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Price Index Calculation

The document provides an example calculation for adjusting the price of cement according to a price adjustment clause. It shows how to calculate the increase or decrease in cement cost (Vs) during a quarter using the percentage of cement component (Ps), total value of cement (R), the current wholesale price index for cement (S1), and the baseline wholesale price index (So). The example calculation determines the price adjustment per bag of cement is an increase of Rs. 2.87, bringing the total paid price to Rs. 207.87 per bag. Monthly wholesale price indices can be found on the provided website.

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230 views

Price Index Calculation

The document provides an example calculation for adjusting the price of cement according to a price adjustment clause. It shows how to calculate the increase or decrease in cement cost (Vs) during a quarter using the percentage of cement component (Ps), total value of cement (R), the current wholesale price index for cement (S1), and the baseline wholesale price index (So). The example calculation determines the price adjustment per bag of cement is an increase of Rs. 2.87, bringing the total paid price to Rs. 207.87 per bag. Monthly wholesale price indices can be found on the provided website.

Uploaded by

simplyarnav90
Copyright
© Attribution Non-Commercial (BY-NC)
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
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Ministry of Commerce and Industry

E X A M P L E (Price Index)
Calculation Cement Price as per price adjustment Clause 20 V2 = 0.85 x Ps x R x ( S1 - So ) 100 So Vs = Increase or decrease in the cost of Cement during the quarter under consideration due to change in the rate of Cement Ps = Percentage of Cement component ( 100% ) R = Total value of Cement during month ( Say 205/- )Per Bag S1 = The all India whole sale price index for Cement for month under consideration published by the Office of Ministry of Commerce & Industry, Government of India ( Say i.e., Mar ' 2011 - 154.10 as per index ) So = The average whole sale price Index for Cement on 28 days preceding for the date of opening of bids as published by the Office of Ministry of Commerce & Industry, Government of India ( Say i.e., Aug ' 2010 - 151.60 ) Price Index ( Enclosed Copy ) S1 = Mar - 2011 i.e., 154.10 So = Aug ' 2010 i.e., 151.60 Rate / MT quoted as per Rs. 205/ per Bag ( R ) Vs = 0.85 x Ps x R x ( S1 - So ) 100 So Vs = 0.85 x 100 x 205 x 154.10 - 151.60 100 151.60 0.85 = 2.50 x 205 x 151. 60

0.85 x 205 x = 0.01649 = 2.87 / Bag Total Amount to be paid 205 + 2.87 = 207.87 Not e:
Monthly wholesale price Index can be obtained from website :http://earindustry .nic.in/wpi_data_display/display_data.asp for calculating cement price adustment.

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