Abstract
The Cotton Corporation of India Ltd. (CCI) is a Miniratna company of the Government of India (GoI), under the Ministry of Textiles. CCI has been serving in the field of marketing of Indian cotton for the past five decades. As an independent entity under GoI, CCI undertakes Minimum Support Price operations to safeguard cotton farmers from distress sale and offers its cotton stocks through e-auction on regular basis to meet the domestic demand of quality cotton at competitive rates. This case illustrates the development of an objective model for determining the variety-wise optimal floor price of daily e-auction of cotton. Before the model was proposed and developed, a team of subject matter experts and top management of CCI considered the (i) Variety-wise prevailing prices of cotton in Indian market; (ii) General price behaviour of international market; and (iii) Previous days’ variety-wise sale rates over and above the floor price and decided the floor price for daily auction. CCI sought academic advisory to develop an optimal floor pricing model to scientifically determine the floor price for the 15 odd cotton varieties traded through CCI.
Additional Information
| Product Type | Case |
|---|---|
| Reference No. | O&DS0001 |
| Title | CCI: Optimal Floor Pricing Model for the E-Auction Market |
| Pages | 8 |
| Published on | Aug 3, 2023 |
| Year of Event | 2022 |
| Authors | Narayanaswami, Sundaravalli; |
| Area | Operations & Decision Sciences (O&DS) |
| Discipline | Economics, Management Education , Marketing, Quantitative Methods, Strategic Management |
| Sector | Agriculture and Animal Husbandry, Government, Public Sector, Trade |
| Learning Objective | To illustrate and develop a data driven optimal floor pricing model for an Indian PSU To understand the trade-off between margin, revenue, and loss for a commodity, subject to market risks. To understand the business challenges of a PSU created for farmers’ welfare to maintain financial viability (and profitability), particularly when holding cost is unavoidable. To explore different possibilities of objectively evaluating uncertainty in buying patterns and determining the impact of floor pricing on organisational revenues. |
| Keywords | Floor Pricing; E-Bidding; Revenue Optimization; MSP; PSU |
| Country | India |
| Organization | Cotton Corporation of India |
| Access | For All |
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