A Project

Titled

PRODUCTION FUNCTON OF A
COMPANY

Under the esteemed Guidance of

Prof. Dr. A.Anuradha
Faculty, VITBS
Chennai.

Submitted by
SAI CHARAN MOTURI -16MBA1025
VIVEK DAYAL. S - 16MBA1026
SRIRAM. T. K- 16MBA1027
 CONTENTS

1. Objective
2. Introduction
3. Review Of Literature
4. Research Methodology
5. Companies Profile
6. Analysis
7. Findings
8. Recommendations
9. Conclusion
 Bibliography
 OBJECTIVE

To Analyse the Production Function of a company by compiling

real time data’s obtained from 5 companies.

Main Aspects are to:

1. Understand different types of ownership of a firm

2. Define short-run and long-run production function
3. Understand the relationship between inputs and output in the
short run with the help of law of variable proportions
4. Understand the relationship between inputs and output in the
long run with the help of law of returns to scale
5. Define Linear production function
6. Clarify all these concepts with the help of a case study
 INTRODUCTION

Production is the result of co-operation of four factors of production viz.,

land, labour, capital and organization. This is evident from the fact that no
single commodity can be produced without the help of any one of these four
factors of production. Therefore, the producer combines all the four factors of
production in a technical proportion. The aim of the producer is to maximize his
profit. For this sake, he decides to maximize the production at minimum cost by
means of the best combination of factors of production.

Production function Definition:

Production function refers to the functional relationship between the

quantity of a good produced (output) and factors of production (inputs).

Mathematically, such a basic relationship between inputs and outputs may be

expressed as

Q = f( L, C, N )

Where,

Q = Quantity of output,

L = Labour,

C = Capital,

N = Land.

Hence, the level of output (Q), depends on the quantities of different inputs (L,
C, N) available to the firm.
 FEATURES OF PRODUCTION FUNCTION

Following are the main features of production function

1. SUBSTITUTABILITY:
The factors of production or inputs are substitutes of one another which make it
possible to vary the total output by changing the quantity of one or a few inputs, while the
quantities of all other inputs are held constant. It is the substitutability of the factors of
production that gives rise to the laws of variable proportions.

2. COMPLEMENTARITY:
The factors of production are also complementary to one another, that is, the two or
more inputs are to be used together as nothing will be produced if the quantity of either of the
inputs used in the production process is zero.

The principles of returns to scale is another manifestation of complementarity of

inputs as it reveals that the quantity of all inputs are to be increased simultaneously in order
to attain a higher scale of total output.

3. SPECIFICITY:
It reveals that the inputs are specific to the production of a particular product.
Machines and equipment’s, specialized workers and raw materials are a few examples of the
specificity of factors of production. The specificity may not be complete as factors may be
used for production of other commodities too. This reveals that in the production process
none of the factors can be ignored and in some cases ignorance to even slightest extent is not
possible if the factors are perfectly specific.

Production involves time; hence, the way the inputs are combined is determined to a
large extent by the time period under consideration. The greater the time period, the greater
the freedom the producer has to vary the quantities of various inputs used in the production
process.

In the production function, variation in total output by varying the quantities of all
inputs is possible only in the long run whereas the variation in total output by varying the
quantity of single input may be possible even in the short run.
 Types of Production functions

1. Cobb Douglas Production function

Cobb-Douglas production function refers to the production function in which

one input can be substituted by other but to a limited extent. For example, capital and
labour can be used as a substitute of each other, but to a limited extent only.

2. Leontief Production Function:

Leontief production function uses fixed proportion of inputs having no

substitutability between them. It is regarded as the limiting case for constant elasticity
of substitution.

3. CES Production Function:

CES stands for constant elasticity substitution. CES production function
shows a constant change produced in the output due to change in input of production.

Linear Production Function

The linear production function is the simplest form of a production

function: it describes a linear relation between the input and the output.

One Input

If the function has only one input, the form can be represented using the
following formula:

y=ax

For example, if a worker can produce 10 chairs per day, the production function
would be:

Q = 10 L
This function can be represented in the following chart:

The number 10 represents the productivity of labor. If the worker increase it’s
productivity, because he took a course on how to produce chairs more quickly, the
new production function would be:

Q = 12 L

Multiple Inputs

If the function has more than one input:

y = a1 x1 + … + an xn

all inputs are perfect substitutes.

