moneymanagementoverview-1-2

techniques_covered_mm-10-9-16-2

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Sap is a business process software. In this technolodgy edge, most of the companies implementing sap to decrease the work load as well as smoother process actitives regular day to day work. There are different modules in SAP name 1) SAP MM modules which is materials management module 2) SAP FI-CO module which is finance & controlling module 3) SAP Investment Management Module 4) SAP Project System Module 5)  SAP Human Capital Management Module 6) SAP Sales & Distribution module 7) SAP Production Planning Module 8) SAP Logistics Execution Module 9) SAP Quality Management Module 10) SAP Warehouse Management Module  11) SAP customer service module.

For Implementing SAP in any Orgn., A  Blue Print is prepared & given to the Support team for Implementation in the Orgn.

So, Each Orgn there is a implemnetaion team working to implement SAP as per the guidance of support team like IBM etc.

Implementation Team will run the software, if there is any trouble comes in while running the software, then Implementation team will raise a trouble ticket, support team like IBM will resolve the issues within a stipulated period of time.

Day to day work activities in any Orgn. like Cretion of Purchase orders, Invoice raise, Voucher preparations, Travel toour vourchers preparation all can do in the twinkling of an eye through SAP.

Although its a very cost Effective because Original  Software very costly to implement in the Orgn. So, Basically most of MNC’s now-a-days implementing SAP to do their work on daily basis.

Also there are many Orgns, who had SAP oriented training for Certifications. But hardly can say, most of them are not very useful.

I can recommend some of the Orgns like Siemens  Ltd. who gives SAP certifications.  So, for Certifications, u should do with a good Orgns whose Certifications is valid. it is also a cost effective training.

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Ratio Analysis is a technique of analysis and interpretation of financial statements. It is the process of establishing and interpreting various ratios for helping in making certain decisions. However Ratio Analysis is not an end itself.It is only a means of better understanding of financial strengths and weakness of a firm.Just like a doctor examines his patient by recording his body temperature,blood pressure,etc before making his conclusion regarding the illness and before giving his treatment,a financial analyst analyses the financial statements with various tools of analysis before commenting upon the financial health or weakness of an enterprise. A ratio is known as a sympton like blood pressure,the pulse rate or the temperature of an individual.

The use of ratios is not confined to financial managers only. As discussed earlier,there are different parties interested in the ratio analysis for knowing the financial position of a firm for different purposes. The suppliers of goods on credits,banks,financial institutions,investors,shareholders and management all make use of ratio analysis  as a tool in evaluating the financial position and performance of a firm for granting credit,providing loans or making investments in the firm.With the use of ratio analysis one can measure the financial condition of a firm and can point out whether the condition is strong,food,questionable or poor.The conclusions can also be drawn as to whether the performance of the firm is improving or deteriorating. The steps involved in Ratios analsis are as follows :-

STEP 1  : Determination of Purpose – The prime step of ratio analysis is to determine the objective and purpose of which ratios are required to be determined,because of the fact that different rations are provided for different purposes.

STEP 2 : Setting up of Ratios :-   After indentification of objective,we are required to select the specific type of ratios that can better suit the purpose. The ratios required by the prospective investors cannot be identical with the ratios required by the lending institutions.

STEP 3 : Definition of Ratios – The next step is to define the ratios identified in a befitting manner. This is most important. The ingredients will depend upon the category of the users.

STEP 4 : Calculation of Components  — It is required to find out the value of each component from the profit and loss a/c.Balance Sheet and other information available.

STEP 5 : Determination  of Results –  Thereafter the values of the components are to be put in the defined formula to get the desired result.

STEP 6 : Interpretation  –   For proper interpretation of the results so calculated, the standards available and the industry averages are to taken into consideration then  the results so determined be compared with the standards and industry averages. This comparison will indicate the financial health of the Org.

