Category: Commerce Notes PPT

Supply Chain

Supply management is a critical element in understanding business operations. Supply Chain Management (SCM) is the oversight of finances, materials, and information when the movement happens from supplier to manufacturer, wholesalers, and retailers and at last reach to customers via defined procedures. Here, we will discuss all the processes among companies and within a company through the supply chain.

Supply Chain Management Flow Chart

Product flow, information flow, and finances flow are the three main flows associated with supply chain management. Check the flow diagram of the supply chain given below that describes the different stages of supply chain management.

Stages of Supply Chain Management

Product Flow – The movement of goods from the supplier to the consumer and returns and other service requirements.

Information Flow – Transferring orders and updating the state of delivery.

Finances Flow – Incorporates payment schedules, consignment, credit terms, and also title deed arrangements.

Well, companies use online platforms or SCM software for the management of the supply chain. They can customize online tools or software according to their needs. Furthermore, SCM software systems are available in two types. In addition, some software can be used both inside and outside of the company. Upstream information can be shared with suppliers, and downstream data can be shared with clients. It helps to increase cost-efficiency, improve time for marketing, and better management of resources. SCM is useful for managing resources and finance to generate more revenue as supply chain management functions are convenient. SCM is used for particular tasks like:

• Improve overall efficiency

• Reduce costs and generate more revenue

• Better services for customers

• Value chain optimization

The transformation process is the method of converting resources into services or products that consumers will buy. Well, industries need resources to trade.

Importance of Supply Chain Management in Organization

Supply chain management is not only about supply, but it also involves the primary stage of the process of product demands to product delivery and customer satisfaction. SCM includes:

• Control of supply and demand

• Sourcing and raw materials

• Manufacture and assembling products

• Warehousing and stock management

• Inventory tracking

• Order management

• Distribution through multiple channels

• Delivery of services or products

Production and Operations Management (POM) Under SCM

The production information supply chain includes many methods in different stages. The whole process of production is divided into different stages. Let us understand the different types of production methods in supply chain flow management.

Job Method

A job or task is done by a single person or a group or people (workers). Such a job can be complicated or small-scale, and it may involve low or high technology. In the job method, certain features are maintained to get the job completed successfully. The features are as follows.

Define Objectives: Clearly states the stages, dates, and milestones

Decision-making Process: Decision of tasks, labour, and resources.

Low Technology Jobs: Technology and skills are needed for low-technology jobs hence workforce is readily available. In this process, the purpose of the specific requirements of customers is fulfilled like hairdressers and tailors.

High Technology Jobs: Some jobs are complex and hence, require high-end technology and skilled management. Such jobs include better project control and management, like film productions and building construction projects.

Batch Method

In the bulk production of products, companies usually prefer the batch method. They will produce end-products in batches. The batch method involves task division and sub-parts of operations. Labourers are trained to complete specific processes, and resource management is essential to ensure the proper production equipment. Two features are imperative: Maximum utilization of equipment and skilled labour or workers. Most of the manufacturing companies adapt the batch method for bulk production.

Flow Methods

However, the batch method has some problems, especially when there is a lack of technology and skilled labourers. It is essential to manage the flow of working on completing batches one after another. The flow method eliminates problems of the batch method and ensures the continuous progress of materials and processes. The goals of the flow method are as follows.

The flow method involves quick completion of different stages of production. As soon as one particular task is completed, the next step will be initiated without any delay.

Requirements for Flow Methods to Work Well

Demand should be regular. If the market is unpredictable or irregular, the flow method ends up with only stock production. In such conditions, problems of storage and stock management will be raised. The flow method works well in standard products; if products vary, you can not get it done by the flow method. Continuous progress needs a constant supply of materials and resources. The entire process should be divided into several stages.