Isoquant

Consider the following linear production function:

Q=K+L

This function, has the following isoquant:

Please note the lack of a curve in the chart: this show us that the inputs are
perfect substitutes

Returns to Scale

 Returns to scale measure how much additional output will be obtained when
all factors change proportionally.

 If the output increases more than proportionally, we say we have increasing

returns to scale. If the output increases less than proportionally, we say we
have decreasing returns to scale. If the output changes proportionally, we
say that the production function has constant returns to scale.

 In the case of the linear production function, the returns to scale

are constant:

 To check how much will output increase when all factors increase
proportionally, we multiply all inputs by a constant factor c. Y’ represents
the new output level.

Y = aK + bL
Y’ = a (cK) + b (cL)
= c (aK + bL)
=cY
If all inputs change by a factor of c, output changes by c. The linear production
function has constant returns to scale.

Elasticity of substitution
The elasticity of substitution is a measure of how easily can be one factor can be
substituted for another. Mathematically, it is defined as the percentage change in
factor proportions divided the change in the MRTS (marginal rate of technical
substitution), but we will try to understand it in a more intuitive way.

Please take a look to the following isoquant:

 At the point a, the slope of the tangent measures the marginal rate of
substitution (MRTS), or how much L can we decrease if we increase K. If we
move to the point b, the MRTS increases. This means, that, as we move to
the left, we need to add more K for every worker we subtract.

 The relation K/L can bee seen by the slope of the straight lines that go from
the origin to the points a or b.

 The MRTS can be seen by the slope of the tangent to the isoquant.

 The elasticity of substitution measures the relation between the change in

K/L with the change in the MRTS.

 If an isoquant is very curved, the change in the MRTS will be very high in
relation to the change in K/L. The elasticity of substitution will be lower: it
is very hard to replace one input with another.
  Then: if the isoquant is more curved, the elasticity of substitution will
be low.

 In the case of the linear production function, the MRTS remains constant in
the whole range. So the change in the MRTS will be always 0; the
denominator is 0.

 The change in K/L is not 0. So, we can deduct that the elasticity of
substitution, for a linear production function, is ∞.

 This conclusion in very straightforward: the inputs are perfect substitutes.

Linear production function examples

- A worker that produces 500 pizzas per day: Y = 500L

- A worker that produces 10 chairs per day. Y = 10L
- A robot that produces 50 chairs per day and a worker that produces 10 chairs per
day. Y = 50R + 10L
- A hard drive that can store 500 GB and a hard drive that can store 1000GB. Take
into account that, in this case, the production is data storage. The production
function can be: Y = 500GB * A + 1000GB * B
 LITERATURE REVIEW

Human Capital Production Function

By Marko Kesti University of Lapland 1, Nov 2013

In many organizations the labour workforce is the single most important

factor for business performance, but also the most difficult to analyse. Traditional
analysing and forecasting methods do not explain the phenomenon how human capital
affects business economics, and therefore they are not too widely used in strategic
management. This article introduces Human Capital Production Function (HCPF) as
an analysing method that combines the tangible and intangible assets of human capital
with financial scorecards in a way that explains the meaning of human resources for
business performance. Intangible assets can be measured using tacit signal method
which can be connected to organization system intelligence.

The Short-Run Production Function

By Tim Tregarthen Page No. 441

A firm uses factors of production to produce a product. The relationship

between factors of production and the output of a firm is called a production function
Our first task is to explore the nature of the production function. Consider a
hypothetical firm, Acme Clothing, a shop that produces jackets. Suppose that Acme
has a lease on its building and equipment. During the period of the lease, Acme’s
capital is its fixed factor of production. Acme’s variable factors of production include
things such as labor, cloth, and electricity. In the analysis that follows, we shall
simplify by assuming that labor is Acme’s onlyvariable factor of production.

Microeconomicsby David BesankoPage 202

The production function is a mathematical representation of the various

technological recipes from which a firm can choose to configure its production
process. In particular, the production function tells us the maximum quantity of output
the firm can produce given the quantities of the inputs that it might employ. We will
write the production function this way: (6.1) where Q is the quantity of output, L is
the quantity of labor used, and K is the quantity of capital employed. This expression
tells us that the maximum quantity of output the firm can get depends on the
quantities of labor and capital it employs. We could have listed more categories of
inputs, but many of the important trade-offs that real firms face involve choices
between labor and capital (e.g., robots and workers for semiconductor firms).
Moreover, we can develop the main ideas of production theory using just these two
categories of inputs.

