Developing a Cost Analysis Model

for the Optimization of Milk Collection Process

at Dinshaw’s: A Study
Nidhi Mulik*

Cost Analysis Model (CAM) aims to determine the optimum level of milk procurement to ensure minimum
profit. If the available milk equals or exceeds this optimum level, only then the route under consideration should
be used. The objective is the optimization of the milk collection process so as to bring down the transportation
cost as well as the total overhead. A study was done on Dinshaw’s at Nagpur to develop the CAM.

Supply Chain Management—The Concept

The increase in the volume of business and the gradual shift from the production era
to the marketing era has created a demand for a more efficient transportation,
distribution and warehousing system which has ultimately led to the evolution of
supply chain management. The company’s value chain provides a systematic and
continuous check on all these critical activities. Companies are striving to remain in
intense competition. Most of the industries have become fragmented with a
conspicuous characteristic of having numerous players. Supply Chain Management
(SCM) has now effectively evolved from logistics as a pure function and an effective
tool of logistics.
In the Fast Moving Consumer Goods (FMCG) Industry the intensity of
competition is the highest, the customers are many, the involvement of the customers
is high and the frequency of purchases is very high. From this we can gauge the
importance of SCM.
Particularly speaking of perishable FMCG products, the role of SCM is very vital.
The operational efficiency can be increased and the objectives of modern marketing can
also be achieved through SCM. All organizations today strive for sustenance, growth in
terms of a larger market share apart from revenue generation; beyond this the objective,
Customer Relationship Management (CRM) can also be achieved by giving better customer
service through SCM. Today, customers are exposed to a number of choices in the
market, and hence, maintaining the competitive position is also a key to success.
The modern customer demands time, space, place, possession and utility at the same
time. SCM has also taken a new shape with the help of technology in the form of
e-SCM, which a number of companies are adopting to the delight of the customer.

Considerations in SCM
While implementing supply chain management in any organization, a few factors have
to be kept in mind.

* Executive,Human Resources, Infospectrum, Nagpur, India. E-mail: nidhimulik@gmail.com

52 The Reserved.
© 2007 The Icfai University Press. All Rights Icfai Journal of Supply Chain Management, Vol. IV, No. 4, 2007
• Type of products: The product dictates the environmental conditions under which
it has to be transported. An important aspect is to ensure that these conditions are
met throughout the period of transit.
• Mode of transportation: The organization needs to know the kind of products to
determine the level of SCM integration required. The mode of transport is also
determined by economic as well as reliability factors.
• Levels of supply chain: In order to reduce the cost of product, a supply chain should
have the least number of intermediate levels between the supplier and the consumer.
This is applicable to both inbound as well as outbound logistics.
• Vendor management: The effectiveness of a supply chain depends upon the
continuous and specification adherent supply of raw materials. This can be achieved
by a vendor performance evaluation system. This in turn can be achieved by
motivating the vendors to perform their best using incentives and concentrating on
a few key vendors.
• IT enablement: In today’s highly competitive environment, an efficient connectivity
between the consumer and the producer can be established by the use of the Internet
and other faster modes of information transfer. The level of IT in any company
operation is dependent on the economic considerations of the industry as well as the
level of globalization of the industry.
• Inventory levels: An efficient SCM requires the optimum blend of inventory level,
i.e., neither too high nor too low. A high inventory level locks capital as well as
requires insurance and risks obsolescence. On the other hand, a low inventory level
may lead to an opportunity loss. In either case the organization is at a loss.

Introduction to the Company

Dinshaw’s Dairy Foods Ltd. is primarily concerned with foods such as ice cream. It is
the most reputed brand in central India. It diversified to the milk business in 1992.
It is primarily concerned with procuring, pasteurization, packaging and distribution.
The plant is situated in Boregaon road, Nagpur. Milk is processed in this plant whereas
the other plant located at MIDC, Nagpur, deals with ice-cream production. Dinshaw’s
Dairy Foods Ltd. has a milk processing capacity of 1 lakh liter per day and the annual
production capacity of ice-cream is around 40 lakh liters. The annual turnover of the
company concerning milk business is Rs. 36 cr. As of today, the Rs. 700 cr Bapuna group
has bought a 50% stake in Dinshaw’s Dairy Food Ltd. with both groups having planned
expansion and diversification.

About the Products

Dinshaw’s currently processes 1 lakh liters of milk daily. This milk is procured from
various sources, like buffalo and cow milk of higher variety (i.e., Solids-Not-Fat (SNF)
content), condensed milk, and cow and milk of lower variety. The proportion of
contribution of each of these components is as shown in Table 1.

Developing a Cost Analysis Model for the Optimization 53

of Milk Collection Process at Dinshaw’s: A Study
 Table 1: Products Launched by Dinshaw’s Dairy Foods Ltd.

Type Amount (L) Fat Content (%) S.N.F.

Buffalo 8,000 6.0 9.0%
Cow 22,000 4.2 8.6%
Condensed 15,000 9.0 25.0%
Cow (average) 9,000 4.0 8.5%
Buffalo (average) 10,000 8.5 9.0%
Skimmed 4,000 0 9.0%

Currently, Dinshaw’s has five

varieties of processed milk, namely, Table 2: Variants of Dinshaw’s Milk
Shwet, Sfurti, Aahar, Prabal and Products 1 L 500 ml 200 ml
Sarvottam. These varieties are
available in packets of 1 liter, Shwet   –
500 ml and 200 ml. The Sfurti –  
combination of variety and packet
Aahar   
size currently produced by
Dinshaw’s are shown in Table 2. Prabal   –
The varieties produced by Sarvottam  – –
Dinshaw’s are classified depending
on their fat contents. The higher
Table 3: Distribution of Fat Content
the fat content, the higher the in the Products
prices. The fat content of each of
the varieties is given in Table 3. Products Fat Content (%)

Analysis for Development Prabal 4.5

of Route Aahar 3.5
If Dinshaw’s wants to continue as
Shwet 3.0
the leader in milk distribution, it
has to tap the source of milk Sfurti 1.5
supply. Therefore, Dinshaw’s Sarvottam 0
conducts an analysis of the present
and future availability of milk, if the present availability of milk in a specific route is
50 to 100 liters with a future prospect of 1,000-1,500 liters then they add that route to
their existing routes. There have been cases when they had employed a Tata 407 in a
route to collect milk but they were not able to fetch more than 20 to 30 liters, whereas
they are now fetching 1000-1500 liters.
Raw Material Receiving Dock (RMRD) is the place where all the raw milk is collected
after procurement from various Daily Milk Collection Centres (DMCs) on each route.
Currently, Dinshaw’s has two RMRDs, one at Nagpur and the other at Bhandara.

54 The Icfai Journal of Supply Chain Management, Vol. IV, No. 4, 2007
 The routes from which milk is Table 4: Different Routes for Milk Collection
collected and brought to each
RMRD are given in Table 4. RMRD-Nagpur RMRD-Bhandara
Currently, six routes are running 1. Tarsa 1. Ambhora
from Nagpur and 11 from
Bhandara. 2. Mandhal 2. Mouda
3. Bhivapur 3. Mohadi
Milk Procurement Process
4. Rajola 4. Khapa
Creation of DMC
5. Kondhali 5. Paoni
The officials of Dinshaw’s visit the
centre where they plan to open a 6. Ramtek 6. Bhorghad
DMC. They motivate people to – 7. Khat
serve as agents for that centre.
The agent has to deposit a certain
– 8. Sakoli
amount for operating the DMC. – 9. Bhorg
These DMCs may or may not be
– 10. Tai
concrete structures and can be in
an open area where the trucks – 11. Khairi-Betala
drop the cans at the responsibility
of the agent. The agent has to collect milk from farmers and check the purity as well
as the fat content. These agents are paid based on the amount of milk they procure.
The agents are paid a commission of Rs. 0.30 per liter of cow milk and Rs. 0.50 per
liter of buffalo milk.

Procurement Procedure
Currently, Dinshaw’s dairy sources milk from 17 routes which include eight routes in
Nagpur and nine routes in Bhandara. The procured milk is collected at Bhandara and
Nagpur known as RMRD. The vehicles used by Bhandara and Nagpur routes are eight
and five respectively. The milk collected at the DMCs is segregated according to the
fat contents. The percentage of fat is more in buffalo milk than in cow milk.
Therefore, the availability of cow milk to buffalo milk at these centers is in the ratio
of 70:30 or 60:40.

Vehicles Used by Dinshaw’s

The vehicles used by Dinshaw’s for each route depends upon the amount of milk
available from that route. The various vehicles used by the company and their capacities
are as follows:
• Tata 709, capacity up to 3,600 liters of milk
• Tata 407, capacity up to 2,200 liters of milk
• Tata 207, capacity up to 1,500 liters of milk
• Auto and Jeep, capacity up to 700-800 liters of milk

Developing a Cost Analysis Model for the Optimization 55

of Milk Collection Process at Dinshaw’s: A Study
 Dinshaw’s dairy food hires all these vehicles. The small vehicles are employed only
when the larger vehicles cannot go or when the quantity of milk provided by the route
is very less.

Procedure to Collect Milk

As ice is a perishable item with low shelf life, the temperature plays an important role in
the procurement process. At high temperatures the shelf life of milk falls and therefore extra
ice may be required to maintain it. Since extra cost may be incurred if extra ice is consumed,
the vehicles leave at night to prevent the adverse effects of temperature on milk.
• The hired truck with driver has to report at the factory at 3 a.m. where the factory
workers load the empty cans with ice chambers.
• The vehicles collect ice from the adjoining ice factory. Ice requirement in summer is 400
gm per liter of milk and that in winter is 800 gm per liter of milk. The ice is available
in full or half slabs. One slab weighs 150 kg and costs Rs. 65.
• The truck then leaves for the designated route; they leave the empty cans and ice
on the onward journey. They carry out the same procedure for all the routes until
the last DMC.
• They start collecting the filled cans from the last DMC until the first DMC on the
route; and then return to the factory.
• The total time required for the complete activity is around eight hours.

Cost Involved in the Procurement of Milk

• Transportation cost: This major cost adds upto the total cost. The goal is to optimize
the route to reduce the cost/liter. By increasing the route length, the cost/liter can
be reduced, i.e., if there is a possibility of surplus milk. The present project is mainly
concentrated in this area.
• Cost of ice: Each ice slab costs around Rs. 65 and weighs around 150 kgs.
The ice is collected from the adjoining ice factory and loaded onto the trucks with
the ice chambers and cans. These ice cans are unloaded at the respective centers as
per requirement.
• Commission to agents: The agents employed by the company are paid remunerations
according to the milk procurement. Due advantage is given to milk with extra fat
content (i.e., buffalo milk). The commission paid to the agents are:
 For buffalo milk: Rs. 0.50 per liter; and
 For cow milk: Rs. 0.30 per liter

Constraints Involved in Milk Procurement

Time Constraint: This is one of the major constraints in finalizing a route. Milk, being
a perishable product, needs to be handled very carefully as compared to durable goods

56 The Icfai Journal of Supply Chain Management, Vol. IV, No. 4, 2007
such as soaps. Hence, it is of utmost importance to ensure timely return of the vehicle
in order to prevent milk from curdling. Hence, this puts a major constraint on the
length of the route that is feasible. On an average, the route lengths range from 100 to
200 km of round trip. Hence, any alternative suggested regarding combining several
routes needs to take into consideration this constraint and then critically analyze the
time requirements of the new route.
Unavailability of Milk in Lean Season: In the lean season, the consumption of milk
increases and the supply decreases due to less production from cattle. Also, the
farmers tend to use the milk by converting it into other forms like curd or butter,
which are in greater demand and produce greater profits. Hence, the DMCs are not
able to meet the rise in the demand of raw material as required by Dinshaw’s.
Therefore, the company has to probe into some other alternatives in order to sustain
profits.