The importance of Ratio Analysis may be detailed out as follows :-

1. TREND ANALYSIS :- The financial trend of any firm can be better compared and analyzed with the help of ratios. The trend analysis on the basis of accounting ratios helps suggest the corrective measures.

2.MEASURE OF EFFECIENCY :-   with the help of  Ratios, the position of a firm in the industry can easily ascertained by comparing the ratios determined with standards and industry averages available.The ratios will indicate whether the management is efficiently discharging the assigned responsibilities or not.

3. BUDGETARY CONTROL  :-  The ratios are the integral part of budgetary control. The ratios are useful to fix up targets and standards.The performance level is indicated by the ratios. So ratios are a tool of budgetary control.

4.SHORT TERM LIQUIDITY :-  Liquidity is the basic requirement of survival of any firm. Ratio Analysis can easily ascertain short-term liquidity, as liquidity ratios are the indicators of short-term solvency.

5. LONG TERM SOLVENCY :- The long-term solvency indicates the viability of a firm in the long run.The ratio analysis plays a vital role for effective Equity analysis,security analysis and so on in such a way that long term solvency can be predicated with much more accuracy.

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1.      Permanent Magnet Synchronous Machine

Recently, permanent magnet synchronous machines (PMSMs) become an important class of high performance ac drives. PMSMs are special types of the synchronous machines. They have conventional three-phase stator windings but, instead of a field winding, permanent magnets produce field flux. Synchronous machines with electrically excited field winding require brushes and slip rings to transfer current to the rotor. The use of permanent magnets eliminates this requirement thus, problems related to the brushes and slip rings are overcome. Lack of brushes also results in a more robust mechanical construction. Moreover, the copper losses are eliminated therefore; higher efficiency and higher torque/inertia ratio can be achieved.

PMSM types are demonstrated in Figure 1.1. When the stator windings are concentrated, the machine is named as trapezoidal type or brushless dc (BLDC) machine. This machine has a trapezoidal back-emf waveform. When the stator windings are sinusoidally distributed, the back-emf waveform is also sinusoidal and the machine is named as permanent magnet ac (PMAC) machine. This type of PMSM is usually named as servo motor and widely used in high performance servo applications.

Figure 1.1: Permanent-magnet machine types.

The PMSMs are further classified according to their magnet mounting types. One of them is the surface-mounted PMSM where the magnets are mounted on the rotor surface as demonstrated in Figure 1.2. The other type is the interior permanent magnet (IPM) machine where the magnets are buried inside the rotor core.

Figure 1.2: Surface-Mounted PMSM rotor.

2.      Stator Voltage Equations in the Stationary abc Reference Frame

In a PMSM the rotor houses the permanent magnets which establish a dc magnetic field linking the surrounding three-phase stator windings placed spatially apart from each other as shown inFigure 2.1. Two-pole PMSM structure is depicted in the figure nevertheless, the analysis is applicable to machines with any number of poles. To derive the model, magnetic saturation, core losses and eddy currents are neglected.

Figure 2.1: Three-phase permanent-magnet synchronous machine structure.

Instantaneous stator voltages developed in these three windings can be written as:

where , ,  are stator voltages, , ,  are stator currents,  is the stator resistance and , ,  are the flux linkages of the corresponding phases. Here it is assumed that, all three-phase windings have an equal resistance.

The flux linkages with the stator winding for one of the phases consist of two components from stator and rotor,

Here  is the flux linkage with the stator phase winding due to the stator currents and  is the flux linkage with the stator phase winding due to the rotor flux. Therefore, the flux-linkages of the stator windings, ,  and  can be written as:

where , and  are the self-inductances of the stator phases-a, -b and –c respectively,  ,  and   are the mutual inductances between stator phases-a and –b; -a and –c; -b and -c, respectively. It is assumed that, all three stator phases have equal self-inductances such that,  . Also  is assumed to be equal to and .

is the flux linkage with the stator phase windings due to the flux produced by the permanent magnets placed on the rotor surface. is the electrical angle between the axis of the rotor flux and stator phase-a axis which is related with the spatial angle of the rotor as in (1.8) where  is the number of poles.

