Categories
Musings

EOQ and ATM withdrawl

Ever tried applying MBA to your daily life? I tried to apply theory of Economic Order Quantity on the amount of cash I should withdraw and I am inclined to not follow its results.

  1. D:  monthly consumption of cash = 15,000/- (to cover for maid salary, newspaper/milk/grocery bills, fuel/auto/transport costs, cafeteria & petty cash)
  2. K: cost to order: 50/- to cover bank fees, fuel (to drive to ATM), cost of time (it takes me 15-20 to retrieve cash)
  3. H: holding cost = foregone interest “4%/12”

When I tie all this together I get a value of Q = INR 21,213/-
However I have rarely seen anybody carrying that kind of cash around in their wallets. Most people tend to withdraw cash between 1-5k during the middle of the middle and 5-10k immediately after salary is credited. (but that is spend immediately to pay monthly bills)
Also a lot of ATMs limit the cash dispensed of 10,000/- forcing me to withdraw a sub-optimal amount. Is it because I have under-estimated the inventory holding cost (increased propensity to spend when you have cash in hand & risk of theft/mugging)
Please share other examples where popular wisdom over-rides the well researched theory.

Categories
Miscellaneous

IIM Lucknow

Warning: I usually don’t discuss my personal/professional life here but this is one exception so please bear with me.

After 4 months of staying abroad I return back to my campus. Here is a 8 minute long video which records some of the aspects of everyday life at IIM Lucknow.

[youtube=http://www.youtube.com/watch?v=iBqekU4yKYo&feature=related]

IIM Lucknow is one of the hardest MBA schools to get into. There are over a 100 applicants for every student they admit. Even after the tough selection process the students are over the next 24 months grilled and prepared for anything the life throws at them. A student has to compulsorily live in the campus which is 12 km from the nearest city or civilized life and 21km from the city center. The campus is 185 acres large and has all the necessities which are conducive for a good academic life. There are security guards who record who enters and exits the campus and how much time they spend outside. The students who are married have to apply to get permission for bringing their spouses on the campus.

As per the student manual every student is supposed to study for a minimum of 100 hours for every course it takes. With 7 courses spread across 10 weeks this boils down to officially requirement of 70 hours a week of studies. However everyone who has been to the campus knows than in reality one has to work much harder. You could be asked to be in the classroom anytime between 8:30am to 2am even on Sundays. Sleeping over 5 hours a day is a luxury which only the brightest few can afford. The library is open 24X7 and it is not uncommon for students to work the whole night. In fact it is more likely that the students works all night, has breakfast rather than wake up and have his breakfast.

It is questionable whether this much rigor makes students better managers/entrepreneurs; however industry seems to appreciate the quality of teaching so I guess the system works. The school is a public school yet it costs about 1Million INR (14-15,000 euros) and 2 years of full time studies to finish ones education and pay for the food, lodging and boarding. This might look too steep but the school ensures that the students who cannot pay get either a loan or a generous scholarship. It takes pride in the fact that no student, no matter how poor ever had to discontinue the education because of financial reasons. The reason for charging this high fees and having a culture where the student rather than his/her parents pay for the fees is to increase the student’s dedication.

As the saying goes: “What does not kill you makes you stronger”

 

Categories
Miscellaneous

business school ranking

rankings http://www.businessweek.com/bschools/04/#top30
1 Northwestern
2 Chicago
3 Pennsylvania
4 Stanford
5 Harvard
6 Michigan (Ross school…fall only)
7 Cornell
8 Columbia
9 MIT Sloan
10 Dartmouth Tuck

11 Duke
12 Virginia
13 NYU
14 UCLA
15 Carnegie Mellon
16 UNC Chapel-Hill
17 UC Berkeley
18 Indiana
19 Texas – Austin
20 Emory