Cost Reduction Alternatives

Table 5: Hiring Charges of Different Vehicles
Owning/Renting of Vehicle
Type of Vehicle Capacity (L) Rent
Dinshaw’s Dairy Foods Ltd. currently
does not own any vehicle. All the Auto 800 Rs. 400/day
vehicles are hired from local transporters. Tata 207 1,500 Rs. 5/km
The rent of the vehicle (Table 5) per day
Tata 407 2,200 Rs. 5.3/km
is decided after taking into consideration
various factors such as: Tata 709 3,600 Rs. 7/km

• Capacity of the vehicle

• Total distance traveled
• Drivers and cleaners allowance, and
• Mileage of the vehicle
An investigation was made whether owning strategy would be more beneficial than
renting strategy in terms of cost. The following cost analysis was done.
Assumptions
• Comparison period = 5 years;
• Time value of money is assured to be constant;
• Bhivapur route is considered;
• Probability of breakdown and repairability are not taken into consideration; and
• Probability of driver unavailability is not taken into consideration;

Analysis
Hiring
Hiring charge per day for Tata 709 = Rs. 1400/day. Hiring charge for Tata 709 for 5 years
= 1400*(5*365) = 26 lakh (approx.)

Developing a Cost Analysis Model for the Optimization 57

of Milk Collection Process at Dinshaw’s: A Study
Owning
Purchase cost for Tata 709 = Rs. 8 lakh, Distance on Bhivapur route (to and fro) = 210
kms. Mileage of Tata 709 = 7-8 kms/ltr. Fuel required per day = 26 ltrs. The cost analysis
is presented in Table 6.
Table 6: Cost Analysis
Cost of fuel required per day = 26 ltrs* cost of diesel/litre
= 26*24
= Rs. 624/day
Fuel cost for 5 years = 624* (5*365)
= Rs. 11.5 lakh (approx)
Drivers allowance per month = Rs. 1,500
Cleaners allowance per month = Rs. 1,000
Drovers allowance for 5 years = 60* 1,500
= Rs. 90,000
Cleaners allowance for 5 years = 60* 1,000
= Rs. 60,000
Maintenance cost for 5 years (assumed = 1.5 lakh
Total cost if vehicle owned = 8lakh + 1.5lakh + 90,000 + 60,000 + 1.5lakh = 22.5 lakh
Estimated saving if vehicle owned = 26 lakh-22.5 lakh
= 3.5 lakh for 5 years
= 70,000 per year

Since saving on one route is Rs. 70,000/year, we can safely assume that saving on
17 routes would be considerably high.

Limitations of Owning Vehicle

• High losses if failure of truck occurs;
• Frequent leaves taken by driver
Due to the above limitations, Dinshaw’s Dairy Foods Ltd. is presently reluctant to
own vehicles. The main advantage of hiring is that the whole risk regarding losses is
transferred to the transporter.
If the company is able to deal with the above limitations and improve the system
reliability, the scope for cost reduction in this area is large.

Prospective Business Analysis

The supply chain existing at Dinshaw’s is unique in this sense because it has an
additional constraint of time imposed on it. The application of any operation research
technique like ‘Traveling Salesman Problem’, etc., is negated due to the noncyclic nature
of the route which adds to the complexity of the process. This application of noncyclic
route is inherent in the process due to the long loading and unloading intervals.
Thus, one aspect that can be covered to bring down the total overhead cost is to
increase the supply level that is presently being left out due to non-feasibility of

58 The Icfai Journal of Supply Chain Management, Vol. IV, No. 4, 2007
opening of extra DMCs. It would also cover centres which are inaccessible due to
improper roads on the routes which are not conducive to transportation by bigger
vehicles. Thus, there exists a potential for the increase of supply by tapping the unused
sources. The following analysis is aimed at finding out alternatives to harness these
potentials and suggesting measures, which will make these alternatives possible.
For this purpose, Bhivapur route is selected which is critical to the company because
of its dual purpose use at present, i.e.:
• For collection of milk; and
• For supply of processed milk

Bhivapur Route
The Bhivapur route consists of eight DMCs which are:
1. Bhivapur
2. Brahmini
3. Neelaj
4. Somnala
5. Tas
6. Thana
7. Udasa
8. Umred
The current level of supply in this route is 2,550 liter. A Tata 709 is used on this
route because of inclusion of the packaged milk. The average hiring cost of a Tata 709

Table 7: The Detailed Schedule Followed on the Route

Outward Journey Inward Journey
Location
Arrival Time Departure Time Arrival Time Departure Time

Factory 3:00 a.m. 3:20 a.m. 12:15 a.m. –

Ice Factory 4:00 a.m. 4:15 a.m. – –

Tas 4.30 a.m. 4:35 a.m. 11:10 a.m. 11:30 a.m.
Thana 4:50 a.m. 4:55 a.m. 10:40 a.m. 11:00 a.m.
Bhivapur 5:15 a.m. 5:20 a.m. 10:15 a.m. 10:30 a.m.
Somnala 5:35 a.m. 5:40 a.m. 09:40 a.m. 10:00 a.m.
Neelaj 6:00 a.m. 6:05 a.m. 09:05 a.m. 09:20 a.m.
Umred 6:15 a.m. 6:20 a.m. 08:40 a.m. 08:55 a.m.
Udhasa 6:35 a.m. 6:40 a.m. 08:10 a.m. 08:25 a.m.
Brahmani 7:00 a.m. – – 07:50 a.m.

Developing a Cost Analysis Model for the Optimization 59

of Milk Collection Process at Dinshaw’s: A Study
is Rs. 7/km. For identification of prospective DMC locations in all the nearby locations,
the company makes a survey.
Out of these locations, only 80% of the sites were integrated into the route.
The remaining 20% centers were left out because of the inaccessible roads. The amount
of milk supplied by these centers does not justify an independent DMC or even an
independent route (Table 7).
According to the survey carried out by Dinshaw’s, either annually or
biannually, the untapped milk potential of this route is roughly 500 liters
(Table 7), and the extra distance to be covered on this route to procure these 500 liters is
approximately 100 kms.

How the Route Works

The hired vehicles arrive at the factory at 3:00 a.m. to start the procurement process.
The hired vehicle is accompanied by a company employee, who helps in general
loading of vehicles. The vehicle collects ice from the ice factory and starts its route,
for example, from Tas continuing to drop empty cans and ice slabs at each junction.
The crates of packaged milk are dropped at Umred. The vehicle has its last stop at
Brahmani and after collection at that point is complete, it starts the return journey.
Thus, there is a time gap of almost 5 hours at some DMCs between the time of

Table 8: Analysis of the Route

The current transportation cost = Rs. 7/km* 200 km
= Rs. 1,400
Current level of supply = 2,550 ltrs.
Targeted transportation cost/ltr = Rs. 0.5 i.e.,
Total transportation cost = Rs. 0.5
Total Supply
Expected additional distance required to be integrated (two ways) = 100 km.
Cost of transportation/km (Tata 207) = Rs. 5/km
Total transportation cost = 1,400 + 5*100 = Rs. 1,900
Amount of extra milk to be collected = 1,900/(2,550 + X) = Rs. 0.5
So, the value of X = 1,250 ltrs.
An estimated increase in supply over a year is = 15% (approx.)
Estimated increase in supply over a year is = 383 ltrs.
Total additional supply in the year is 383 + 500 = 883 ltrs.
Additional supply shortfall = 1,250 – 883 = 367 ltrs.
If this shortfall is overcome then the estimated savings would be as follows:
Present transportation cost/ltr = Rs. 0.56
Targeted transportation cost/ltr = Rs. 0.50
Net savings/ltr = 0.56 – 0.5 = Rs. 0.06/ltr.
By assuming the modified supply levels = 3,600 ltrs.
Net savings/day = 3,600*0.06 = Rs. 216
Net savings/year = 216*365 = Rs. 78,840

60 The Icfai Journal of Supply Chain Management, Vol. IV, No. 4, 2007
dropping the cans and collecting them. This is the time which has to be utilized
to run an additional smaller vehicle, either a Tata 207 or a 5-wheeler auto, which
could make a round trip within the adjoining area with a maximum both way
coverage of 100 km, returning to the DMC before the bigger vehicle arrives at the
DMC. This would ensure tapping of unutilized potential which could give the
company higher margins due to increased supply. The following analysis is based on
similar concept (Table 8).
Thus, the savings are substantial enough to justify a well-planned vendor
development strategy, which would help in achieving the supply to the desired
level.

Cost Analysis Model

Cost Analysis Model (CAM) is a genetic model for analysis of existing routes as well
as new routes. It is a tool for the top management to choose the route from among the
various alternatives, existing as well as proposed, which minimizes the total cost of
transportation of milk per liter taking into consideration various combinations of
total amount of milk available, type of vehicle used, length of route and cow milk to
buffalo milk ratio (CM:BM).
The various components of total cost of transportation of milk per liter are:
Transportation Cost: This is the cost associated with the renting or hiring of the
mode of transportation. This cost is fixed by the contractor and the authority at
Dinshaw’s keeping in mind the various constraints including length of route, number
of days of leasing, risk involved of the curdling of milk in the case of a breakdown of
the vehicle, etc. This cost includes the cost of fuel as well as the wages of the driver
and the cleaner.
The cost associated with the vehicles hired by Dinshaw’s are:
• Auto: Rs. 400 per day
• Tata 207: Rs. 4.5 per km
• Tata 407: Rs. 5 per km
• Tata 709: Rs. 7 per km
Cost of Ice: Milk, being a perishable product, has a very short shelf life. At room
temperature, it cannot be sustained for a long period of time. Hence, it becomes
economically infeasible to procure sufficient amount of milk within this short period of
time. Thus, methods are to be adopted to increase the shelf life of milk. The easiest way
to do this is to add cans containing ice in the milk containers so as to lower the
temperature of milk. This increases the shelf life of milk from 4 hours to approximately
8 hours. This time is sufficient to travel a distance of approximately 100 km one way
and procure enough milk. Each slab of ice weighs 150 kg and costs (half slabs of ice are
also available):

Developing a Cost Analysis Model for the Optimization 61

of Milk Collection Process at Dinshaw’s: A Study
 • Rs. 0.30 per liter of cow milk
• Rs. 0.50 per liter of buffalo milk
A combination of these three costs gives the total cost of procurement of milk.
This cost divided by the total amount of milk procured gives the total cost per
liter.
Based on the combination of the above-mentioned costs, the distances of routes, the
amount of milk available/procured, the type of vehicle used (Tables 9 and 10) and the
ratio of CM:BM, (Table 11) a CAM was developed to determine the optimum level of
milk procurement to ensure minimum profit. If the available milk equals or exceeds this
optimum level, only then the route under consideration should be used.
This model can be used for the evaluation of existing routes, modified routes as well
as new routes.
The various combinations of different variables used are:
 Route length (two way)

• 100 km
• 120 km
• 140 km
• 160 km
• 180 km
• 200 km
 Type of vehicle used

• Auto
• Tata 207
• Tata 407
• Tata 709
 Ratio of CM:BM

• 80:20
• 70:30
• 60:40
Amount of Milk Available
From 100 to 3,600 in steps of 100 liter

62 The Icfai Journal of Supply Chain Management, Vol. IV, No. 4, 2007
 Table 9: CAM for Combination of Different Variables

Route Length Total Cost per L (Rs.)