Production Function Estimation with Measurement Error in Inputs

By Jan De Loecker Princeton University and KU Leuven NBER and CEPR

(May 12, 2016)

The measurement of capital is one of the nastiest jobs that economists have set
to statisticians. (Hicks (1981) p. 204)

Production functions are a central component in a variety of economic

analysis. However, these production functions often first need to be estimated using
data on individual production units. Measurement of capital assets poses a problem
for estimation of production functions. More than any other input in the production
process, there is reason to believe that there are severe errors in the recording of a
producer’s capital stock. These errors are likely to be large, and are extremely
difficult to reduce through improved collection efforts since firms themselves have
difficulty evaluating their capital stock. Thus, when estimating production functions,
we need to account for the ubiquity of measurement error in capital stock. This paper
shows that commonly used estimation techniques in the productivity literature fail in
presence of plausible amounts of measurement error in capital. We show that using
both investment and the book value of capital can correct the presence of
measurement error in the capital stock. This idea follows the standard insight of
relying on two measures of the same underlying (true) variable of interest, and using
one of these measures as an instrument for the other. The presence of substantial, or at
least the potential of, measurement error in capital is reflected in a well-documented
fact that when estimating production functions with firm fixed-effects, capital
coefficients are extremely low, and sometimes even negative. Griliches and Mairesse
(1998) state ‘’In empirical practice, the application of panel methods to micro-data
produced rather unsatisfactory results: low and often insignificant capital coefficients
and unreasonably low estimates of returns to scale.”. One obvious other interpretation
is that capital is a fixed factor of production, and therefore the variation left in the
time series is essentially noise.
 RESEARCH METHODOLOGY
REGRESSION & COMPARATIVE RATIO ANALYSIS

Theory of Regression Analysis

Regression analysis is a statistical tool for the investigation of

relationshipsbetween variables. Usually, the investigator seeks toascertain the
causal effect of one variable upon another—the effect ofa price increase upon
demand, for example, or the effect of changesin the money supply upon the
inflation rate.

To explore such issues,the investigator assembles data on the underlying

variables ofinterest and employs regression to estimate the quantitative effect
ofthe causal variables upon the variable that they influence. Theinvestigator also
typically assesses the “statistical significance” of theestimated relationships,
that is, the degree of confidence that thetrue relationship is close to the
estimated relationship.

What is Regression?

 Regression is a statistical analysis that attempts to predict the effect of

one or more variables on another variable. Regression analysis is often
used in the business and investment world to attempt to predict the effect
of certain inputs on an output.
 For example, an analyst may want to try to predict the effect of the price
of steel on car sales, or a company may want to see if movement in the
GDP can predict its sales.
 The variable being influenced is called the dependent variable, because
its value depends on the other variables. The other variables are called
independent variables.
 A linear regression has one independent variable. When there are more
than one independent variables, it is multiple regression.
 An example of multiple regression would be General Motors seeking to
learn the relationship of interest rates, the price of steel, the price of oil,
and national income on its stock price.
  Regression is also used to determine covariance and correlation, which
are variables used in the investment world to show how much two stocks
tend to move in the same direction, or in different directions. This is
important information for investors who want to diversify to stocks that
are not correlated to the ones they already own.

Simple Linear Regression

The X Variable is sometimes called the independent variable and the Y

variable is called the dependent variable Simple Linear regression plots one
independent variable x against one dependent variable y. Technically the
regression analysis the independent variable is usually called the predictor
variable and the dependent variable is called criterion variable. However, many
people just call them the independent and dependent variables, More advanced
regression techniques (like multiple regression use multiple independent
variables.

Regression line Equation

You might remember from algebra that a line is identified by its slope
(the angle of the line describing the change inY per unit X) and intercept (where
the line crosses the Y axis). Regression describes the relation between X and
Ywith just such a line. When discussing our line, lety represent the predicted
value of Y,a represent the intercept of the best fitting line, andb represents the
slope of the line.
Thus, the regression model is denoted:
ya bx

But how do we identify the best line for the data? If all data points were
to fall on such a line, identifying the slopeand intercept would be easy.
However, because statistical data has random scatter, identifying a good line is
not atrivial matter.The goal it to determine a line that minimizes the sum of the
squared residuals. This line is called the least squaresline. The slope(b) of the
least squares line is given by:
whereSSXY is the sum of the cross-products and SSXX is the sum of the
squares for variable X.
The intercept of the least squares line is given by the equation:

ay bx

wherey is the average value of Y, b is the slope, and x is the average value of X.

