Bpcl was an indian government owned oil and gas

  • No School
  • AA 1
  • 10

This preview shows page 5 - 8 out of 10 pages.

the fuel stations was the responsibility of the petrol company. BPCL was an Indian government-owned oil and gas company headquartered in Mumbai, Maharashtra. It was a market leader in the Indian petroleum sector. With revenues of US$40 billion, it had been listed among the 2015 Fortune Global 500 companies. INVENTORY MANAGEMENT AT
Image of page 5
THE FUEL STATION Rohit Automobiles had three separate storage tanks, each with a different capacity, for each of the three fuel types (see Exhibits 1 and 2). The firm owned a tanker that picked up the entire inventory ordered from BPCL's Bina refinery, which was about 110 kilometres away from the fuel station. The firm did not plan to purchase an additional tanker in the foreseeable future. The business operated completely on a cash-and- carry basis, which meant that no credit whatsoever was provided by BPCL, the supplier of fuel to Rohit Automobiles. The supplier mandated receipt of payment through an online banking payment system before making a delivery. BPCL introduced an online automatic ordering system for its fuel stations, which Rohit Automobiles used to place frequent orders. Approximately once each month, an order failed to be placed and the tanker would be unable to load the required fuel, due to unforeseen technical glitches such as server failure on the supplier's end. One other possible reason for order failure was the order amount. The supplier would refuse to deliver fuel unless the order amounted to exactly 12,000 litres, either for an individual fuel or a combined order of the three different fuel types. BPCL compensated the fuel station for transportation or other incurred charges related to a failed order The tanker driver was employed by the fuel station on a fixed monthly salary, so costs related to the driver's time did not factor into the ordering cost. It took approximately one day from the time the order was placed until the inventory was replenished.
Image of page 6
To unload the fuel, sales had to be stopped for approximately 10 minutes. The fuel station manager estimated the ordering cost at 150, based on the approximate loss of potential sales during this time. The tanker's total capacity matched the required order amount, at exactly 12,000 litres. The tanker had four compartments, each with the capacity to store 3,000 litres (see Exhibit 3). Inventory ordering had to follow a procedure known as a "pre-planned deliver system." Essentially, the procedure required that an order be placed before 3:00p.m. for the next day's requirements, and that the order be for a total quantity of 12,000 litres, in any combination of the three fuel types. Current pricing for each type of fuel was fired by the regulatory authorities, and the profit margin per unit was decided by the oil companies, including BPCL (see Exhibit 4). To oversee business operations, the fuel station employed a full-time manager, who was responsible for inventory management. Both inventory management and ordering policies were based on a set of basic and simple assumptions. The sales forecast for a coming month was assumed to be equivalent to the previous
Image of page 7
Image of page 8

You've reached the end of your free preview.

Want to read all 10 pages?

  • Fall '19
  • Rohit, Bharat Petroleum Corporation Limited, Rohit Automobiles, vehicle fuel station, Indra Ghosh

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern

Stuck? We have tutors online 24/7 who can help you get unstuck.
A+ icon
Ask Expert Tutors You can ask You can ask You can ask (will expire )
Answers in as fast as 15 minutes
A+ icon
Ask Expert Tutors