Before jumping to frequency distribution, let us first understand what frequency is. Frequency refers to a measure of how often something has happened. The frequency of any observation tells you the repeated number of times a specific observation occurs in the observed data. Tables can show both qualitative and quantitative variables; qualitative variables are also known as categorical and represent different non-measurable categories like eye colour, brands, etc., while quantitative variables are numeric. 

In a frequency distribution, we use class intervals to represent a range of values in the data under consideration. The intervals are framed concerning the minimum and maximum value between certain thresholds. A major difference between a frequency distribution series and a frequency distribution table is that most often in a frequency distribution series, the x-variable is discrete numeric, whereas, in a frequency distribution table, it is used for continuous values. 

The different types of frequency distributions are ungrouped frequency distributions, grouped frequency distributions, cumulative frequency distributions, and relative frequency distributions.

Grouped Frequency Distribution: Sometimes to derive insights from an observation easily, we group them into class intervals. 

• Calculate the maximum and minimum value of the data set

• Divide this range by the number of groups you intend to have in your analysis

• Segregate the data within this small sub-group basis the class width

• Calculate the frequency of data within each group 

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Ungrouped Frequency Distribution: The ungrouped cumulative distribution is similar to grouped frequency distribution except for the fact that class intervals are not created, and values are ordered from minimum to maximum. 

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Cumulative Frequency Distribution

When you add or subtract the frequencies of all the previous class intervals to determine the frequency of a particular class interval, it results in a cumulative frequency distribution. Also, another major difference is that class intervals do not denote a range but instead represent a logical conclusion like greater than a threshold value or less than a threshold value. 

• Calculate frequencies for every category

• Arrange in ascending or descending order according to categories/class intervals based on whether one wants to prepare an increasing/decreasing cumulative frequency distribution

• Total all the preceding frequencies. E.g., the second category’s frequency is calculated by the sum of the first and second category’s individual frequencies. Third is calculated by the sum of the first, second, third category’s individual frequencies 

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Relative Frequency Distribution

A relative frequency distribution is extensively used in our day-to-day statistical applications, which refers to the proportion of total observations associated with each category. It is calculated for individual class intervals by dividing them by the total observed frequencies. Relative frequencies can be written as a percentage, fraction, or decimal points. Cumulative relative frequency is the total of all preceding relative frequencies. To find the cumulative relative frequency, total all the previous relative frequencies till the current category.

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Common Representations of Frequency Distributions

The most common way in which a frequency distribution is visualised is using a bar chart. People also use pie charts for their data analysis of frequency distributions. The major advantage of these representations is that one can get a clear idea of the distribution with a glance. However, the disadvantage is that there is a chance of outliers getting lost in these representations if we are not careful. In the real world, analysts commonly use frequency distributions to identify how data is skewed and where the focus should lie on.

 

Solved Examples: 

A research was done in 20 homes in Chennai Avadi. People were asked how many bikes they own?  The results were: 1, 4, 3, 0, 5, 1, 2, 2, 1, 5, 2, 3, 2, 2, 0, 1, 2, 0, 3, 2. 

Present this data in the Frequency Distribution Table. Also, find the maximum number of homes owning the same number of bikes.

Solution: Divide the number of bikes in every home into different intervals. Every house can own either 0,1,2,3, etc. bikes. All these numbers form the rows. Now calculate the number of homes having {0,1,2,3, etc.} bikes. This is called the frequency. When you plot this in the form of a table: 

It can be seen from the table that 6 homes have 2 bikes and a lesser number of people own other numbers of bikes. Hence the answer is 6 homes.

Did You Know?

Toyota used Frequency Distributions for its famous Assembly line manufacturing and discovery of a lean process. 

Many noted automobile manufacturers use this method to identify the root cause of machine failure. Using this method, all possible causes of the frequency of failure of each of these causes was plotted. By this, we can identify which reason is the highest contributor to machine failure, and immediate actions can be taken to resolve it.