COMPARITIVE ANALYSIS

Comparison is a fundamental principle of science as well as a basic element

of everyday life. It is a spontaneous mental process, so that “[t]thinking
without comparison is unthinkable” (Swanson, 1971, p. 145). Daily we
compare lines in shops (shorter or longer), the weather from one day to the
next (better or worse), the size of clothing articles (larger or smaller), and the
arrival of trains (earlier or later).

Simple terms like “densely populated” make implicit comparisons (Smelter,

1976, p. 3). In the social sciences, researchers compare the quality of life
between cities, the stability of governments across countries, economic
behavior between social groups, and the impact of rituals on social cohesion.
With classification (Bailey, 1994, in this same series), comparison is one of the
crucial conceptual processes making the world intelligible.

1-1. Identify the outcome that you are interested in and the cases that
exemplify this outcome. Learn as much as you can about these “positive”
cases.
1-2. Based on #1, identify negative cases—those that might seem to be
candidates for the outcome but nevertheless failed to display it (“negative”
cases). Together #1 and #2 constitute the set of cases relevant to the
analysis.
1-3. Again based on #1, and relevant theoretical and substantive knowledge,
identify the major causal conditions relevant to the outcome. Often, it is
 useful to think in terms of different causal “recipes”—the various
combinations of conditions that might generate the outcome.
1-4. Try to streamline the causal conditions as much as possible. For
example, combine two conditions into one when they seem
“substitutable.”

Comparitive Analysis Equation

((CURRENT YEAR-BASEYEAR)/BASEYEAR))*100
 COMPANIES PROFILE
ASHOK LEYLAND

Ashok Leyland is an Indian automobile manufacturing company

based in Chennai, India. Founded in 1948, it is the 2nd largest
commercial vehicle manufacturer in India, 4th largest manufacturer of
buses in the world and 16th largest manufacturer of trucks globally.
Operating six plants, Ashok Leyland also makes spare parts and engines
for industrial and marine applications.

It sells about 60,000 vehicles and about 7,000 engines annually. It

is the second largest commercial vehicle company in India in the medium
and heavy commercial vehicle (M&HCV) segment with a market share of
28% (2007–08). With passenger transportation options ranging from 19
seaters to 80 seaters, Ashok Leyland is a market leader in the bus
segment. The company claims to carry more than 60 million passengers a
day, more people than the entire Indian rail network. In the trucks
segment Ashok Leyland primarily concentrates on the 16 ton to 25 ton
range of trucks.

However Ashok Leyland has presence in the entire truck range

starting from 7.5 tons to 49 tons. With a joint venture with Nissan
Motors of Japan the company made its presence in the Light Commercial
Vehicle (LCV) segment (<7.5 tons).

FORCE MOTORS

Force Motors, formerly Bajaj Tempo, is an Indian manufacturer

of three-wheelers, multi-utility and cross country vehicles, light
commercial vehicles, tractors, buses and heavy commercial vehicles. It
was originally named Firodia Tempo Ltd. and later after partial
acquisition by Bajaj Auto as Bajaj Tempo Ltd.

HYUNDAI MOTORS

An automotive manufacturer headquartered in Seoul, South Korea.

The company was founded in 1967 and, along with its 32.8% owned
subsidiary, Kia Motors, together comprise the Hyundai Motor Group,
which is the world's fifth largest automaker based on annual vehicle sales
 in 2012. In 2008, Hyundai Motor (without Kia) was ranked as the eighth
largest automaker. As of 2012, the Company sold over 4.4 million
vehicles worldwide in that year, and together with Kia, total sales were
7.12 million.

Hyundai is currently the fourth largest vehicle manufacturer in the

world. Hyundai operates the world's largest integrated automobile
manufacturing facility in Ulsan, South Korea, which has an annual
production capacity of 1.6 million units. The company employs about
75,000 people worldwide. Hyundai vehicles are sold in 193 countries
through some 5,000 dealerships and showrooms.

On 4 November 2015, Hyundai announced Genesis Motors as a

new luxury car brand. Hyundai is currently the fourth largest vehicle
manufacturer in the world. Hyundai operates the world's largest
integrated automobile manufacturing facility in Ulsan, South Korea,
which has an annual production capacity of 1.6 million units. The
company employs about 75,000 people worldwide. Hyundai vehicles are
sold in 193 countries through some 5,000 dealerships and showrooms.