Rate
Slabs

Vehicle
Type of

Amount
100 120 140 160 180 200 100 120 140 160 180 200

(Rs./km)
No. of lce

of Milk (L)
Cost of Ice
Commission
km km km km km km km km km km km km
800 Auto 400 400 400 400 400 400 2.0 130.0 280 1.01 1.01 1.01 1.01 1.01 1.01
800 Tata 207 5.0 500 600 700 800 900 1,000 2.0 130.0 280 1.14 1.26 1.39 1.51 1.71 1.84
800 Tata 407 5.3 530 636 742 848 954 1,060 2.0 130.0 280 1.18 1.31 1.44 1.57 1.71 1.84
800 Tata 709 7.0 700 840 980 1,120 1,260 1,400 2.0 130.0 260 1.39 1.56 1.74 1.91 2.09 2.26
900 Tata 207 5.0 500 600 700 800 900 1,000 2.5 162.5 315 1.09 1.20 1.31 1.42 1.53 1.64
900 Tata 407 5.3 530 636 742 848 954 1,060 2.5 162.5 315 1.12 1.24 1.36 1.47 1.59 1.71
900 Tata 709 7.0 700 840 980 1,120 1,260 1,400 2.5 162.5 315 1.31 1.46 1.62 1.78 1.93 2.09

of Milk Collection Process at Dinshaw’s: A Study

1,000 Tata 207 5.0 500 600 700 800 900 1,000 2.5 162.5 350 1.01 1.11 1.21 1.31 1.41 1.51

Developing a Cost Analysis Model for the Optimization

1,000 Tata 407 5.3 530 636 742 848 954 1,060 2.5 162.5 350 1.04 1.15 1.25 136 1.47 1.57
1,000 Tata 709 7.0 700 840 980 1,120 1,260 1,400 2.5 162.5 350 1.21 1.31 1.49 1.63 1.77 1.91
1,100 Tata 207 5.0 500 600 700 800 900 1,000 3.0 195.0 385 0.98 1.07 1.16 1.25 1.35 1.44
1,100 Tata 407 5.3 530 636 742 848 954 1,060 3.0 195.0 385 1.01 1.11 1.2 1.30 1.39 1.49
1,100 Tata 709 7.0 700 840 980 1,120 1,260 1,400 3.0 195.0 385 1.16 1.29 1.42 1.55 1.67 1.80
1,200 Tata 207 5.0 500 600 700 800 900 1,000 3.0 195.0 420 0.93 1.01 1.10 1.18 1.26 1.35
1,200 Tata 407 5.3 530 636 742 848 954 1,060 3.0 195.0 420 0.95 1.04 1.13 1.22 1.31 1.40
1,200 Tata 709 7.0 700 840 980 1,120 1,260 1,400 3.0 195.0 420 1.10 1.21 1.33 1.45 1.56 1.68
1,300 Tata 207 5.0 500 600 700 800 900 1,000 3.5 227.5 455 0.91 0.99 1.06 1.14 1.22 1.29
1,300 Tata 407 5.3 530 636 742 848 954 1,060 3.5 227.5 455 0.93 1.01 1.10 1.18 1.26 1.34
1,300 Tata 709 7.0 700 840 980 1,120 1,260 1,400 3.5 227.5 455 1.06 1.17 1.28 1.39 1.49 1.69
1,400 Tata 207 5.0 500 600 700 800 900 1,000 3.5 227.5 490 0.87 0.94 1.01 1.08 1.16 1.23
1,400 Tata 407 5.3 530 636 742 848 954 1,060 3.5 227.5 490 0.89 0.97 1.04 1.12 1.19 1.27
1,400 Tata 709 7.0 700 840 980 1,120 1,260 1,400 3.5 227.5 490 1.01 1.11 1.21 1.31 1.41 1.51

63
64
Table 10: CAM for Combination of Different Variables

Route Length Total Cost per L (Rs.)

Rate
Slabs

Vehicle
Type of
100 120 140 160 180 200 100 120 140 160 180 200

Amount
(Rs./km)
No. of lce
Cost of Ice

of Milk (L)
Commission
km km km km km km km km km km km km
1,500 Tata 207 5.0 500 600 700 800 900 1,000 4.0 260.0 525.00 0.86 0.92 0.99 1.06 1.12 1.19
1,500 Tata 407 5.3 530 636 742 848 954 1,060 4.0 260.0 525.00 0.88 0.95 1.02 1.09 1.16 1.23
1,500 Tata 709 7.0 700 840 980 1,120 1,260 1,400 4.0 260.0 525.00 0.99 1.08 1.18 1.27 1.36 1.46
1,600 Tata 407 5.3 530 636 742 848 954 1,060 4.0 260.0 560.00 0.84 0.91 0.98 1.04 1.11 1.18
1,600 Tata 709 7.0 700 840 980 1,120 1,260 1,400 4.0 260.0 560.00 0.95 1.04 1.13 1.21 1.30 1.39
1,700 Tata 407 5.3 530 636 742 848 954 1,060 4.5 292.5 595.00 0.83 0.90 0.96 1.02 1.08 1.15
1,700 Tata 709 7.0 700 840 980 1,120 1,260 1,400 4.5 292.5 595.00 0.93 1.02 1.11 1.18 1.26 1.35
1,800 Tata 407 5.3 530 636 742 848 954 1,060 4.5 292.5 630.00 0.81 0.87 0.92 0.98 1.04 1.10
1,800 Tata 709 7.0 700 840 980 1,120 1,260 1,400 4.5 292.5 630.00 0.90 0.98 1.06 1.13 1.21 1.29
100 Auto 400 400 400 400 400 400 0.5 32.5 33.33 4.66 4.66 4.66 4.66 4.66 4.66
100 Tata 207 5.0 500 600 700 800 900 1,000 0.5 32.5 33.33 5.66 6.66 7.66 8.66 9.66 10.66
100 Tata 407 5.3 530 636 742 848 954 1,060 0.5 32.5 33.33 5.96 7.02 8.02 9.14 10.20 11.26
100 Tata 709 7.0 700 840 980 1,120 1,260 1,400 0.5 32.5 33.33 7.66 9.06 10.46 11.88 13.26 14.66
200 Auto 400 400 400 400 400 400 0.5 32.5 66.67 2.50 2.50 2.50 2.50 2.50 2.50
200 Tata 207 5.0 500 600 700 800 900 1,000 0.5 32.5 66.67 3.00 3.50 4.00 4.50 5.00 5.50
200 Tata 407 5.3 530 636 742 848 954 1,060 0.5 32.5 66.67 3.15 3.68 4.21 4.74 5.27 5.80
200 Tata 709 7.0 700 840 980 1,120 1,260 1,400 0.5 32.5 66.67 4.00 4.70 5.40 6.10 6.80 7.50
300 Auto 400 400 400 400 400 400 1.0 65.0 100.00 1.88 1.88 1.88 1.88 1.88 1.88
300 Tata 207 5.0 500 600 700 800 900 1,000 1.0 65.0 100.00 2.22 2.55 2.88 3.22 3.55 3.88
300 Tata 407 5.3 530 636 742 848 954 1,060 1.0 65.0 100.00 2.32 2.67 3.02 3.38 3.73 4.08

The Icfai Journal of Supply Chain Management, Vol. IV, No. 4, 2007
(Contd...)
 Table 10: CAM for Combination of Different Variables (...contd)

Route Length Total Cost per L (Rs.)

Rate
Slabs

Vehicle
Type of
100 120 140 160 180 200 100 120 140 160 180 200

(Rs./km)

Amount
No. of lce
Cost of Ice

of Milk (L)
km km km km km km km km km km km km

Commission
300 Tata 709 7.0 700 840 980 1,120 1,260 1,400 1.0 65.0 100.00 2.88 3.35 3.82 4.28 4.75 5.22
400 Auto 400 400 400 400 400 400 1.0 65.0 133.33 1.50 1.50 1.50 1.50 1.50 1.50
400 Tata 207 5.0 500 600 700 800 900 1,000 1.0 65.0 133.33 1.75 2.00 2.25 2.50 2.75 3.00
400 Tata 407 5.3 530 636 742 848 954 1,060 1.0 65.0 133.33 1.82 2.09 2.35 2.62 2.88 3.15
400 Tata 709 7.0 700 840 980 1,120 1,260 1,400 1.0 65.0 133.33 2.25 2.60 2.95 3.30 3.65 4.00
500 Auto 400 400 400 400 400 400 1.5 97.5 166.67 1.33 1.33 1.33 1.33 1.33 1.33
500 Tata 207 5.0 500 600 700 800 900 1,000 1.5 97.5 166.67 1.53 1.73 1.93 2.13 2.33 2.53

of Milk Collection Process at Dinshaw’s: A Study

500 Tata 407 5.3 530 636 742 848 954 1,060 1.5 97.5 166.67 1.59 1.80 2.01 2.22 2.44 2.65

Developing a Cost Analysis Model for the Optimization

500 Tata 709 7.0 700 840 980 1,120 1,260 1,400 1.5 97.5 166.67 1.93 2.21 2.49 2.77 3.05 3.33
600 Auto 400 400 400 400 400 400 1.5 97.5 200.00 1.16 1.16 1.16 1.16 1.16 1.16
600 Tata 207 5.0 500 600 700 800 900 1,000 1.5 97.5 200.00 1.33 1.50 1.66 1.83 2.00 2.16
600 Tata 407 5.3 530 636 742 848 954 1,060 1.5 97.5 200.00 1.38 1.56 1.73 1.91 2.09 2.26
600 Tata 709 7.0 700 840 980 1,120 1,260 1,400 1.5 97.5 200.00 1.66 1.90 2.13 2.36 2.60 2.83
700 Auto 400 400 400 400 400 400 2.0 130.0 233.33 1.09 1.09 1.09 1.09 1.09 1.09
700 Tata 207 5.0 500 600 700 800 900 1,000 2.0 130.0 233.33 1.23 1.38 1.52 1.66 1.80 1.95
1,600 Tata 407 5.3 530 636 742 848 954 1,060 4.0 260.0 533.33 0.83 0.89 0.95 1.03 1.09 1.16
1,600 Tata 709 7.0 700 840 980 1,120 1,260 1,400 4.0 260.0 533.33 0.93 1.02 1.11 1.20 1.28 1.37
1,700 Tata 407 5.3 530 636 742 848 954 1,060 4.5 292.5 566.67 0.82 0.88 0.94 1.00 1.07 1.13
1,700 Tata 709 7.0 700 840 980 1,120 1,260 1,400 4.5 292.5 566.67 0.92 1.00 1.08 1.16 1.25 1.33
1,800 Tata 407 5.3 530 636 742 848 954 1,060 4.5 292.5 600.00 0.79 0.85 0.91 1.97 1.03 1.08

(Contd...)