Frequency distribution comes under the statistical branch of mathematics. It is an extremely important concept that is usually taught in earlier classes, starting from The 8th grade. It is important in the sense that it helps in organising data in a systematic manner which helps in easier analysis.

To make the learning process fun and easier the ‘s team has curated study material related to frequency distribution. This article mainly deals with the many types of frequency distribution and how we can construct a frequency distribution table. This article explains in-depth about grouped frequency distribution, and grouped frequency distribution, cumulative frequency distribution, relative frequency distribution. For students to get a good hold over the concept ’s team has also provided practice questions along with their solutions so that students can keep checking their progress and Study in a systematic manner. This article simplifies frequency distribution with the use of simple examples.

Frequency distribution covers the statistical part of mathematics. It helps in the collection, organisation, distribution, and interpretation of data. It helps to analyse and understand what a certain dataset reveals about a particular topic. It is helpful as it interprets data which is useful while conducting research or while studying a particular discipline. Tables represent both qualitative and quantitative variables; qualitative variables are also known as categorical and represent different non-measurable categories like eye colour, brands, etc., while quantitative variables are numeric.

Frequency can be defined as the number of times a certain event occurs. If in a particular research a certain number occurs more than once then we can say that its frequency happens to be more than once. After writing down the different frequencies in a table students can get a frequency distribution table. Basically, it means to lay out data in a systematic manner which is based on the number of observations. It helps to analyse and present data in a systematic manner.

In order to understand and get a clear grasp over the concept of frequency distribution students should be well informed about certain things that are used in frequency distribution such as classes, class limits, the midpoint of each class, the magnitude of a class interval, class frequency.

Data becomes extremely difficult to organise when it is present in large numbers. With the help of a frequency distribution table students or researchers can get a better understanding of the research conducted. They can interpret the data according to their needs.

The goods when they are sold to the customer, they are immediately treated as sales and the revenue is recognized therein. However, when the goods are sold on approval basis or return basis, then the accounting treatment will be different. The sale is then recorded only when the goods are approved by the buyer, these are the goods which are sent casually. Now we will discuss the treatment for Goods that are sent casually in our prevailing section. We will know the details about the concept vividly.

Understanding the Concept

The goods when are sent casually, include a few transactions, the goods that are sent on approval or on return basis are treated as ordinary sales by the side of the seller. In a specified time limit the goods are required to be accepted and if they are not returned then no entry will be passed in that regard. We will treat the goods as sold for which the entry is being passed before. While, if the goods are being rejected or returned or no intimation is received within the specified time limit, then the entry to reverse the sales is required to be passed.

Apart from this, if the goods are still lying with the buyer or the receiver of the goods at the end of the accounting year and the specified time limit is set to expire, then they are treated as closing stock. The entry for sales that are made earlier is cancelled and then they are recorded at the cost price. When the goods are returned by the customer after a specified time limit then no entry is passed.

Treatment for Goods Sent Casually

The journal entries for the goods that are sent casually are required to be entered to facilitate the company in a process which will be useful to them. The basic journal entries used for the recording purpose are as follows:

1. The Goods Sent on Approval

Debtors A/C………. Dr

To Sales A/C 

(bring goods that are sent on approval)

2. Goods When Accepted at the Invoice Price.

No entry.

3. When Goods are Accepted at a Price Which is Higher than the Invoice Price

Debtors A/C………… Dr

To Sales A/C 

(The difference of the sale price is recorded)

4. When Goods are Accepted at a Price Which is Lower than the Invoice Price

Sales A/C……… Dr

To Debtors A/C

(The difference in the sale price recorded)

5. Goods Which are Rejected or Returned Within the Specified Time Limit

Sales A/C………. Dr

To Debtors A/C

(Goods which are recorded as sales is now reversed)

6. The Specified Time Limit is Yet to Expire and the Goods are Lying with the Customers on Year End

Sales A/C………. Dr

To Debtors A/C

(Entry of sales made earlier and reversed at the invoice price)