On 4 November 2015, Hyundai announced Genesis Motors as a

new luxury car brand.

BOSCH MOTORS

Robert Bosch is one of the finest companies out of the

German multinational engineering and electronics company and is head
quartered in Gerlingen, near Stuttgart, Germany.It also makes world class
automobiles since 1990’s. It is the world's largest supplier of
automobile.The company was founded by Robert Bosch in Stuttgart in
1886. Bosch is 92% owned by Robert Bosch Stiftung.

Bosch's core products are automotive components

(including brakes, controls, electrical drives, electronics, fuel systems,
generators, starter motors and steering systems), industrial products
(including drives and controls, packaging technology and consumer
goods) and building products (including household appliances, power
tools, security systems and thermotechnology).

Source: Wikipedia & Prowess

 FINDINGS
GRAPHS ON COMPARITIVE ANALYSIS AND REGRESSIONRESULTS

HONDA CARS

RAW MATERIALS CONSUMED y = 112.2x - 73.98

R² = 1
300

250

200

150

100

50

0
0 0.5 1 1.5 2 2.5 3 3.5
-50

-100

STORES CONSUMED y = 92.26x - 64.76

R² = 1
250

200

150

100

50

0
0 0.5 1 1.5 2 2.5 3 3.5
-50

-100

Inference:

On the analysis of the graph of Honda basis of comparative analysis, it

states that both raw material consumed and the stores consumed has been in
an increasing note with regards to the previous year.
 ASHOK LEYLAND

y = 5.8618x - 31.142
ANALYSIS ON FOREIGNS AND CASTINGS R² = 0.0587
30

20

10

0
-2 -1 0 1 2 3 4 5 6 7
-10

-20

-30

-40

-50

-60

PLATES AND STEEL

500
y = 71.44x - 21.476
400 R² = 0.667

300

200

100

0
-2 -1 0 1 2 3 4 5 6 7
-100

-200
 TYRES TUBES FLAPS
20
15
10
5
y = 2.4043x - 14.28
0
R² = 0.0208
-2 -1 -5 0 1 2 3 4 5 6 7

-10
-15
-20
-25
-30
-35

OTHERS
20

10

0
-2 -1 0 1 2 3 4 5 6 7
-10

-20

y = -6.7409x + 10.381
-30
R² = 0.2947

-40

Inference:

Comparative analysis graph on the consumption of raw materials, it

states that foreign and castings has decreased and increased, plant and steel is
on increasing note, tires and tubes had a great dip and rise in consumption,
other raw materials required has decreased very drastically.
 BOSCH

ANALYSIS ON RAW MATERIALS

140
120 y = 21.078x - 12.974
R² = 0.5227
100
80
60
40
20
0
-2 -1 0 1 2 3 4 5 6 7
-20
-40
-60

Inference:

It states that the consumption of raw materials in bosch is on the increasing side.
 ANALYSIS

HONDA CARS INDIA LTD

Shares of Indigenous & Imported Raw Material
Honda Cars India Ltd.

Mar 2012 (12 mths) Mar 2013 (12 mths) Mar 2014 (12 mths)

Indicators Value Total Value Total Value Total

(Rs. Million) consumption (Rs. Million) consumption (Rs. Million) consumption
(share in total) (share in total) (share in total)

Raw materials consumed 26,255.00 100 36,291.60 100 65,749.20 100

Indigenous 15,082.40 57.45 23,617.90 65.08 49,669.60 75.54
Imported 11,172.60 42.55 12,673.70 34.92 16,079.60 24.46
-
Stores & spares consumed 300 100 382.5 100 659.3 100
Indigenous 247.4 82.47 315.8 82.56 538.7 81.71
Imported 52.6 17.53 66.7 17.44 120.6 18.29

COMPARITIVE ANALYSIS FOR HONDA CARS:

% in % in Details
2013 2014
38.22 150.42 raw materials consumed
56.59 229.32 Indigenous
13.43 43.91 Imported
13.28 31.48 total cost indigenous
-17.13 -42.12 total cost imported
27.5 119.76 stores and spares consumed
27.64 117.75 stores and spares indigenous
26.8 129.27 stores and spares imported
-84.67 -0.92 stores and spares consumed total cost
-0.51 4.33 stores and spares consumed total cost imported

PREDICTIVE ANALYSIS FOR HONDA CARS

REGRESSION EQUATION IS Y=A+BX

WHERE A=-4414.801734 & B=106.4219653

SUBSTITUTING Y as RAW MATERIALS USED WHEN X as NUMBER OF STORES KNOWN.

