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Muphoria (Second Edition ) Solution

Well the MuPhoria second edition has ended now I want to explain some of approaches that can be used to solve the problem. I think there may not be an unique solution of the problem. The solution may vary depending upon the approach followed. The problem is quite related to real life and expect you to get a reasonable solution.

At first I would like you to have a overview of the problem statement :

Problem Statement:
You have been appointed the Chief Procurement Officer of Vada Pavs R Us. We are the nation’s leading manufacturers of Vada Pavs. For one of our flagship stores, we’d like you to purchase all the potatoes, chillies and other assorted ingredients that go into making the nation’s favorite snack. If you thought French cooking was difficult, wait till you see our patented recipe (see worksheet "Vada Pav Recipe" in the Dataset).
We've been consistently ranked the nation’s top seller of Vada Pavs (see worksheet "Historical Sales" in the Dataset). We'd like you to make sure that our chefs have all the ingredients that they need. They’re really cranky – our last procurement officer messed up supply this one time and no one’s heard of him since. We’re also trying to locate a barrel of oil that went missing around the same time.
Our suppliers are known to be a capricious lot. They raise prices before you can say 'extra mirchi' and we've tried not to be too dependent on any one of them (See worksheet "Supplier Details" in the Dataset). Our ingredients are sourced from all corners of the known universe and our supply chain has to contend with tin-pot dictators, cyclones and other forces of nature. To help you do your job better we have attached all the orders that we have placed over the last 72 weeks. (worksheet "Historical Order Summary" in the Dataset).
Here's what we need you to do. Ensure that demand is met adequately and that our stocks are fresh. Did we mention that you also have to ensure that our costs (all of them - procurement, storage and wastage) are kept down to the lowest extent possible? Each and every customer is important so try to keep the loss of sales to a minimum. We’d like you to take a look at our historical sales trends and help us come up with a daily buy plan – the units of raw material that we need to procure in order to meet the demand (estimated by you), the prices at which we should purchase them and the times of purchase for each of the goods. You can use the template as given in worksheet "Order Balance Sheet" in the Dataset.
Here are a few hints to get you started:
·         Objective: Minimize total monthly cost. That is, minimize the sum of procurement cost, inventory storage costs, wastage and lost sales
·         Procurement = Price of unit (on that day) x No. of units to be procured
·         Inventory storage cost = Inventory holding cost (per unit) x No. of units in inventory at the end of each day
·         Wastage cost = Disposal cost / unit x No. of units expired (Only for expired material)
·         Lost sales = Selling price x Units of unmet demand
·         Expected output: A daily buy plan (for a month)
·         Orders for a fresh planning cycle in July will have to be placed starting July 1st
·         A fixed quantity of each commodity will be provided on the first of the month, to ensure that the store is up & running from the first day of the month
·         Inventory ordered on the basis of previous month’s buy plan cannot be carried forward to the next month and will be considered as wastage or accounted under inventory storage costs
·         Shelf life for a product starts from the day they are received (ignoring transportation time)

You can see the graph in data sheets and can observe that there have been various up downs in corresponding months. 

There have been holidays, strikes, seasonal festivals, and other trends which affect demand as well as other things largely. Like on a day of strike you goods won’t arrive. You might get a huge sale of Vada Pavs on a festive day. So these thing must be considered while forecasting the demand.   


The naïve approach of solution is to see the trends of previous year of the month to be forecasted and you can take a mean of the sale and standard deviation. Depending upon the mean and standard deviation forecast the sale of each day of month equally. Also add some extra demand to the day of special importance like a festive day or holiday or something else. While doing this keep track of the existing goods and depending upon the requirement of goods on a particular day place the order of item on lead time (as given in the data sheets) before. Also since lead time is varying quietly so keep a counter to switch the lead time also. There are multiple seller of a particular item so regularly change the seller so that no seller gets overwhelmed with the demand and increase the price of item they are selling.

            We can use a simulation software WEBGPSS. It is a general purpose simulation                       software.You can download this software at :               


          You might not find enough tutorial on this on internet but this can be used to forecast              and generate various report by doing a little bit of practice. The WEBGPSS  contains              a number of built in function (e.g. normal distribution function ) which can be used to                distribute data over the period of demand. This generates a report as formatted by                  you.Later you can manually put the forecasted value on the attached answer sheet or              programmatically generate the report.

        Check here a complete post on how to use WEBGPSS to find a solution of MuPhoria second edition.

The data given contains a lot of variations and exhibits different trends. One approach is to use time-series-analysis of data. Time series forecasting is the method that can be used to get a solution that can give you very close solution.
Watch these three videos to get enough idea on how to use time series forecasting. You need to prepare data accordingly to forecast.

Safety stock is another thing which must be considered while placing the orders for the demand of goods. Your inventory must have some goods to run the shop in case there happens an unexpected strike or demand is greater than what forecasted. Although this will lead you to some holding cost but your customers will be happy which is what you desire.

It was a great experience to solve the problem of MuPhoria second edition. It got me a lot of things to learn and earn also.

If you have one, do share your approach also!

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