7. The Goods Sent on Approval or on Return Basis as the Closing Stock

Goods sent on Approval A/C…. Dr

To Trading A/C

(Goods are sent on approval and are recorded as closing stock at cost or at market price whichever is lower)

Goods Sent on Approval Basis before (GST)

Goods Sent on Approval Basis Returned within 6 months from the GST being implemented 

The goods being sent on approval for a maximum six months before the appointed day are rejected and returned to the seller on or after the 1st July then nil tax will be payable. The goods should be returned within these six months from the appointed day

The period of 6 months is to be extended for a maximum of 2 months if only there is sufficient cause.

If the Goods Are Returned after 6 months

GST is to be paid by the person who is returning the goods, meaning the buyer after 6 months if those goods are liable to tax under the GST Act

The seller is required to pay GST on the goods returned after the 6 months.

Human Development Index (HDI) is a tool to measure a country’s development based upon its economic and social measurements. The tool was developed to lay down the fact that a country’s overall development is not only assessed based on its economic growth but also assessed based on its people and their capabilities.

Both social and economic dimensions of a country consider the health of the people, their education capabilities, their standard of living, and Gross National Income (GNI) per capita.

Human Development Index is calculated through the normal indices of each of the above three factors. Human Development Index is the mean of these indices. HDI is also used to question a country’s national policy and compare the countries with similar GNI per capita to question why the human development of these countries are different despite having similar Gross National Income (GNI) per capita.

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What Is the Human Development Index?

Human Development Index or HDI integrates the significant social and economic aspects of a country to assess the overall development of a country. HDI generally uses the three dimensions of the development of a country’s population that include their education, their standard of living, and the health of the people based on which country’s development is assessed.

In the year 1990, the human development index was first used by the Pakistani Economist Mahbub Ul Haq. The index is further used by the United Nation Development Program to rank countries and is considered as one of the best tools to assess the country’s development on the basis of its economic and social measurements.

Indicators of the Human Development Index

The three indicators or factors that represent the different aspects of life include the following:

Longevity: The human’s longevity is measured by life expectancy at birth. The life expectancy at birth means how many years a newly born person is expected to survive in this world. This indicated the element of health in the Human Development Index. 

Education: It is measured by the expected years of schooling life of a child at the school entry age and the mean years of schooling of the adult population.

Mean years of schooling: 

It determines the average number of years of total schooling adults (aged 25 years and above) have received. 

Expected Years of Schooling:

It estimates the number of years of schooling that a child of school entrance age can expect to get if the present age- specific enrollment rates survive through the child’s life by country.

Standard of Living: The standard of living of people is measured by Gross National Income per capita adjusted for the price level of the country.

Importance of Human Development Index

The importance of the human development index is that it is an essential indicator of the overall socio-economic conditions of a nation and its residents. Since it takes into account various parameters to determine the development of those areas, it is an effective way to evaluate the performance of every nation.

Consequently, after the survey, every country is awarded a rank by the United Nations Development Programme annually. A higher rank is allocated to the one that has performed well in all or most of the parameters. Likewise, nations that have not fared well in all or most of the parameters attain a lower rank. As a result, HDI acts as a measuring tool that helps in gauging socio-economic conditions of nations every year and also keeps track of the same.

What Are The Consequences And Implications of the Human Development Index?

The HDI is used to show the attention of policy-makers, the media, and non-governmental organizations, and to change the approach from general economic statistics to human outcomes. It was launched to re-estate that people and their proficiency should be the ultimate guidelines for determining the country’s development, not economic growth.

The Human Development Index is also used to diagnose  the alternatives of national policy and to find out how two countries with the similar level of income per person can have different human development outcomes. For example, two different countries may have similar incomes per person but have different life expectancy and literacy levels, such that one of the countries has a much higher HDI than the other. These dissimilarities encourage debate on government policies concerning health and education to determine what can be attained in one country is beyond the reach of the other country.