 ASHOK LEYLAND
Raw material Measure Mar-11 Mar-12 Mar-13 Mar-14 Mar-15
(Rs. Million - Non-Annualised) 12 mths 12 mths 12 mths 12 mths 12 mths
Bars Quantity 5,664.00
Unit Tonnes
Rs. Million 288.4 @ @ @ @
Forgings & Castings Rs. Million 6,933.70 6,531.30 4,878.80 3,359.30 8,392.60
Others Rs. Million 62,970.50 70,082.50 59,390.40 45,567.90 60,540.80
Plates, Sheets & Angles Quantity 46,486.00
Unit Tonnes
Rs. Million 1,852.10 2,748.90 * 4,991.90 * 3,727.00 * 7,581.00 *
Steel Tubes Quantity 296.08
Unit 000 metres
Rs. Million 37.6 @ @ @ @
Tyres, Tubes & Flaps Quantity 858,590.00
Unit Sets
Rs. Million 8,585.40 9,167.30 6,136.10 6,446.50 9,751.90

* Includes others
@ Included elsewhere

COMPARITIVE ANALYSIS FOR ASHOK LEYLAND

% in % in % in % in
2012 2013 2014 2015 Details
-
-5.80354 -29.6364 51.5511 21.04071 foreigns and castings
-
11.29418 -5.68536 27.6361 -3.85847 Others
plates sheets and
48.42071 169.5265 101.231 309.3192 angles
-
6.777786 -28.5287 24.9132 13.58702 tyres tubes flaps

ENERGY CONSUMPTION OF ASHOK LEYLAND

Energy type Measure Mar-07

(Rs. Million - Non-Annualised) 12 mths
Electricity Quantity 1,900,000.00
Unit Kwh
 BOSCH LTD
BOSCH PLANT LOCATIONS

Location District State Product

Bangalore Bangalore Karnataka Fuel Injection Pumps

Injectors, Nozzles& Nozzle Holders

Portable Electric Power Tools
Naganathapura Bangalore Karnataka Fuel Injection Pumps

Injectors, Nozzles& Nozzle Holders

Portable Electric Power Tools
Nasik Nashik Maharashtra Fuel Injection Pumps

Injectors, Nozzles& Nozzle Holders

Portable Electric Power Tools
Sitapura Jaipur Rajasthan Fuel Injection Pumps

Injectors, Nozzles& Nozzle Holders

Portable Electric Power Tools

Bosch Ltd.

Dec 2012 (12 mths) Dec 2013 (12 mths) Mar 2015 (15 mths)

Indicators Value Total Value Total Value Total

(Rs. Million) consumption (Rs. Million) consumption (Rs. Million) consumption
(share in total) (share in total) (share in total)

Raw materials consumed 28,843.00 100 30,600.00 100 40,335.00 100

Indigenous 17,017.00 59 18,360.00 60 25,411.00 63
Imported 11,826.00 41 12,240.00 40 14,924.00 37
-
Stores & spares consumed
Indigenous
Imported
-
Others
Indigenous
Imported

COMPARITIVE ANALYSIS FOR BOSCH LTD

% IN 2013 % IN 2014
6.091599348 0
7.892107892 38.404139
 3.500761035 21.928105

Bosch Ltd.

Raw material Measure Dec-10 Dec-11 Dec-12 Dec-13 Mar-15

(Rs. Million - Non-Annualised) 12 mths 12 mths 12 mths 12 mths 12 mths
Components Rs. Million 19,754.10 24,599.70 23,902.00 23,182.00 38,719.00
Others Rs. Million 1,768.70 2,622.40 3,747.00 6,631.00
Steel Quantity 1,821.00 3,688.00
Unit Tonnes Tonnes
Rs. Million 129.1 206.6 298 119

COMPARITIVE ANALYSIS FOR BOSCH LTD ON RAW MATERIALS

%IN2011 %IN2012 %IN2013 %IN2014

24.52959 20.99767 17.35285 96.00488
48.26709 111.8505 274.9081 -100
60.03098 130.8288 -7.82339 -100

PREDECTIVE ANALYSIS
REGRESSION EQUATION IS

a) Y=A+BX

HERE A=25338.00035

B=-0.3308

THEREFORE SUBSTITUTE THIS VALUE TO Y as NUMBER OF COMPONENTS USED WHEN X as OTHER

RAW MATERIALS ARE FIXED.

b) Y=A+BX
HERE A=23075.5
B=3.9381

THEREFORE SUBSTITUTE THIS VALE IN THE EQUATION TO FIND OUT THE NUMBER OF COMPONENTS
USED WHEN STEEL IS USED.
 FORCE MOTORS

PLANT LOCATIONS
Force Motors Ltd.

