return from ti me 0 to 2 = Financial Math Support Materials Page 55 of 85 Continuously Compounded Returns An investor is given a choice of: (a) investing at 16. 5% p. a. , (b) investing at 4% per quarter, for 1 year (c) investing at 16. 3% p. a. and compounded daily. (d) 16. 3% p. a. continuously compounding. Which investment is chosen? Financial Math Support Materials Page 56 of 85 Calculate the effective rate in each case. (a) 16. 5% pa (b) (c) (d) Financial Math Support Materials Page 57 of 85 (4) MUTIPLE CASH FLOWS Cash Flow Stream : Future Value 0 1 2 3 $200 3. 5 $450 4 5 6 $800 1 2 3 If interest rate 9%pa = $1,712. 50 1 :$ 2 :$ 3 :$ Stream Future Value Financial Math Support Materials Page 58 of 85 Cash Flow Stream : Present Value 0 1 2 3 $200 3. 5 $450 4 5 6 $800 1 2 3 If interest rate = 9%pa 1 2 3 Stream Present Value = $ Financial Math Support Materials Page 59 of 85 Net Present Value – NPV The present value of the following stream of cash flows, using a discount rate of 7. 5%, is: 0 Cash flows: 1 2 3 $880 $560 $420 4 $980 PV’s =$ Suppose it cost the investor $2,000 to purchase this stream of cash flows, the net present value of this stream is: NPV = -$2,000 + $ =$ outflow Investment projects where NPV ? 0 are viable.Financial Math Support Materials Page 60 of 85 Internal Rate of Return – IRR One period: YEAR $ 0 -1000 1 +1120 Dollar return = $ Equivalently, solve for r : What value of r will produce an NPV = 0 ? PV of $1,120 Using discount Rate of r for 1 period Financial Math Support Materials No discounting required since $1,000 occurs â€Å"now† Page 61 of 85 Internal Rate of Return – IRR Two periods YEAR $ 0 -1000 1 +1120 2 + 25 Clearly, IRR > 12% pa but IRR < 14. 5% pa Why? Because this would be the rate of return if the additional $25 was received in year 1. That is, Thus 12% < IRR < 14. 5% But where in this range is the IRR ?