65
66
Table 10: CAM for Combination of Different Variables (...contd)

Route Length Total Cost per L (Rs.)

Rate
Slabs

Vehicle
Type of
100 120 140 160 180 200 100 120 140 160 180 200

Amount
(Rs./km)
No. of lce
Cost of Ice

of Milk (L)
km km km km km km km km km km km km

Commission
1,800 Tata 709 7.0 700 840 980 1,120 1,260 1,400 4.5 292.5 600.00 0.88 0.96 1.04 1.12 1.20 1.27
1,900 Tata 407 5.3 530 636 742 848 954 1,060 5.0 325.0 633.33 0.78 0.84 0.89 0.95 1.01 1.06
1,900 Tata 709 7.0 700 840 980 1,120 1,260 1,400 5.0 325.0 633.33 0.87 0.95 1.02 1.09 1.17 1.24
2,000 Tata 407 5.3 530 636 742 848 954 1,060 5.0 325.0 666.67 0.76 0.81 0.87 0.92 0.97 1.03
2,000 Tata 709 7.0 700 840 980 1,120 1,260 1,400 5.0 325.0 666.67 0.85 0.92 0.99 0.06 1.13 1.20
2,100 Tata 407 5.3 530 636 742 848 954 1,060 5.5 357.5 700.00 0.76 0.81 0.86 0.91 0.96 1.01
2,100 Tata 709 7.0 700 840 980 1,120 1,260 1,400 5.5 357.5 700.00 0.84 0.90 0.97 1.04 1.10 1.17
2,200 Tata 407 5.3 530 636 742 848 954 1,060 5.5 357.5 733.33 0.74 0.78 0.83 0.88 0.93 0.98
2,200 Tata 709 7.0 700 840 980 1,120 1,260 1,400 5.5 357.5 733.33 0.81 0.88 0.94 1.00 0.07 1.13
2,300 Tata 709 7.0 700 840 980 1,120 1,260 1,400 6.0 390.0 766.67 0.81 0.87 0.93 0.99 1.05 1.18
2,400 Tata 709 7.0 700 840 980 1,120 1,260 1,400 6.0 390.0 800.00 0.79 0.85 0.90 0.96 1.02 1.08
2,500 Tata 709 7.0 700 840 980 1,120 1,260 1,400 6.5 422.5 833.33 0.78 0.84 0.89 0.95 1.01 1.06
2,600 Tata 709 7.0 700 840 980 1,120 1,260 1,400 6.5 422.5 866.67 0.77 0.82 0.87 0.93 0.98 1.03
2,700 Tata 709 7.0 700 840 980 1,120 1,260 1,400 7.0 455.0 900.00 0.76 0.81 0.86 0.92 0.97 1.02
2,800 Tata 709 7.0 700 840 980 1,120 1,260 1,400 7.0 455.0 933.33 0.75 0.80 0.85 90.0 0.95 1.00
3,000 Tata 709 7.0 700 840 980 1,120 1,260 1,400 7.5 487.5 1,000.00 0.73 0.78 0.82 0.87 0.92 0.96
3,100 Tata 709 7.0 700 840 980 1,120 1,260 1,400 7.5 487.5 1,033.33 0.72 0.76 0.81 0.85 0.92 0.94
3,200 Tata 709 7.0 700 840 980 1,120 1,260 1,400 7.5 487.5 1,066.67 0.70 0.75 0.79 0.84 0.88 0.92
3,300 Tata 709 7.0 700 840 980 1,120 1,260 1,400 7.5 487.5 1,100.00 0.69 0.74 0.78 0.82 0.86 0.91
3,400 Tata 709 7.0 700 840 980 1,120 1,260 1,400 7.5 487.5 1,133.33 0.68 0.72 0.76 0.81 0.85 0.89
(Contd...)

The Icfai Journal of Supply Chain Management, Vol. IV, No. 4, 2007
 Table 10: CAM for Combination of Different Variables (...contd)

Route Length Total Cost per L (Rs.)

Rate
Slabs

Vehicle
Type of
100 120 140 160 180 200 100 120 140 160 180 200

Amount
(Rs./km)
No. of lce
Cost of Ice

of Milk (L)
km km km km km km km km km km km km

Commission
3,500 Tata 709 7.0 700 840 980 1,120 1,260 1,400 7.5 487.5 1166.67 0.67 0.71 0.75 0.79 0.83 0.87
3,600 Tata 709 7.0 700 840 980 1,120 1,260 1,400 7.5 487.5 1200.00 0.66 0.70 0.74 0.78 0.82 0.86
700 Tata 407 5.3 530 636 742 848 954 1,060 2.0 130.0 233.33 1.28 1.43 1.58 1.73 1.88 2.03
700 Tata 709 7.0 700 840 980 1,120 1,260 1,400 2.0 130.0 233.33 1.52 1.72 1.92 2.12 2.32 2.52
800 Auto 400 400 400 400 400 400 2.0 130.0 266.67 1.00 1.00 1.00 1.00 1.00 1.00
800 Tata 207 5.0 500 600 700 800 900 1,000 2.0 130.0 266.67 1.12 1.25 1.37 1.50 1.62 1.75
800 Tata 407 5.3 530 636 742 848 954 1,060 2.0 130.0 266.67 1.16 1.29 1.42 1.56 1.69 1.82

of Milk Collection Process at Dinshaw’s: A Study

800 Tata 709 7.0 700 840 980 1,120 1,260 1,400 2.0 130.0 266.67 1.37 1.55 1.72 1.90 2.07 2.25

Developing a Cost Analysis Model for the Optimization

900 Tata 207 5.0 500 600 700 800 900 1,000 2.5 162.5 300.00 1.07 1.18 1.29 1.40 1.51 1.63
900 Tata 407 5.3 530 636 742 848 954 1,060 2.5 162.5 300.00 1.10 1.22 1.34 1.46 1.57 1.69
900 Tata 709 7.0 700 840 980 1,120 1,260 1,400 2.5 162.5 300.00 1.29 1.45 1.60 1.70 1.91 2.07
1,000 Tata 207 5.0 500 600 700 800 900 1,000 2.5 162.5 333.33 1.00 1.10 1.20 1.30 1.4 1.50
1,000 Tata 407 5.3 530 636 742 848 954 1,060 2.5 162.5 333.33 1.03 1.13 1.24 1.34 1.45 1.56
1,000 Tata 709 7.0 700 840 980 1,120 1,260 1,400 2.5 162.5 333.33 1.20 1.34 1.48 1.62 1.76 1.90
1,100 Tata 207 5.0 500 600 700 800 900 1,000 3.0 195.0 366.67 0.97 1.07 1.15 1.24 1.32 1.42
1,100 Tata 407 5.3 530 636 742 848 954 1,060 3.0 195.0 366.67 0.99 1.09 1.21 1.28 1.38 1.47
1,100 Tata 709 7.0 700 840 980 1,120 1,260 1,400 3.0 195.0 366.67 1.15 1.27 1.40 1.53 1.66 1.78
1,200 Tata 207 5.0 500 600 700 800 900 1,000 3.0 195.0 400.00 91.00 1.00 1.00 1.16 1.25 1.33
1,200 Tata 407 5.3 530 636 742 848 954 1,060 3.0 195.0 400.00 94.00 1.03 1.11 1.20 1.29 1.37
1,200 Tata 709 7.0 700 840 980 1,120 1,260 1,400 3.0 195.0 400.00 1.08 1.20 1.31 1.43 1.55 1.66

(Contd...)

67
68
Table 10: CAM for Combination of Different Variables (...contd)

Route Length Total Cost per L (Rs.)

Rate
Slabs

Vehicle
Type of
100 120 140 160 180 200 100 120 140 160 180 200

Amount
(Rs./km)
No. of lce
Cost of Ice

of Milk (L)
km km km km km km km km km km km km

Commission
1,300 Tata 207 5.0 500 600 700 800 900 1,000 3.5 227.5 433.33 0.89 0.97 1.05 1.12 1.20 1.28
1,300 Tata 407 5.3 530 636 742 848 954 1,060 3.5 227.5 433.33 0.92 1.00 1.08 1.16 1.24 1.32
1,300 Tata 709 7.0 700 840 980 1,120 1,260 1,400 3.5 227.5 433.33 1.05 1.15 1.26 1.37 1.48 1.59
1,400 Tata 207 5.0 500 600 700 800 900 1,000 3.5 227.5 466.67 0.85 1.92 1.00 1.07 1.14 1.21
1,400 Tata 407 5.3 530 636 742 848 954 1,060 3.5 227.5 466.67 0.87 1.95 1.03 1.10 1.18 1.25
1,400 Tata 709 7.0 700 840 980 1,120 1,260 1,400 3.5 227.5 466.67 1.00 1.10 1.20 1.30 1.40 1.50
1,500 Tata 207 5.0 500 600 700 800 900 1,000 4.0 260.0 500.00 0.84 1.91 1.97 1.04 1.11 1.17
1,500 Tata 407 5.3 530 630 742 848 954 1,060 4.0 260.0 500.00 0.86 1.93 1.00 1.07 1.14 1.21
1,500 Tata 709 7.0 700 840 980 1,120 1,260 1,400 4.0 260.0 500.00 97.00 1.07 1.16 1.25 1.35 1.44
100 Auto 400 400 400 400 400 400 0.5 32.5 35.00 4.68 4.68 4.68 4.68 4.68 4.68
100 Tata 207 5.0 500 600 700 800 900 1,000 0.5 32.5 35.00 5.68 6.68 7.68 8.68 9.68 10.68
100 Tata 407 5.3 530 636 742 848 954 1,060 0.5 32.5 35.00 5.98 7.04 8.10 9.16 10.22 11.28
100 Tata 709 7.0 700 840 980 1,120 1,260 1,400 0.5 32.5 35.00 7.68 9.08 10.48 11.88 13.28 14.68
200 Auto 400 400 400 400 400 400 0.5 32.5 70.00 2.51 2.51 2.51 2.51 2.51 2.51
200 Tata 207 5.0 500 600 700 800 900 1,000 0.5 32.5 70.00 3.01 3.51 4.01 4.51 5.01 5.51
200 Tata 407 5.3 530 636 742 848 954 1,060 0.5 32.5 70.00 3.16 3.69 4.22 4.75 5.28 5.81
200 Tata 709 7.0 700 840 980 1,120 1,260 1,400 0.5 32.5 70.00 4.01 4.71 5.41 6.11 6.81 7.51
300 Auto 400 400 400 400 400 400 1.0 65.0 105.00 1.90 1.90 1.90 1.90 1.90 1.90
300 Tata 207 5.0 500 600 700 800 900 1,000 1.0 65.0 105.00 2.23 2.57 2.90 3.23 3.57 3.90
300 Tata 407 5.3 530 636 742 848 954 1,060 1.0 65.0 105.00 2.33 2.69 3.04 3.39 3.75 4.10
(Contd...)