Year-ended : March 2014

Location District State Product

Pithampur Dhar Madhya Pradesh Auto Components

Automobiles

Moulds, Dies, Press Tools, Jigs & Fixtures

Pune Pune Maharashtra Auto Components
Automobiles

Moulds, Dies, Press Tools, Jigs & Fixtures

Force Motors Ltd.

Raw material Measure Mar-10 Mar-11 Mar-12 Mar-13 Mar-14

(Rs. Million - Non-
Annualised) 12 mths 12 mths 12 mths 12 mths 12 mths
1,653,357.0 2,440,403.0
Castings & Forgings Quantity 0 0
Unit Numbers Numbers
Rs.
Million 413.3 595.7 776 739.8 633.1
Rs. 12,988.5 12,619.4 12,561.4
Components Million 5,607.80 8,964.90 0 0 0
Steel & Other Metals
(Metres) Quantity 77,703.00 101,920.00
Unit Metres Metres
Rs.
Million @ @ @ @
Steel & Other Metals
(Tonnes) Quantity 9,779.00 15,415.00
Unit Tonnes Tonnes
Rs.
Million 684.9 892.6 * 1,165.30 * 1,032.80 * 946.2 *
 COMPARITIVE ANALYSIS OF FORCE MOTORS
%IN2011 %IN2012 %IN2013 %IN2014
44.13259 87.75708 78.99831 53.18171
59.86483 131.6149 125.033 123.9987
31.16611 -100 -100 -100
57.6337 -100 -100 -100
30.32559 70.14163 50.79574 38.15155

PREDICTIVE ANALYSIS
REGRESSION EQUATION IS

a) Y=A+BX

HERE VALUE OF A=316.164

B=16.7127

THEREFORE SUBSTITUTING THESE VALUES IN THE EQUATION WE GET Y as THE TOTAL NUMBER OF
RAW MATERIALS USED as X WHEN CASTINGS IS USED.

b) Y=A+BX

HERE VALUE OF A=204.8155

B=11.4729

THEREFORE SUBSTITUTING THESE VALUES IN THE EQUATION WE GET THE TOTAL NUMBER OF RAW
MATERIALS as Y USED WHEN STEEL IS USED AS RAW MATERIALS as X.

Force Motors Ltd.

Mar 2012 (12 mths) Mar 2013 (12 mths) Mar 2014 (12 mths)

Indicators Value Total Value Total Value Total

(Rs. consumption (Rs. consumption (Rs. consumption
Million) Million) Million)
(share in total) (share in total) (share in total)

Raw materials consumed 14,929.90 100 14,392.00 100 14,140.70 100

Indigenous 11,604.20 77.72 11,333.80 78.75 9,960.70 70.44
Imported 3,325.70 22.28 3,058.20 21.25 4,180.00 29.56
-
Stores & spares
consumed
Indigenous
Imported

COMPARITIVE ANALYSIS OF FORCE MOTORS

%IN2013 %IN2014
-
3.602837259 -1.746109
-
2.330190793 -12.11509
-8.04341943 36.681708
 HYUNDAI MOTOR INDIA LTD.

Plant locations
Hyundai Motor India Ltd.

Year-ended : March 2012

Location District State Product

Irungattukkottai Kancheepuram Tamil Nadu Passenger Cars

Raw Material Details

Hyundai Motor India Ltd.

Raw material Measure Mar-10 Mar-11 Mar-12 Mar-13 Mar-14

(Rs. Million - Non-Annualised) 12 mths 12 mths 12 mths 12 mths 12 mths
Aluminium Quantity 5,714.00 6,033.00
Unit Tonnes Tonnes
Rs. Million 561.3 698.8
Other Components Rs. Million 151,106.80 150,453.20
Paints Rs. Million 2,536.90 2,588.20
Raw Materials Rs. Million 181,484.10 205,510.40 206,271.30
Steel Coils Quantity 88,077.00 87,575.00
Unit Tonnes Tonnes
Rs. Million 4,270.30 4,114.70

Shares of Indigenous & Imported Raw Material

Hyundai Motor India Ltd.