The self-inductance of a stator phase can be defined as:

(2.9)

where  is the leakage inductance which accounts for the flux produced by the stator winding which does not cross the air gap. the magnetizing inductance that can be formulated as,

(2.10)

where  is the permeability of air,  is the mean radius at the air gap,   is the length of the rotor along its shaft axis,  is the air gap length and   is the number of turns per phase in the stator winding. Since the surface-mounted PMSMs are almost always non-salient, it is assumed that, air gap length  does not vary with .

Mutual inductances between two stator phases can be found as,

(2.11)

3.      Transformation to Rotor Reference Frame

Each stator phase winding produces a sinusoidally distributed mmf  ,  and  in the air gap which can be represented by vectors along the axis of that phase. The resultant stator mmf, at any point in the air gap around the rotor periphery can be represented by a vector which is the sum of mmf vectors due to all three phases as shown inFigure 3.1.

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Following are the factors (Root Cause to use a jargon of TQM) behind the turmoil:

1. Rising costs of aviation fuel, labor & its consequences on the ailing airline-

Rising input costs – aviation turbine fuel (ATF), at “32% of all operating expenses”

and rising labor cost due to “4 % across the board”. Both the factors eat away

profitability.

The solution of backward integration can be explored, (Ford got into steel mines,

steel making etc), however, thinking of late is in Core Competence (C K Prahalad

and Gary Hammel’s Theory of Core Competence), successful organizations are

trying to find their mojo in selective things rather than getting into myriad acts, since

CA could not handle the complexities of service industry, there is no guarantee that it

would be able to crack the ATF manufacturing business, that is a different ball game

altogether.

Besides, albeit ATF is costly and a major cost head, but that is true for the whole

industry, if others can manage the monster, CA should also learn to live with the

ground reality of high cost of ATF.

Labor and its wage rate can be rationalized. If the rate cannot be reduced, right sizing

(retrenchment for critics and affected parties), automation (overall productivity raise

would justify the capex and opex) and productivity increase through existing

manpower are other solutions. Training and development for willing and weeding out

the misfits are in dire need.

Some Benchmarking study with “Best in class” and “industry average” from the

local aviation industry may throw up important learning lessons that can be

implemented to boost productivity, reduce cost or right sizing manpower should it

disclose that CA employs more labor than required.

2. Improper segmentation and lack of innovation

Proper Segmentation – CA should decide for once and all whether to cater to LCC

(Low Cost carrier) segment and hence bare bone infra and features would do or

chase middle of the road or even premium, full service airline – luxury class,

segments too.

For middle of the road and luxury, rebuilding the airline's seats for greater leg room,

creating wider arm rest requirement were never implemented, so CA must have lost

those travelers. The introduction of convertible seats and TV screens for each seat

which already were in other airlines remained on the drawing board. So CA can at

best hope to have economy and LCC crowd, so for this reason, it has no other option

rather than pursuing focused cost leadership. 4 % across the board wage hike does

not go with this segmentation. Wage rate should be rationalized with union and a

resettlement through Collective bargaining or Tripartite agreement should be

attempted.

3. Poor Customer Service issues:

Supports through web (online checking), phone, loyalty program need to be

revamped on urgent basis. Training customer facing employees to improve “moment

of truth”, listen to “VOC- voice of customer” on not to leave her stranded, being

more responsive and less indifferent, a “service blue printing” or service scape” are

in urgent need. They need to implement measures combining Services marketing and

TQM on urgent basis else bankruptcy is imminent.

4. A weak and fragmented management

The management has the below things to do:

Out of the various possibilities shown below they are at stage of Phantom or Rubber Stamp,

no genuine leadership and strategic interventions.