The Icfai Journal of Supply Chain Management, Vol. IV, No. 4, 2007
 Table 10: CAM for Combination of Different Variables (...contd)

Route Length Total Cost per L (Rs.)

Rate
Slabs

Vehicle
Type of
100 120 140 160 180 200 100 120 140 160 180 200

Amount
(Rs./km)
No. of lce
Cost of Ice

of Milk (L)
km km km km km km km km km km km km

Commission
300 Tata 709 7.0 700 840 980 1120 1,260 1,400 1.0 65.0 105 2.90 3.37 3.83 4.3 4.77 5.30
400 Auto 400 400 400 400 400 400 1.0 65.0 140 1.51 1.51 1.51 1.51 1.51 1.51
400 Tata 207 5.0 500 600 700 800 900 1,000 1.0 65.0 140 1.76 2.01 2.26 2.51 2.76 3.01
400 Tata 407 5.3 530 636 742 848 954 1,060 1.0 65.0 140 1.84 2.10 2.37 2.63 2.90 3.16
400 Tata 709 7.0 700 840 980 1,120 1,260 1,400 1.0 65.0 140 2.26 2.61 2.96 3.31 3.66 4.01
500 Auto 400 400 400 400 400 400 1.5 97.5 175 1.35 1.35 1.35 1.35 1.35 1.35
500 Tata 207 5.0 500 600 700 800 900 1,000 1.5 97.5 175 1.55 1.75 1.95 2.15 2.35 2.55

of Milk Collection Process at Dinshaw’s: A Study

500 Tata 407 5.3 530 636 742 848 954 1,060 1.5 97.5 175 1.61 1.82 2.03 2.24 2.45 2.68

Developing a Cost Analysis Model for the Optimization

500 Tata 709 7.0 700 840 980 1,120 1,260 1,400 1.5 97.5 175 1.95 2.23 2.51 2.79 3.07 3.35
600 Auto 400 400 400 400 400 400 1.5 97.5 210 1.18 1.18 1.11 1.18 1.18 1.18
600 Tata 207 5.0 500 600 700 800 900 1,000 1.5 97.5 210 1.35 1.51 1.68 1.85 2.01 2.18
600 Tata 407 5.3 530 636 742 848 954 1,060 1.5 97.5 210 1.40 1.57 1.75 1.93 2.10 2.28
600 Tata 709 7.0 700 840 980 1,120 1,260 1,400 1.5 97.5 210 1.68 1.91 2.15 2.38 2.61 2.85
700 Auto 400 400 400 400 400 400 2.0 130.0 245 1.11 1.11 1.11 1.11 1.11 1.11
700 Tata 207 5.0 500 600 700 800 900 1,000 2.0 130.0 245 1.25 1.39 1.54 1.68 1.82 1.96
700 Tata 407 5.3 530 636 742 848 954 1,060 2.0 130.0 245 1.29 1.44 1.60 1.75 1.90 2.05
700 Tata 709 7.0 700 840 980 1,120 1,260 1,400 2.0 130.0 245 1.54 1.74 1.94 2.14 2.34 2.54
1,900 Tata 407 5.3 530 636 742 848 954 1,060 5.0 325.0 665 0.80 0.86 0.91 0.97 1.02 1.08
1,900 Tata 709 7.0 700 840 980 1,120 1,260 1,400 5.0 325.0 665 0.89 0.95 1.04 0.11 1.18 1.26
2,000 Tata 407 5.3 530 636 742 848 954 1,060 5.0 325.0 700 0.78 0.83 0.88 0.94 0.99 1.04

(Contd...)

69
70
Table 10: CAM for Combination of Different Variables (...contd)

Route Length Total Cost per L (Rs.)

Rate
Slabs

Vehicle
Type of
100 120 140 160 180 200 100 120 140 160 180 200

Amount
(Rs./km)
No. of lce
Cost of Ice

of Milk (L)
km km km km km km km km km km km km

Commission
2,000 Tata 709 7.0 700 840 980 1,120 1,260 1,400 5.0 325.0 700 0.86 0.93 1.00 1.07 1.14 1.21
2,100 Tata 407 5.3 530 636 742 848 954 1,060 5.5 357.5 735 0.77 0.82 0.87 0.92 0.97 1.03
2,100 Tata 709 7.0 700 840 980 1,120 1,260 1,400 5.5 357.5 735 0.85 0.82 0.99 1.05 1.12 1.19
2,200 Tata 407 5.3 530 636 742 848 954 1,060 5.5 357.5 770 0.75 0.8 0.85 0.90 0.95 0.99
2,200 Tata 709 7.0 700 840 980 1,120 1,260 1,400 5.5 357.5 770 0.83 0.89 0.96 1.02 1.09 0.15
2,300 Tata 709 7.0 700 840 980 1,120 1,260 1,400 6.0 390.0 805 0.82 0.88 0.95 1.01 1.07 0.13
2,400 Tata 709 7.0 700 840 980 1,120 1,260 1,400 6.0 390.0 840 0.80 0.86 0.92 0.98 1.04 0.10
2,500 Tata 709 7.0 700 840 980 1,120 1,260 1,400 6.5 422.5 875 0.80 0.86 0.91 0.97 1.02 1.08
2,600 Tata 709 7.0 700 840 980 1,120 1,260 1,400 6.5 422.5 910 0.78 0.84 0.89 0.94 1.00 1.05
2,700 Tata 709 7.0 700 840 980 1,120 1,260 1,400 7.0 455.0 945 0.78 0.83 0.88 0.93 0.99 1.04
2,800 Tata 709 7.0 700 840 980 1,120 1,260 1,400 7.0 455.0 980 0.76 0.81 0.86 0.91 0.96 1.01
3,000 Tata 407 5.3 530 636 742 848 954 1,060 7.5 487.5 1,050 0.69 0.72 0.76 0.80 0.83 0.87
3,000 Tata 709 7.0 700 840 980 1,120 1,260 1,400 7.5 487.5 1,050 0.75 0.79 0.84 0.89 0.93 0.98
3,100 Tata 709 7.0 700 840 980 1,120 1,260 1,400 7.5 487.5 1,085 0.73 0.78 0.82 0.87 0.91 0.96
3,200 Tata 709 7.0 700 840 980 1,120 1,260 1,400 7.5 487.5 1,120 0.72 0.76 0.81 0.85 0.90 0.94
3,300 Tata 709 7.0 700 840 980 1,120 1,260 1,400 7.5 487.5 1,155 0.71 0.75 0.79 0.84 0.88 0.92
3,400 Tata 709 7.0 700 840 980 1,120 1,260 1,400 7.5 487.5 1,190 0.70 0.74 0.78 0.82 0.86 0.91
3,500 Tata 709 7.0 700 840 980 1,120 1,260 1,400 7.5 487.5 1,225 0.69 0.73 0.77 0.81 0.85 0.89
3,600 Tata 709 7.0 700 840 980 1,120 1,260 1,400 7.5 487.5 1,260 0.68 0.72 0.76 0.80 0.84 0.87
100 Auto 400 400 400 400 400 400 0.5 32.5 34 4.67 4.67 4.67 4.67 4.67 4.67
(Contd...)

The Icfai Journal of Supply Chain Management, Vol. IV, No. 4, 2007
 Table 10: CAM for Combination of Different Variables (...contd)

Route Length Total Cost per L (Rs.)

Rate
Slabs

Vehicle
Type of
100 120 140 160 180 200 100 120 140 160 180 200

Amount
(Rs./km)
No. of lce
Cost of Ice

of Milk (L)
km km km km km km km km km km km km

Commission
100 Tata 207 5.0 500 600 700 800 900 1,000 0.5 32.5 34 5.67 6.67 7.67 8.67 9.67 10.67
100 Tata 407 5.3 530 636 742 848 954 1,060 0.5 32.5 34 5.97 7.03 8.09 9.15 10.21 11.27
100 Tata 709 7.0 700 840 980 1,120 1,260 1,400 0.5 32.5 34 7.67 9.07 10.47 11.87 13.27 14.67
200 Auto 400 400 400 400 400 400 0.5 32.5 68 2.50 2.50 2.50 2.50 2.50 2.50
200 Tata 207 5.0 500 600 700 800 900 1,000 0.5 32.5 68 3.00 3.50 4.00 4.50 5.00 5.50
200 Tata 407 5.3 530 636 742 848 954 1,060 0.5 32.5 68 3.15 3.68 4.21 4.74 5.27 5.80
200 Tata 709 7.0 700 840 980 1,120 1,260 1,400 0.5 32.5 68 4.00 4.70 5.40 6.10 6.80 7.50

of Milk Collection Process at Dinshaw’s: A Study

300 Auto 400 400 400 400 400 400 1.0 65.0 102 1.89 1.89 1.89 1.89 1.89 1.89

Developing a Cost Analysis Model for the Optimization

300 Tata 207 5.0 500 600 700 800 900 1,000 1.0 65.0 102 2.22 2.56 2.89 3.22 3.56 3.89
300 Tata 407 5.3 530 636 742 848 954 1,060 1.0 65.0 102 2.32 2.00 3.03 3.38 3.74 4.90
300 Tata 709 7.0 700 840 980 1,120 1,260 1,400 1.0 65.0 102 2.89 3.36 3.82 4.29 4.76 5.22
400 Auto 400 400 400 400 400 400 1.0 65.0 136 1.50 1.50 1.50 1.50 1.50 1.50
400 Tata 207 5.0 500 600 700 800 900 1,000 1.0 65.0 136 1.75 2.00 2.25 2.50 2.75 3.00
400 Tata 407 5.3 530 636 742 848 954 1,060 1.0 65.0 136 1.83 2.09 2.36 2.62 2.89 3.15
400 Tata 709 7.0 700 840 980 1,120 1,260 1,400 1.0 65.0 136 2.25 2.60 2.95 3.30 3.65 4.00
500 Auto 400 400 400 400 400 400 1.5 97.5 170 1.34 1.34 1.34 1.34 1.34 1.34
500 Tata 207 5.0 500 600 700 800 900 1,000 1.5 97.5 170 1.54 1.74 1.94 2.14 2.34 2.54
500 Tata 407 5.3 530 636 742 848 954 1,060 1.5 97.5 170 1.60 1.81 2.02 2.23 3.60 2.66
500 Tata 709 7.0 700 840 980 1,120 1,260 1,400 1.5 97.5 170 1.94 2.22 2.50 2.78 1.17 3.34
600 Auto 400 400 400 400 400 400 1.5 97.5 204 1.17 1.17 1.17 1.17 2.00 1.17

71
(Contd...)
72
Table 10: CAM for Combination of Different Variables (...contd)

Route Length Total Cost per L (Rs.)