The HDI is also used to represent the discrepancy within countries, across genders, between states or provinces, across ethnicities, and other socioeconomic groupings. Promoting contradictions in such a way has raised the national debate in many countries.

Limitations of the Human Development Index

Despite the communist idea behind the concept of the human development index, the statistical measure is largely simplified. The present version of the HDI calculation considers only a few factors that affect the development of a country.

To come up with a more accurate analysis of a country’s development, other factors such as employment opportunities, empowerment movement, and feeling of security should be considered in index calculations.

Income determination is a crucial part of every individual’s life; people often plan to spend a certain amount and end up either more or less than that. A decision like this is a crucial part of any economy; it helps countries to manage revenues and expenses.

Ex-ante and Ex-post are two concepts of income decision, and it plays a significant role in the financial planning of any country. In this regard, one takes the help of macroeconomics to understand the variable and find an accurate result.

Income Determination

Macroeconomics deals with various factors of an economy, and one essential element is income. Income affects both sides, i.e. demand-side and total national output. The theoretical models of macroeconomics provide the necessary insight in this regard. It helps to comprehend one variable on other factors of an economy.

Macroeconomics has developed such theoretical models where it considers one variable at a time as constant. Resultantly, it aids in identifying the effects of other elements, and how to proceed in future. Moreover, these models provide a perception of unemployment, rise of prices, growth rate, etc.

This process is typical to any theoretical exercise, and it is known as ‘ceteris paribus’. It is a Latin phrase that means ‘other things remaining equal’.

Ex-Ante and Ex-Post – Brief Idea

Ex-ante and Ex-post are two Latin words used to predict the return against security. Moreover, when transcribed from Latin, Ex-ante means ‘before the event’. It provides predictions of a specific future event like a potential turnover of a company. Since it is impossible to predict such instances that include several variables, the predictions of Ex-ante are often inaccurate.

On the other hand, Ex-post stands for ‘after the event’, which means looking at an event after it is complete. Moreover, Ex-post offers an analysis of the results of any occasion and encourages critical analysis and learning from it. Therefore, one can predict the outcome of a similar situation in the future and prepare for its outcome. Typically, companies analyse different situations to comprehend the possibility of making a profit or a loss on a specific investment.

What is Ex-Ante?

As mentioned above, Ex-ante stands for ‘before the event’. Companies use this concept to predict the estimated return on a particular investment after a specific period. In layman’s terms, it offers an early prediction of an event, before it occurs. Therefore, the outcome is uncertain here.

Now, companies ascertain an Ex-ante value to this outcome and later compare it against the real result to observe the difference.

For instance, during a merger, analysts predict the expected synergies of this event. It can be alterations in terms of share prices, estimated earning, and others. After a period, they evaluate the outcome of this merger against their estimated Ex-ante value to find whether it is a success or not.

Furthermore, the prediction of Ex-ante is uncertain, and it can involve a single product or service, or a unit of a company, or the entire business. The outcome of this event serves as the base of comparison with the actual result.

For instance, RBI makes an ex-ante prediction that recession will hit the Indian economy and increases the rate of interest accordingly. Since this prediction is not on the basis of actual data, it is difficult to say whether it is right or not.

Moreover, if a recession hits the Indian economy, then this increase in interest rate will be viewed as a mistake. On the contrary, if the Indian economy remains stable, then this decision will be a well-judged one.

What is Ex-Post?

Ex-post meaning is ‘after the event’. It stands in contrast to Ex-ante. Investors use this concept to predict the return on investment based on its previous performance. Unlike ex-ante, here, the prediction is based on actual data instead of estimation. Here, investors gauge the performance of security on its previous performance to make a decision.

Investors use readily available ex-post data to understand the performance and capabilities of an investment. It also includes forecasts and projections of market shocks that it has recorded previously. The ex-post value of an investment derives by subtracting its previous price paid by investors from its current market value.