Board of Director Continuum

CA management needs to move from phantom stage to Active participation. The financial

literacy of CA management was questionable and they failed to foresee problems what to talk

of taking preemptive or even post mortem actions. The management was too old (average age

64 yrs) for a sector like airlines that thrive on innovations and agility. In all the confusion and

incompetence, widespread blame game and finger pointing was going on rather any crisis

management. Dissent was open and vicious, annual evaluations was on hold, transparent

feedback, performance review and individual accountability was missing. CA presented quite

a hopeless scenario of mismanagement, indifference and callousness from top to bottom.

5. Competition

In Africa for the airlines, the entry barriers were low (liberalization and globalization,

about 1,300 new airlines were established in the last 40 years. Competition is not only

from new entrants, existing ones may expand into new geographies, new segments like

LCC turning full service or vice versa etc. Related diversification (also called

concentric) is relatively better than unrelated as far as entry barriers are concerned.

Losing a customer (attrition) is easy in airlines more so, when CA is not doing much of

customer services itself. Many airlines form a group called alliance (e. g. Star Alliance),

alliances try to bind customers to some extent but one can move inside an alliance and

albeit to a competitor rather easily.

Strategic alliance in service industry

Lufthansa

Air New Zealand

SAS

Austrian Airlines

Varig

Asiana Airlines

Spanair

United Airlines

Tyrolean

Oviango Airlines merged with Afrik Airlines made them a dominant force in the West

African hub, 4 new airlines has made entry into regional market making life of CA more

difficult.

It would be classic Marketing Myopia (coined by Theo Levitt) to consider only airlines

as competitor, road, train or any other transport option is a competitor and eating into the

pie of airlines, too many suitors for a lone bride – elusive customer.

Singapore AirlinesBritish MidlandThai Airways

Below is a Fishbone diagram and then a solution roadmap:

Cause-and- Effect Chart for

turbulence in CA

Rising costs of aviation fuel,

labor

Competition

Weak management Poor customer service

Solution roadmap:

 Tinkering into ATF manufacture may be too risky, leave it alone and learn to live

with it

 Rightsize labor, renegotiate lower wage rate, increase productivity

 Compete with heart and brain, be proactice, be customer centric or look for chapter 11

(bankruptcy)!!!

 Inject some Viagra into management weed out the old and junk, bring some new

blood.

 PRAY!!!

References & acknowledgements:

1. Operation Management for Competitive Advantage,Richard B Chase F Robert Jacobs,

Nicholas J Aquilano, Nitin K Agarwal, 11th Ed, Mc Graw Hill

2. Concepts in Strategic Management & Business Policy, Thomas L Wheelen, J David Hunger &

Krish Rangarajan, 9 th Ed, Pearson Education

3. Strategic Management – Concepts & Cases, 12 th Ed, PHI, Fred R David

4. Strategic Management – Formulation, Implementation & Control, John A Pearce, Richard

B Robinson, Amita Mital, TMH, 10 th Edition.

5.Industrial Relations, Arun Monappa,Tata-Mc Graw Hill, 2011;

6. Services Marketing, Lovelock, Wirtz & Chatterjee, Pearson

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Volvo Car Corporation is one of the many leading brands of car manufacturers that have been in the

market for quite some time. Unlike a lot of car manufacturers who tend to operate in niche pockets,

Volvo caters to a global audience. In this paper, the concentration will be on the major challenges that

the Volvo Car Corporation tends to face in the European Union area. In the last few years the company

has been plagued with issues related to research and development as well as marketing and sales. These

two problems are related to each other and have thus given to many other problems as well.

One of the biggest challenges that the Volvo management tends to face in the area of its operation in

the European Union is that the governments as well as the governing bodies of the Union are very strict

and stringent about their allegiance towards cutting carbon dioxide emission that tend to come from the

car. Here is the percentage wise breakup of the contribution to the carbon dioxide emissions in 2014.