Rate
Slabs

Vehicle
Type of
100 120 140 160 180 200 100 120 140 160 180 200

Amount
(Rs./km)
No. of lce
Cost of Ice

of Milk (L)
km km km km km km km km km km km km

Commission
600 Tata 207 5.0 500 600 700 800 900 1,000 1.5 97.5 204 1.34 1.5 1.67 1.84 2.00 2.17
600 Tata 407 5.3 530 636 742 848 954 1,060 1.5 97.5 204 1.39 1.56 1.74 1.92 9.00 2.26
600 Tata 709 7.0 700 840 980 1,120 1,260 1,400 1.5 97.5 204 1.67 1.90 2.14 2.37 2.60 2.27
700 Auto 400 400 400 400 400 400 2.0 130.0 238 1.10 1.10 1.10 1.10 1.10 2.84
700 Tata 207 5.0 500 600 700 800 900 1,000 2.0 130.0 238 1.24 1.38 1.53 1.67 1.81 1.10
700 Tata 407 5.3 530 636 742 848 954 1,060 2.0 130.0 238 1.28 1.43 1.59 1.74 1.89 1.95
700 Tata 709 7.0 700 840 980 1,120 1,260 1,400 2.0 130.0 238 1.53 1.73 1.93 2.13 2.33 2.40
800 Auto 400 400 400 400 400 400 2.0 130.0 272 1.00 1.00 1.00 1.00 1.00 2.53
800 Tata 207 5.0 500 600 700 800 900 1,000 2.0 130.0 272 1.13 1.25 1.38 1.50 1.63 1.00
800 Tata 407 5.3 530 636 740 848 954 1,060 2.0 130.0 272 1.17 1.30 1.43 0.56 1.70 1.83
800 Tata 709 7.0 700 840 980 1,120 1,260 1,400 2.0 130.0 272 1.38 1.55 1.73 1.90 2.08 2.25
900 Tata 207 5.0 500 600 700 800 900 1,000 2.5 162.5 306 1.08 1.19 1.30 1.41 1.52 1.63
900 Tata 407 5.3 530 636 742 848 954 1,060 2.5 162.5 306 1.11 1.23 1.35 1.46 1.58 1.70
900 Tata 709 7.0 700 840 980 1,120 1,260 1,400 2.5 162.5 306 1.30 1.45 1.61 1.77 1.92 2.08
1,000 Tata 207 5.0 500 600 700 800 900 1,000 2.5 162.5 340 1.00 1.10 1.20 1.30 1.40 1.50
1,000 Tata 407 5.3 530 636 742 848 954 1,060 2.5 162.5 340 1.03 1.14 1.24 1.35 1.46 1.56
1,000 Tata 709 7.0 700 840 980 1,120 1,260 1,400 2.5 162.5 340 1.20 1.34 1.48 1.62 1.76 1.90
1,100 Tata 207 5.0 500 600 700 800 900 1,000 3.0 195.0 374 0.97 1.06 1.15 1.24 1.34 1.43
1,100 Tata 407 5.3 530 636 742 848 954 1,060 3.0 195.0 374 1.00 1.10 1.19 1.29 1.38 1.48
1,100 Tata 709 7.0 700 840 980 1,120 1,260 1,400 3.0 195.0 374 1.15 1.28 1.41 1.54 1.66 1.79
(Contd...)

The Icfai Journal of Supply Chain Management, Vol. IV, No. 4, 2007
 Table 10: CAM for Combination of Different Variables (...contd)

Route Length Total Cost per L (Rs.)

Rate
Slabs

Vehicle
Type of
100 120 140 160 180 200 100 120 140 160 180 200

Amount
(Rs./km)
No. of lce
Cost of Ice

of Milk (L)
km km km km km km km km km km km km

Commission
1,200 Tata 207 5.0 500 600 700 800 900 1,000 3.0 195.0 408 0.92 1.00 1.09 1.17 1.25 1.34
1,200 Tata 407 5.3 530 636 742 848 954 1,060 3.0 195.0 408 0.94 1.03 1.12 1.21 1.30 1.39
1,200 Tata 709 7.0 700 840 980 1,120 1,260 1,400 3.0 195.0 408 1.09 0.20 1.32 1.44 1.55 1.67
1,300 Tata 207 5.0 500 600 700 800 900 1,000 3.5 227.5 442 0.90 0.98 1.05 1.13 1.21 1.28
1,300 Tata 407 5.3 530 636 742 848 954 1,060 3.5 227.5 442 0.92 0.10 1.09 1.17 1.25 1.31
1,300 Tata 709 7.0 700 84 980 1,120 1,260 1,400 3.5 227.5 442 1.05 1.16 1.27 1.38 1.48 1.59
1,400 Tata 207 5.0 500 600 700 800 900 1,000 3.5 227.5 476 0.86 0.93 1.00 1.07 1.15 1.22

of Milk Collection Process at Dinshaw’s: A Study

1,400 Tata 407 5.3 530 636 742 848 954 1,060 3.5 227.5 476 0.88 0.96 1.03 1.11 1.18 1.26

Developing a Cost Analysis Model for the Optimization

1,400 Tata 709 7.0 700 840 980 1,120 1,260 1,400 3.5 227.5 476 1.00 1.10 1.20 1.30 1.40 1.50
1,500 Tata 207 5.0 500 600 700 800 900 1,000 4.0 260.0 510 0.82 0.91 0.98 1.05 1.11 1.18
1,500 Tata 407 5.3 530 636 742 848 954 1,060 4.0 260.0 510 0.87 0.94 1.01 1.08 1.15 1.22
1,500 Tata 709 7.0 700 840 980 1,120 1,260 1,400 4.0 260.0 510 0.98 1.07 1.17 1.26 1.35 1.45
1,600 Tata 407 5.3 530 636 742 848 954 1,060 4.0 260.0 544 0.83 0.90 1.97 1.03 1.10 1.17
1,600 Tata 709 7.0 700 840 980 1,120 1,260 1,400 4.0 260.0 544 0.94 1.03 1.12 1.20 1.29 1.38
1,700 Tata 407 5.3 530 636 742 848 954 1,060 4.5 292.5 578 0.82 0.89 0.95 1.01 1.07 1.14
1,700 Tata 709 7.0 700 840 980 1,120 1,260 1,400 4.5 292.5 578 0.92 1.01 1.09 1.17 1.25 1.34
1,800 Tata 407 5.3 530 636 742 848 954 1,060 4.5 292.5 612 0.80 0.85 0.91 0.97 1.03 1.02
1,800 Tata 709 7.0 700 840 980 1,120 1,260 1,400 4.5 292.5 612 0.89 0.97 1.05 1.12 1.20 1.28
1,900 Tata 407 5.3 530 636 742 848 954 1,060 5.0 325.0 646 0.79 0.85 0.90 0.96 1.01 1.07
1,900 Tata 709 7.0 700 840 980 1,120 1,260 1,400 5.0 325.0 646 0.88 0.95 1.03 1.10 1.17 1.25

(Contd...)

73
74
Table 10: CAM for Combination of Different Variables (...contd)

Route Length Total Cost per L (Rs.)

Rate
Slabs

Vehicle
Type of
100 120 140 160 180 200 100 120 140 160 180 200

Amount
(Rs./km)
No. of lce
Cost of Ice

of Milk (L)
Commission
km km km km km km km km km km km km
2,000 Tata 407 5.3 530 636 742 848 954 1,060 5.0 325.0 680.00 0.77 0.82 0.87 0.93 0.98 1.03
2,000 Tata 709 7.0 700 840 980 1,120 1,260 1,400 5.0 325.0 680.00 0.85 0.92 0.99 1.06 1.13 1.20
2,100 Tata 407 5.3 530 636 742 848 954 1,060 5.5 357.5 714.00 0.76 0.81 0.86 1.91 0.96 1.02
2,100 Tata 709 7.0 700 840 980 1,120 1,260 1,400 5.5 357.5 714.00 0.84 0.91 0.98 1.04 1.11 1.18
2,200 Tata 407 5.3 530 636 742 848 954 1,060 5.5 357.5 748.00 0.74 0.79 0.84 1.90 0.94 0.98
2,200 Tata 709 7.0 700 840 980 1,120 1,260 1,400 5.5 357.5 748.00 0.82 0.88 0.95 1.01 1.08 1.14
2,300 Tata 709 7.0 700 840 980 1,120 1,260 1,400 6.0 390.0 782.00 0.81 0.87 0.94 1.00 1.06 1.12
2,400 Tata 709 7.0 700 840 980 1,120 1,260 1,400 6.0 390.0 816.00 0.79 0.85 0.91 0.97 1.03 1.09
2,500 Tata 709 7.0 700 840 980 1,120 1,260 1,400 6.5 422.5 850.00 0.79 0.85 0.90 0.96 1.01 1.07
2,600 Tata 709 7.0 700 840 980 1,120 1,260 1,400 6.5 422.5 884.00 0.77 0.83 0.88 0.93 0.99 1.04
2,700 Tata 709 7.0 700 840 980 1,120 1,260 1,400 7.0 455.0 918.00 0.77 0.82 0.87 0.92 0.98 1.03
2,800 Tata 709 7.0 700 840 980 1,120 1,260 1,400 7.0 455.0 952.00 0.75 0.80 0.85 0.90 0.95 1.00
3,000 Tata 709 7.0 700 840 980 1,120 1,260 1,400 7.5 487.5 1,020.00 0.74 0.78 0.83 0.88 0.92 0.97
3,100 Tata 709 7.0 700 840 980 1,120 1,260 1,400 7.5 487.5 1,054.00 0.72 0.77 0.81 0.86 0.90 0.95

3,200 Tata 709 7.0 700 840 980 1,120 1,260 1,400 7.5 487.5 1,066.67 0.70 0.75 0.79 0.84 0.88 0.92

3,300 Tata 709 7.0 700 840 980 1,120 1,260 1,400 7.5 487.5 1,100.00 0.69 0.74 0.78 0.82 0.86 0.91

3,400 Tata 709 7.0 700 840 980 1,120 1,260 1,400 7.5 487.5 1,133.33 0.68 0.72 0.76 0.81 0.85 0.89

3,500 Tata 709 7.0 700 840 980 1,120 1,260 1,400 7.5 487.5 1,166.67 0.67 0.71 0.75 0.79 0.83 0.87

The Icfai Journal of Supply Chain Management, Vol. IV, No. 4, 2007
(Contd...)
 Table 10: CAM for Combination of Different Variables
(...contd)

Route Length Total Cost per L (Rs.)