Mar 2012 (12 mths) Mar 2013 (12 mths) Mar 2014 (12 mths)

Indicators Value Total Value Total Value Total

(Rs. Million) consumption (Rs. Million) consumption (Rs. Million) Consumption
(share in total) (share in total) (share in total)

Raw materials consumed 183,870.80 100 206,966.00 100 207,810.00 100

Indigenous 142,740.00 77.63 152,881.60 73.87 160,123.80 77.05
Imported 41,130.80 22.37 54,084.40 26.13 47,686.20 22.95
-
Stores & spares consumed 2,386.60 100 1,455.70 100 1,538.60 100
Indigenous 2,141.50 89.73 1,287.00 88.41 1,410.40 91.67
Imported 245.1 10.27 168.7 11.59 128.2 8.33

COMPARATIVE ANALYSIS OF HYUNDAI MOTORSLTD.

%IN2013 %IN2014 DETAILS
RAWMATERIALS
12.56055883 13.019577 CONSUMED
7.104946056 12.178646 INDIGENOUS
31.49367384 15.937935 IMPORTED
-
39.00527948 -35.53172 STORES AND SPARES
-
39.90193789 -34.13962 INDIGENOUS
-
31.17095063 -47.69482 IMPORTED

PREDICTIVE ANALYSIS
REGRESSION EQUATION IS

Y=A+BX

WERE,

THE VALUE OF A=192145.6

B=10.180941

THEREFORE SUBSTITUTING THESE VALUES IN THE EQUATION YOU CAN FIND THE TOTAL NUMBER
OF RAW MATERIALS as Y CONSUMED WHEN THE STORES USED as X IS KNOWN.
 RECOMMENDATIONS

 The LINEAR FUNCTION is popular in economics. It is attractive because

it is simple and easy to handle mathematically. It has many important
applications.
 Linear functions are those whose graph is a straight line.
 A linear function has the following form y = f(x) = a + bx
 A linear function has one independent variable and one dependent variable.
The independent variable is x and the dependent variable is y.
 a is the constant term or the y intercept. It is the value of the dependent
variable when x = 0.
 b is the coefficient of the independent variable. It is also known as the slope
and gives the rate of change of the dependent variable.

Graphing a linear function

To graph a linear function:

1. Find 2 points which satisfy the equation

2. Plot them

3. Connect the points with a straight line

 CONCLUSION

In this study an attempt was made to explain the short-run

fluctuations in the number of raw materials consumed and other factors
in raw materials an attempt was made to develop a model which was
capable of predicting these variables.

In order to use the model of the short-run demand for raw

materials developed in this study for prediction purposes, for example, it
would be necessary to know the expected future changes in output in
advance, and at least for those industries in which expectations appear to
be quite accurate (and not based merely on past output behaviour)this
would require knowledge of the industry which an economic forecaster
(as opposed to an individual manager in the industry) does not have at
his disposal.

Also, in this study an effort was made to use as disaggregate and

homogeneous a body of data as possible to lessen the problems of
aggregating vastly dissimilar firms, but to forecast aggregate
employment from the three-digit industry level would be a tremendous
task, even if all of the necessary data were available. For forecasting
aggregate employment more aggregated data would have to be used.

Nevertheless, if the model developed in this study can be taken to

be avalid representation of the structure of the employment sector of
the economy with respect to short-run fluctuations in the number of raw
materials consumed and the other materials and other factors such as
materials imported exported, stores consumed, the information
contained in this model should be considerable use to someone
attempting to develop an aggregate forecasting model of the usage of raw
materials in automobile industry.

It was seen that the model developed in this study provides an

explanation of the relationship between the raw materials consumed by
the industry which depends upon the capital and also other factors such
as the exports and imports made by the company, and also other factors,
this method of linear function gives the resulted output during
economy-wide contractions and expansions.
 BIBLIOGRAPHY

1. http://www.economicsdiscussion.net/product
ion-function/production-function-meaning-
definitions-and-features/6892

2. http://www.economicsdiscussion.net/product
ion/3-types-of-production-functions-
explained/3659

3. http://economicpoint.com/linear-production-
function

4. en.wikipedia.org

5. http://wikieducator.org/PRODUCTION_FUN
CTION

6. Prowess Software 4.0