Imghttp://www.crp-eut.org/2014_Samuelsson.pdf courtesy –

The EU is very particular about this issue making it mandatory for car manufacturers to comply with

their rules and norms regarding the issue. However, the Volvo management tends to complain of a

regular non practice for innovation in the car technology space. There is a series lack of automotive

research and thus has hampered the company’s prospects to a very great extent. In a statement given

by Stefan Jacoby, President and CEO of Volvo Car Corporation, he mentions “Volvo Car Corporation

urges the EU to coordinate incentives whilst supporting research and development. The European

automotive industry risks losing the present technological leadership if this do not happen”. This fear is

not unfounded and thus the management feels that making it mandatory for the cars to be electrified in

order to reduce the carbon emission requires to be done in phases. The company does not have the

required time for the research and the expertise needs to be developed. On the other hand the EU is

unwilling to compromise on this issue.

In conjunction with the above mentioned problem, there is another issue of marketing and sales that

has been bothering the company. The auto giant is facing stiff competition from other players operating

in the same sphere in the market. Some of these has already developed the technology of electric cars

wherein the amount and rate of the carbon emission is quite less and in adherence to the limit

prescribed by the EU.

In this paper, we shall see how the new global marketing strategy can help the company to bring itself

back to its former glory. The paper will explore various options regarding the EU’s stand on the

reduction of the carbon dioxide emissions and the various options that Volvo cars have in the near

future that they can exercise to stay put in the European markets and tackle completion in the market as

well. These options are changing the branding strategy of the cars and even exploring the social media

and the online marketing channel to penetrate the market and reach the audience better.

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Abstract:

The study shall show changes have occurred in the supply and demand of coal & iron-

ore in the Australian economy. These are two resources that are very much essential

for Australia. They add significantly to the country’s GDP. But the demand & supply for

these two resources have fallen drastically in China. This induced a greater affect for

the Australian manufacturing organizations. But their supplies have been increasing

considerably in Australia. Ironically, their demands have dropped very much. Since

2013 this trend has begun. It is still continuing. The Council of Financial Regulators

thinks it differently. Firstly, the council thinks this situation will change by 2018.

Secondly, supply will be constant. Thirdly, demand for these two resources by go up.

Table of Contents

1.0 Introduction: 2

1.2 Incomes: 2

1.3 Price of goods: 2

1.4 Price of related goods (Complements & (Substitutes): 3

1.5 Tastes & Preferences: 3

1.6 Income distributions: 3

2.0 Factors affecting the supplies of coal & iron ore: 3

2.1 Price of the said goods: 4

2.2 Prices of other goods: 4

2.3 Price of factor inputs: 4

2.4 Technology: 4

2.5 Government’s taxation policy: 5

3.0 The by and large effects: 5

4.0 Conclusion: 6

5.0 References 6

1.0 Introduction:

Factors affecting the demand for coal & iron ore:

Factors affecting the demand for these resources are given below:

1.2 Incomes:

The demand for these resources depends upon the peoples’ income. It is the

rudimentary factor. Normal goods pose a positive income effect. Inferior goods pose a

negative income effect. As incomes of people rise, demand falls for inferior commodities

(Carboni, 2014).

1.3 Price of goods:

As price of iron- ore and coal rises, their demand falls. It pertains to income effect. As

price of iron- ore and coal falls, their demand falls. Consumption of iron and coal falls as

its price rises.

1.4 Price of related goods (Complements & (Substitutes):

The demand for coal & iron is influenced when prices of other commodities change. The

goods may be substitutes or complements (Kim and Lee, 2014). For example when the

price of iron rises, then price of steel also rises. These are complementary goods.

Again, if the price of petroleum soars high, then biomass sources can be used. These

are substitute commodities.

1.5 Tastes & Preferences:

The demand for coal and iron is ordained by the consumers’ preferences & tastes. Their

demand may vary according to the use of products. Their demand may vary over times

also. Thus, to supply iron and coal, their demand is essential for the suppliers. For

example, railways of many countries used coal to run railway engines. But now they

mostly run on electricity. Thus, consumers’ preferences have changed. India is an

example where coal was used for cooking. But now the consumers use liquefied

petroleum gas for cooking.