Moreover, experts then analyse this value to understand the price fluctuation and make a future prediction based on that. Also, the comparison between the ex-post value and predicted return then determines the precision of the risk assessment method used for this purpose.

Ex-Ante and Ex-Post are two essential concepts of modern economics, especially income determination method. It helps investors, companies, and individuals to comprehend market trends and predict a favourable outcome.

Students can learn more about these two concepts via online learning platforms like . Along with study materials, students can also access live online classes and doubt clearing sessions to improve their preparations further.

It is strongly recommended that all partnerships under limited liabilities should enter into the LLP agreement to achieve enhanced clarity and certainty over the business relationships and the members. With such an agreement, the legislation will be able to impose certain rules over the obligations and rights of the members. As a basic rule, no member under the agreement can be expelled for any reason, and all the profits should be shared equally between the members. Keep reading to know more about the Indian partnership act LLP agreement. 

Even if a particular member has invested significantly, the profits must be shared equally. This type of written agreement promotes a massive opportunity to the members for varying, or excluding the default position imposed by law. Let us take a detailed look at the chapter.

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LLP Agreements

LLP contracts can terminate and resolve many costly disputes when it comes to business operations under a community. An LLP agreement with a standard document can be used on establishing a new business as an LLP. It is also applicable while transferring a partnership business to an LLP. The partnership deed LLP keeps track of all the records of the clauses and terms agreed between the members of LLP. It is a crucial part of the internal workings of LLP. The LLP deed covers the entire concept including expulsion from the agreement, admission of new members, management and decision making, profit sharing, and retirement from the agreement. 

LLP Agreement India is written between the partners coming under the agreement terms. It is very helpful in establishing the rights of duty in terms of the performing partners toward each other along with the LLP itself. It is compulsory to exclude the file of the agreement within a month of LLP incorporation. LLP deed format forms the base of smooth performing limited liability partnership. It helps in defining the outlook and the concepts required for decision making, leaving or existing partners, and changing the roles.

Contents of LLP Agreements

A draft copy of the LLP agreement must be provided to all the members. It helps in the successful functioning of the LLP. As LLP is not a company, the provisions of a typical company are not applicable in the case of LLP. Therefore, the contents must be clear and address the issues of corporate structures. These include:

• Name of the LLP

• Date of agreement and the parties included

• Introductory provisions

• Statement of background

• Method of contribution

• Partner’s contribution

• LLP bank arrangements and record-keeping

• Capital and current account

• Distribution and Allocation

• Disassociation of partners

• Issue of a partner’s rights

• Cross-purchase and redemption of rights

• Partnership rights of sales and transfers

• Partner’s rights to records

• Partner’s voting and meeting

• General Provisions and arbitration

• Fiduciary and management duties

Companies in this agreement can develop a customized draft llp agreement in India only after careful study of the LLP Act & Rules.

What are the Provisions in Absence of an LLP Agreement? 

Students who want to know – what is LLP agreement must also have an insight into the provisions required or imposed in the absence of an LLP agreement. A typical LLP contract must be put in place with a written LLP agreement among the members. However, in the absence of an agreement, the provisions include:

• All partners must agree to share the profits and losses equally.

• Partners will be insured for any personal payment made in the general course of business or any action taken to preserve the assets of the business.

• Partners should reimburse the LLP in the case of loss or any fraudulent act.

• Through an LLP contract, all members forming the LLP can take part in the management tasks.

• Partnership deed LLP states, when a new partner is entering or taking admission, permission from all the partners is required.

• None of the partners is entitled to salary for the managerial roles for the LLP.

• In case of any issue, the matter will be resolved through a vote from all the partners, and the majority should pass a stern resolution. However, in the case of changing the nature of a business, all the partners must show their consent.

• In a typical LLP deed, the partners will not be able to force out a specific partner unless there is a written agreement between the partners.