Rate
Slabs

Vehicle
Type of

Amount
100 120 140 160 180 200 100 120 140 160 180 200

(Rs./km)
No. of lce
Cost of Ice

of Milk (L)
km km km km km km km km km km km km

Commission
3,600 Tata 709 7.0 700 840 980 1,120 1,260 1,400 7.5 487.5 1,200.00 0.66 0.70 0.74 0.78 0.82 0.86

Tata 207 5.0 500 600 700 800 900 1,000 2.5 162.5 300.00 1.07 1.18 1.29 1.40 1.51 1.63

Tata 407 5.3 530 636 142 848 954 1,060 2.5 162.5 300.00 1.10 1.22 1.34 1.46 1.57 1.69

Tata 709 7.0 700 840 980 1,120 1,260 1,400 2.5 162.5 300.00 1.29 1.45 1.60 1.76 1.91 2.07

of Milk Collection Process at Dinshaw’s: A Study

Tata 207 5.0 500 600 700 800 900 1,000 2.5 162.5 333.33 1.00 1.10 1.20 1.30 1.40 1.50

Tata 407 5.3 530 636 142 848 954 1,060 2.5 162.5 333.33 1.03 1.13 1.24 1.34 1.45 1.56

Developing a Cost Analysis Model for the Optimization

Tata 709 7.0 700 840 980 1,120 1,260 1,400 2.5 162.5 333.33 1.20 1.34 1.48 1.62 1.76 1.90

Tata 207 5.0 500 600 700 800 900 1,000 3.0 195.0 366.67 0.97 1.06 1.15 1.24 1.33 1.42

Tata 407 5.3 530 636 142 848 954 1,060 3.0 195.0 366.67 0.99 1.09 1.19 1.28 1.38 1.47

Tata 709 7.0 700 840 980 1,120 1,260 1,400 3.0 195.0 366.67 1.15 1.27 1.40 1.53 1.66 1.78

Tata 207 5.0 500 600 700 800 900 1,000 3.0 195.0 400.00 0.91 1.00 1.08 1.16 1.25 1.33

Tata 407 5.3 530 636 142 848 954 1,060 3.0 195.0 400.00 0.94 1.03 1.11 1.20 1.29 1.38

Tata 709 7.0 700 840 980 1,120 1,260 1,400 3.0 195.0 400.00 1.08 1.20 1.31 1.43 1.55 1.66

Tata 207 5.0 500 600 700 800 900 1,000 3.5 227.5 433.33 0.89 0.97 1.05 1.12 1.20 1.28

Tata 407 5.3 530 636 142 848 954 1,060 3.5 227.5 433.33 0.92 1.00 1.06 1.16 1.24 1.32

Tata 709 7.0 700 840 980 1,120 1,260 1,400 3.5 227.5 433.33 1.05 1.15 1.26 1.37 1.48 1.59

75
 Table 11: Analysis of the Ratio of CM:BM
AUTO

Total Cost for CM:BM

Amount of Milk (L)
1:03 1:04 1:05

100 4.68 4.67 15.50

200 2.51 2.50 2.50

300 1.90 1.89 1.88

400 1.51 1.50 1.50

500 1.35 1.34 1.33

600 1.18 1.17 1.16

700 1.11 1.10 1.09

800 1.01 1.00 1.00

Tata 207 BM:CM 1:3

Total Cost per L (Rs.)

Amount
of Milk (L)
100 km 120 km 140 km 160 km 180 km 200 km

100 5.68 6.68 7.68 8.68 9.68 10.68

200 3.01 3.51 4.01 4.51 5.01 5.51

300 2.23 2.57 2.90 3.23 3.57 3.90

400 1.76 2.01 2.26 2.51 2.76 3.01

500 1.55 1.75 1.95 2.15 2.35 2.55

600 1.35 1.51 1.68 1.85 2.01 2.18

700 1.25 1.39 1.54 1.68 1.82 1.96

800 1.14 1.26 1.39 1.51 1.64 1.76

900 1.09 1.20 1.31 1.42 1.53 1.64

1,000 1.01 1.11 1.21 1.31 1.41 1.51

1,100 0.98 1.07 1.16 1.25 1.35 1.44

1,200 0.93 1.01 1.10 1.18 1.26 1.35

1,300 0.91 0.99 1.06 1.14 1.22 1.29

1,400 0.87 0.94 1.01 1.08 1.16 1.23

1,500 0.86 0.92 0.99 1.06 1.12 1.19

(Contd...)

76 The Icfai Journal of Supply Chain Management, Vol. IV, No. 4, 2007
 Table 11: Analysis of the Ratio of CM:BM (...contd)
Tata 207 BM:CM 1:4

Amount Total Cost per L (Rs.)

of Milk (L) 100 km 120 km 140 km 160 km 180 km 200 km
100 5.67 6.67 7.67 8.67 9.67 10.67
200 3.00 3.50 4.00 4.50 9.67 5.50
300 2.22 2.56 2.89 3.22 5.00 3.89
400 1.75 2.00 2.25 2.50 3.56 3.00
500 1.54 1.74 1.94 2.14 2.75 2.54
600 1.34 1.50 1.67 1.84 3.34 2.17
700 1.24 1.38 1.53 1.97 2.00 1.95
800 1.13 1.25 1.38 1.50 1.81 1.75
900 1.08 1.19 1.30 1.41 1.63 1.63
1,000 1.00 1.10 1.20 1.30 1.52 1.50
1,100 0.97 1.06 1.15 1.24 1.40 1.43
1,200 0.92 1.00 1.09 1.17 1.25 1.34
1,300 0.90 0.98 1.05 1.13 1.21 1.28
1,400 0.86 0.93 1.00 1.07 1.15 1.22
1,500 0.85 0.91 0.98 1.05 1.11 1.18
Tata 207 BM:CM 1:5

Amount Total Cost per L (Rs.)

of Milk (L) 100 km 120 km 140 km 160 km 180 km 200 km
100 5.66 6.66 7.66 8.66 9.66 10.66
200 3.00 3.50 4.00 4.50 5.00 5.50
300 2.22 2.55 2.88 3.22 3.55 3.88
400 1.75 2.00 2.25 2.50 2.75 3.00
500 1.53 1.73 1.93 2.13 2.33 2.53
600 1.33 1.50 1.66 1.83 2.00 2.16
700 1.23 1.38 1.52 1.66 1.80 1.95
800 1.12 1.25 1.37 1.50 1.62 1.75
900 1.07 1.18 1.29 1.40 1.51 1.63
1,000 1.00 1.10 1.20 1.30 1.40 1.50
1,100 0.97 1.06 1.15 1.24 1.33 1.42
1,200 0.91 1.00 1.08 1.16 1.25 1.33
1,300 0.89 0.97 1.05 1.12 1.20 1.28
1,400 0.85 0.92 1.00 1.07 1.14 1.21
1,500 0.84 0.91 0.97 1.04 1.11 1.17

(Contd...)

Developing a Cost Analysis Model for the Optimization 77

of Milk Collection Process at Dinshaw’s: A Study
 Table 11: Analysis of the Ratio of CM:BM (...contd)
Tata 407 BM:CM 1:3
Amount Total Cost per L (Rs.)
of Milk (L) 100 km 120 km 140 km 160 km 180 km 200 km
100 5.98 7.04 8.1 10.22 11.28 11.28
200 3.16 3.69 4.22 5.28 5.81 5.81
300 2.33 2.69 3.04 3.75 4.10 4.10
400 1.84 2.10 2.37 2.90 3.16 3.16
500 1.61 1.82 2.03 2.45 2.67 2.67
600 1.40 1.57 1.75 2.10 2.28 2.28
700 1.29 1.44 1.60 1.90 2.05 2.05
800 1.18 1.31 1.44 1.71 1.84 1.84
900 1.12 1.24 1.36 1.59 1.71 1.71
1,000 1.04 1.15 1.25 1.47 1.57 1.57
1,100 1.01 1.11 1.20 1.39 1.49 1.49
1,200 0.95 1.04 1.13 1.31 1.40 1.40
1,300 0.93 1.01 1.10 1.26 1.34 1.34
1,400 0.89 0.97 1.04 1.19 1.27 1.27
1,500 0.88 0.95 1.02 1.16 1.23 1.23
1,600 0.84 0.91 0.96 1.11 1.18 1.18
1,700 0.83 0.90 0.96 1.08 1.15 1.15
1,800 0.81 0.87 0.92 1.04 1.10 1.10
1,900 0.80 0.86 0.91 1.02 1.08 1.08
2,000 0.78 0.83 0.98 0.99 1.04 1.04
2,100 0.77 0.82 0.87 0.97 1.03 1.03
2,200 0.75 0.80 0.85 0.95 0.99 0.99
Tata 407 BM:CM 1:4

Amount Total Cost per L (Rs.)

of Milk (L) 100 km 120 km 140 km 160 km 180 km 200 km
100 5.97 7.03 8.09 9.15 10.21 11.27
200 3.15 3.68 4.21 4.74 5.27 5.80
300 2.32 2.68 3.03 3.38 3.74 4.09
400 1.83 2.09 2.36 2.62 2.89 3.15
500 1.60 1.81 2.02 2.23 2.44 2.66
600 1.39 1.56 1.74 1.92 2.09 2.27
700 1.28 1.43 1.59 1.74 1.89 2.04
800 1.17 1.30 1.43 1.56 1.70 1.83
(Contd...)

78 The Icfai Journal of Supply Chain Management, Vol. IV, No. 4, 2007
 Table 11: Analysis of the Ratio of CM:BM (...contd)
Tata 407 BM:CM 1:4

Amount Total Cost per L (Rs.)

of Milk (L) 100 km 120 km 140 km 160 km 180 km 200 km
900 1.11 1.23 1.35 1.46 1.58 1.70
1,000 1.03 1.14 1.24 1.35 1.46 1.56
1,100 1.00 1.10 1.19 1.29 1.38 1.48
1,200 0.94 1.03 1.12 1.21 1.30 1.39
1,300 0.92 1.00 1.09 1.17 1.25 1.33
1,400 0.88 0.96 1.03 1.11 1.18 1.26
1,500 0.87 0.94 1.01 1.08 1.15 1.22
1,600 0.83 0.90 0.97 1.03 1.10 1.17
1,700 0.82 0.89 0.95 1.01 1.07 1.14
1,800 0.80 0.86 0.91 0.97 1.03 1.09
1,900 0.79 0.85 0.90 0.93 1.01 1.07
2,000 0.77 0.82 0.87 0.91 0.98 1.03
2,100 0.76 0.81 0.86 0.80 0.96 1.02
2,200 0.74 0.79 0.84 – 0.94 0.98
Tata 407 BM:CM 1:5
Amount Total Cost per L (Rs.)
of Milk (L) 100 km 120 km 140 km 160 km 180 km 200 km
100 5.96 7.02 8.08 9.14 10.20 11.26
200 3.15 3.68 4.21 4.74 5.27 5.80
300 2.32 2.67 3.02 3.38 3.73 4.08
400 1.82 2.09 2.35 2.62 2.88 3.15
500 1.59 1.80 2.01 2.22 2.44 2.65
600 1.38 1.56 1.73 1.91 2.09 2.26
700 1.28 1.43 1.58 1.73 1.88 2.03
800 1.16 1.29 1.42 1.56 1.69 1.82
900 1.10 1.22 1.34 1.46 1.57 1.69
1,000 1.03 1.13 1.24 1.34 1.45 1.56
1,100 0.99 1.09 1.19 1.28 1.38 1.47
1,200 0.94 1.03 1.11 1.20 1.29 1.38
1,300 0.92 0.96 1.08 1.16 1.24 1.32
1,400 0.87 0.95 1.03 1.10 1.18 1.25
1,500 0.86 0.93 1.00 1.07 1.14 1.21
1,600 0.83 0.89 0.96 1.03 1.09 1.16
(Contd...)