1.6 Income distributions:

When the incomes in the society are equally distributed, all have equal purchasing

power (Miron and Alexe, 2014). Then every person in the society can purchase

commodities as per their preferences. The demand for costly commodities drops when

income is equally distributed. People consume more when their income soars. People

consume less when their income is less. But equal income distribution is a rarity in the

society.

2.0 Factors affecting the supplies of coal & iron ore:

Several factors influence the supply of these two resources. These factors are as

follows:

2.1 Price of the said goods:

The supply of goods and their prices are positively related. When price rises, so does

the supply. When the price falls, so does the supply. Greater profits are gotten by

suppliers when prices are exorbitant.

2.2 Prices of other goods:

Every resource has alternative uses. Not only their price but goods also depend on

prices of other commodities. When prices of other good rises, it is profitable for the said

commodity. It means firms alter their limited resources. Thus, firms produce some other

goods. For example if the prices of thermal energy rise, then the use of hydroelectricity

will be more. When the cost of meat rises, non-veg pizza is costly to make. Instead, the

pizza joints can make cheese pizzas. It is because meat is one of the essential

elements of non-veg pizza.

2.3 Price of factor inputs:

The costs of productions rise due to two situations as follows:

a) Firstly, if the cost of an input of production rises.

b) Secondly, if amounts payable to the inputs of production increases.

It means the profitability drops. Thus, the suppliers will slash the prices of goods that

they supply. The supply of goods shall rise if the prices of the production input drop.

Thus, production cost also drops. Subsequently, there is the hike in the profit margins.

For example, if the production cost of iron drops, then more steel can be produced. If

the cost of cement rises, the production of buildings will not be profitable. Thus, fewer

buildings will be made. But the producer will always try to pass on the extra amount to

the consumers.

2.4 Technology:

The supply of commodities is influenced by technological leapfrogging. If the technology

used in the production process is improved or advanced, then the cost of production is

lessened. Thus, the profit margin is hiked (Von Broembsen, 2012). Outdated technology

leads to incur more costs of production. This affects the supply of goods. Thus, the

supply decreases considerably.

2.5 Government’s taxation policy:

There can be rises in the cost of production and taxation (Von Broembsen, 2012). This

induces the reduction in the supply of goods. Because of less margin of profit it

happens. The government can bestow tax concessions or subsidies. It increases the

supply. Thus, firms become more profitable.

3.0 The by and large effects:

Since 201, there have been bulk investments by the Australian investors. It is mainly

due to a potent demand from the Chinese energy sector. At this time, the costs of iron

and coal were too exorbitant. Thus, the investors became greedy. They thought of

making the best use of this situation. The balance of trades was favorable for Australia.

It made the Australian economy flourish. The profile of the resource output is principally

based on the Chinese demand number. There were mere chances of growth in the

domestic market as per consumer demand for iron & coal. The GDP of the country is

mainly dependent on the yields from this sector. Primary concerns are about the growth

in the production of iron and coal. It is because the demands have dropped for coal and

iron. Australia’s resource boom happened due to the Chinese demand. There was a rise

in the production of steel from 489-832 million tons. By the year 2030 this matured

industry of China will decline. It is because they build scraps from older steel. So, the

economy will see a drop in the demand for coal and iron. The nation has made the

export prices lower. It is to maintain the same production level. Thermal energy uses

are degrading. It is because of the Chinese economy’s growth. Secondly, it is due to

environmental effects. Hydro-wind is a substitute for the thermal sector. Hydro-wind’s

increase caused a drop in the demands for the thermal energy. From the year 2006 to

2012, there was an increasing demand for coal. Thus, its consumption increased

considerably in China. But last year (2014), it dropped more than two percent. The

growth of the Indian economy is also the matter of fear. It is because quality coal and

iron is required to widen its infrastructure. South-east Asian nations will see more

growth in their demands. Thus, poor demand in the Chinese economy will offset. It is

thus, a golden opening for exporters in Australia (Financial Review, 2015).