Developing a Cost Analysis Model for the Optimization 79

of Milk Collection Process at Dinshaw’s: A Study
 Table 11: Analysis of the Ratio of CM:BM (...contd)
Tata 407 BM:CM 1:5

Amount Total Cost per L (Rs.)

of Milk (L) 100 km 120 km 140 km 160 km 180 km 200 km

1,700 0.82 0.88 0.94 1.00 1.07 1.13

1,800 0.79 0.85 0.91 0.97 1.03 1.08
1,900 0.78 0.84 0.89 0.50 1.01 1.06
2,000 0.76 0.81 0.87 0.92 0.97 1.03
2,100 0.76 0.81 0.86 0.91 0.96 1.01
2,200 0.74 0.71 0.83 0.88 0.93 0.98
Tata 709 BM:CM 1:3
Amount Total Cost per L (Rs.)
of Milk (L) 100 km 120 km 140 km 160 km 180 km 200 km
100 7.68 9.08 10.48 11.88 13.28 14.68
200 4.01 4.71 5.41 6.11 6.81 7.51
300 2.90 3.37 3.83 4.30 4.77 5.23
400 2.26 2.61 2.96 3.31 3.66 4.01
500 1.95 2.23 2.51 2.79 3.07 3.35
600 1.68 1.91 2.15 2.38 2.61 2.85
700 1.54 1.74 1.94 2.14 2.34 2.54
800 1.39 1.56 1.74 1.91 2.09 2.26
900 1.31 1.46 1.62 1.78 1.93 2.09
1,000 1.21 1.35 1.49 1.63 1.77 1.91
1,100 1.16 1.29 1.42 1.55 1.67 1.80
1,200 1.10 1.21 1.33 1.45 1.56 1.68
1,300 1.06 1.17 1.28 1.39 1.49 1.60
1,400 1.01 1.11 1.21 1.31 1.41 1.51
1,500 0.99 1.08 1.18 1.27 1.36 1.46
1,600 0.95 1.04 1.13 1.21 1.30 1.39
1,700 0.93 1.02 1.10 1.18 1.26 1.35
1,800 0.90 0.98 1.06 1.13 1.21 1.29
1,900 0.89 0.96 1.04 1.11 1.18 1.26
2,000 0.86 0.93 1.00 1.07 1.14 1.21
2,100 0.85 0.92 0.99 10.50 1.12 1.19
2,200 0.83 0.89 0.95 1.02 1.09 1.15
2,300 0.82 0.88 0.95 1.01 1.07 1.13
2,400 0.80 0.86 0.92 0.98 1.04 1.10
(Contd...)

80 The Icfai Journal of Supply Chain Management, Vol. IV, No. 4, 2007
 Table 11: Analysis of the Ratio of CM:BM (...contd)
Tata 709 BM:CM 1:3

Amount Total Cost per L (Rs.)

of Milk (L) 100 km 120 km 140 km 160 km 180 km 200 km
2,500 0.80 0.86 0.91 0.97 1.02 1.08
2,600 0.78 0.84 0.89 0.94 1.00 1.05
2,700 0.78 0.83 0.88 0.93 0.99 1.04
2,800 0.76 0.81 0.86 0.91 0.96 1.01
3,000 0.75 0.79 0.84 0.69 0.93 0.98
3,100 0.73 0.78 0.82 0.87 0.91 0.96
3,200 0.72 0.76 0.81 0.85 0.90 0.94
3,300 0.71 0.75 0.79 0.84 0.88 0.92
3,400 0.70 0.74 0.78 0.82 0.86 0.91
3,500 0.69 0.73 0.77 0.81 0.85 0.89
3,600 0.68 0.72 0.76 0.80 0.84 0.87

Tata 709 BM:CM 1:4

Amount Total Cost per L (Rs.)

of Milk (L)
100 km 120 km 140 km 160 km 180 km 200 km

100 7.67 9.07 10.47 1.87 13.27 14.47

200 4.00 4.70 5.40 6.10 6.80 7.50
300 2.89 3.36 3.82 4.29 4.76 5.22
400 2.25 2.60 2.95 3.30 3.65 4.00
500 1.94 2.22 2.50 2.78 3.06 3.34
600 1.67 1.90 2.14 2.37 2.60 2.84
700 1.53 1.73 1.93 2.13 2.33 2.53
800 1.38 1.55 1.73 1.90 2.08 2.25
900 1.30 1.45 1.61 1.77 1.92 2.08
1,000 1.20 1.34 1.48 1.62 1.76 1.90
1,100 1.15 1.28 1.41 1.54 1.66 1.79
1,200 1.09 1.20 1.32 1.44 1.55 1.67
1,300 1.05 1.16 1.27 1.38 1.48 1.59
1,400 1.00 1.10 1.20 1.30 1.40 1.50
1,500 0.98 1.07 1.17 1.26 1.35 1.45
1,600 0.94 1.03 1.12 1.20 1.29 1.38
1,700 0.92 1.10 1.09 1.17 1.25 1.34
1,800 0.89 0.97 1.05 1.12 1.20 1.28
(Contd...)

Developing a Cost Analysis Model for the Optimization 81

of Milk Collection Process at Dinshaw’s: A Study
 Table 11: Analysis of the Ratio of CM:BM (...contd)
Tata 709 BM:CM 1:4
Total Cost per L (Rs.)
Amount
of Milk (L) 100 km 120 km 140 km 160 km 180 km 200 km

1,900 0.88 0.95 1.03 1.10 1.17 1.25

2,000 0.85 0.92 0.99 1.06 1.13 1.20
2,100 0.84 0.91 0.98 1.04 1.11 1.18
2,200 0.82 0.88 0.95 1.01 1.08 1.14
2,300 0.81 0.87 0.94 1.00 1.06 1.12
2,400 0.79 0.85 0.91 0.97 1.03 1.09
2,500 0.79 0.85 0.90 0.96 1.01 1.07
2,600 0.77 0.83 0.88 0.93 0.99 1.04
2,700 0.77 0.82 0.87 0.92 0.98 1.03
2,800 0.75 0.80 0.85 0.90 0.95 1.00
3,000 0.74 0.78 0.83 0.88 0.92 0.97
3,100 0.72 0.77 0.81 0.86 0.90 0.95
3,200 0.71 0.75 0.80 0.84 0.89 0.93
3,300 0.70 0.74 0.78 0.83 0.87 0.91
3,400 0.69 0.73 0.77 0.81 0.85 0.90
3,500 0.68 0.72 0.76 0.80 0.84 0.88
3,600 0.67 0.71 0.75 0.79 0.83 0.86
Tata 709 BM:CM 1:5

Amount Total Cost per L (Rs.)

of Milk (L)
100 km 120 km 140 km 160 km 180 km 200 km

100 7.66 9.06 10.46 11.86 13.26 14.56

200 4.00 4.70 5.40 6.10 6.80 7.50
300 2.88 3.35 3.82 4.28 4.75 5.22
400 2.25 2.60 2.95 3.30 3.65 4.00
500 1.93 2.21 2.49 2.77 3.05 3.33
600 1.56 1.90 2.13 2.36 2.6 2.83
700 1.52 1.72 1.92 2.12 2.32 2.52
800 1.37 1.55 1.72 1.90 2.07 2.25
900 1.29 1.45 1.60 1.76 1.91 2.07
1,000 1.20 1.34 1.48 1.62 1.76 1.90
1,100 1.15 1.27 1.40 1.53 1.66 1.78
1,200 1.00 1.20 1.31 1.43 1.55 1.66
(Contd...)

82 The Icfai Journal of Supply Chain Management, Vol. IV, No. 4, 2007
 Table 11: Analysis of the Ratio of CM:BM (...contd)

Tata 709 BM:CM 1:5

Amount Total Cost per L (Rs.)

of Milk (L) 100 km 120 km 140 km 160 km 180 km 200 km

1,300 1.05 1.15 1.26 1.37 1.48 1.59

1,400 1.00 1.10 1.20 1.30 1.40 1.50
1,500 0.97 1.07 1.16 1.25 1.35 1.44
1,600 0.93 1.02 1.11 1.20 1.28 1.37
1,700 0.92 1.00 1.08 1.16 1.25 1.33
1,800 0.88 0.96 1.04 1.12 1.20 1.27
1,900 0.87 0.95 1.02 1.09 1.17 1.24
2,000 0.85 0.92 0.99 1.06 1.13 1.20
2,100 0.84 0.90 0.97 1.04 1.10 1.17
2,200 0.81 0.88 0.94 1.00 1.07 1.13
2,300 0.81 0.87 0.93 0.99 1.05 1.11
2,400 2.79 0.85 0.90 0.96 1.02 1.08
2,500 0.78 0.84 0.89 0.95 1.01 1.06
2,600 0.77 0.82 0.87 0.93 0.98 1.03
2,700 0.76 0.81 0.86 0.92 0.97 1.02
2,800 0.75 0.80 0.85 0.90 0.95 1.00
3,000 0.73 0.78 0.82 0.87 0.92 0.96
3,100 0.72 0.76 0.81 0.85 0.90 0.94
3,200 0.70 0.75 0.79 0.84 0.88 0.92
3,300 0.59 0.74 0.78 0.82 0.86 0.91
3,400 0.68 0.72 0.76 0.81 0.85 0.89
3,500 0.67 0.71 0.75 0.79 0.83 0.87
3,600 0.66 0.70 0.74 0.78 0.82 0.86

How to Use the Model

The model can be used to compare the various combinations of amount of milk and type
of vehicle used along with distance to be traveled, to come up with an alternative which
gives the minimum cost per liter of milk.
For instance, assume that Tata 207 is being engaged for procuring milk of 900 liter at
BM:CM of 1:5, covering 100km. If 100 liters of milk is available in next 20 kms,
amounting to 1000 liters the cost of procuring will move from Rs. 1.07 to 1.10 per liter.
If Tata 407 is engaged then the cost would increase from the current Rs. 1.07 to Rs. 1.13,
which is greater than the case of Tata 207. Tata 207 happens to be economical compared
to Tata 407 upto 1,200 liters for 120 km. At 1,300 liters the procurement cost per liter is

Developing a Cost Analysis Model for the Optimization 83

of Milk Collection Process at Dinshaw’s: A Study
less for Tata 407 than Tata 207. Hence, the truck 207 can be continued until the
availability of milk raises by 400 liters in that 20 km.
Each alternative in different scenarios can be compared based upon distance, CM:BM,
amount of milk available, etc., using CAM.

Conclusion
The emphasis of the study is on the optimization of the milk collection process so as
to bring down the transportation cost as well as the total overhead costs. For this
purpose, the following alternatives were probed:
• Vehicle owning/renting cost analysis;
• Combining several routes to reduce the overheads;
• Expanding the existing routes as per the availability of milk; and
• Developing a “Cost Analysis Model”
Various alternatives mentioned in the preceding chapters were thoroughly
researched and the following results were obtained.
• It will be profitable for the company to think on the lines of owning the vehicle
rather than hiring it. The expenditure saved can be to the tune of almost
Rs. 70,000 per year. If the company can control the loss due to driver absenteeism
and vehicle breakdown well below Rs. 70,000 per annum, then this alternative is
definitely economically viable for the company,.
• The company should adopt extensive vendor development strategies, which would
enable the company to generate a larger volume of supply. This increased supply
would translate into higher profits due to economy of scale. The company should
explore areas surrounding the DMCs which are not covered under the DMC to assess
the potential supply and then concentrate their efforts on these areas. These
measures would include employing a certain number of additional smaller vehicle,
which would complete a smaller route within the intermediate time gap.
The feasibility of such a measure would depend on the extent of additional supply
available as well as the spare capacity available in the larger vehicle. 

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Developing a Cost Analysis Model for the Optimization 85

of Milk Collection Process at Dinshaw’s: A Study