4.0 Conclusion:

Challenges are faced by the Australian economy due to drop in demand of iron and

coal. It is for the decrease in the Chinese growth. The current ROI is poorer for the

country’s resources sector. But economists see a ray of hope from South-east Asian

countries’ demand. They argue the losses of the investors in the resource & mineral

sector.

5.0 References

Carboni, G. (2014). Term Premia Implications of Macroeconomic Regime

Changes. Macroecon. Dynam., pp.1-25.

Financial Review, (2015). Resources perfect storm. [online] Available at:

http://www.afr.com/opinion/australia-has-not-recognised-the-change-in-chinese-

demand-for-iron-ore-and-coal-20150405-1mf00o [Accessed 8 Aug. 2015].

Kim, S. and Lee, J. (2014). INTERNATIONAL MACROECONOMIC

FLUCTUATIONS.Macroecon. Dynam., pp.1-31.

Miron, D. and Alexe, I. (2014). Capital Flows and Income Convergence in the European

Union. A Fresh Perspective in View of the Macroeconomic Imbalance

Procedure. Procedia Economics and Finance, 8, pp.25-34.

Von Broembsen, M. (2012). People want to work, yet most have to labour: Towards

decent work in South African supply chains. Law, Dem. & Dev., 16(1).

KHA 117603

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In the following question, they have asked what are the issues surrounding the use of random number in simulation. You have given 5 points. Kindly elaborate the same.

Question:

Answer

Following are the issues surrounding the use of random numbers  in simulation:

1.Uniformity

2.Independence

3.Efficiency

4.Replicability

5.Long Cycle Length

Monte-carlo simulation technique requires the generation of a sequence of random numbers that is an integral part of the simulation model. The sequence of random numbers help in choosing random observations from the probability distribution.

Random numbers, used in simulation exercises are generated using digital computers.

*Multiplicative Congruential Random Number Generation Method:

Basic Relationship:

X_i+1 = a X_i (mod m), where a ³ 0  and  m ³ 0

Most natural choice for m is one that equals to the capacity of a computer word.

m = 2^b (binary machine), where b is the number of bits in the computer word.

m = 10^d (decimal machine), where d is the number of digits in the computer word.

The max period(P) is:

For m a power of 2, say m = 2^b, and c ¹ 0, the longest possible period is P = m = 2^b , which is achieved provided that c is relatively prime to m (that is, the greatest common factor of c and m is 1), and a = 1 + 4k, where k is an integer.

For m a power of 2, say m = 2^b, and c = 0, the longest possible period is P = m / 4 = 2^b-2 , which is achieved provided that the seed X₀ is odd and the multiplier, a, is given by a = 3 + 8k or a = 5 + 8k, for some k = 0, 1,…

For m a prime number and c = 0, the longest possible period is P = m – 1, which is achieved provided that the multiplier, a, has the property that the smallest integer k such that a^k – 1 is divisible by m is k = m – 1,

In the given demonstration , X_i+1 = a X_i (mod m)

Here, a=6, m=17, x₀=1, since m-1=16 is the 2 digit random number, therefore it will generate 2-digit random numbers.

So, X₁ = a X₀ (mod m)=6*1(mod 17)=6/17=06

X₂ = a X₁ (mod m)=6*6(mod 17)=36/17=02

X₃ = a X₀ (mod m)=6*2(mod 17)=12/17=12

The student got the following answer from one of his friend.  Please provide your suggestions for the answer given.

Question : What are the issues surrounding the use of random number in simulation.

Answer : Random numbers are integral part of simulation as it allows verification of model based on unbiased number generation. However there are multiple random number generation techniques varying from simple to complex calculation. Every model can only respond to particular set of random numbers only. Therefore it becomes quintessential to pin point random number generation technique to be used for any specific model.

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