Dharwar Drilling Society (DDS)

The objective of the society is to motivate farmers to take the

risk of drilling and to increase area under irrigation. The farmers
will also become self-reliant and have better standard of living.
The managing director of DDS, Mr. Nijalingappa is facing
problem of deciding how to mitigate the risk that the poor
farmers has to undertake. To help him in his problem he has
asked Ms. Malati Prasad, a student of WIMWI, to examine it and
come up with a possible solution. Details of the case were
explained to her.

Decision points:
1. Soil condition.
2. Survey.
-No of sites recommended for drilling by survey.

Decision variables:
1. Additional Per foot charge taken for successful cases (x per
foot) .
2. Government subsidy for special and normal cases in failed
wells (the number of special cases).
3. Cost of digging in various cases.

Objective :
To reduce burden on farmer with unsuccessful wells by charging
appropriate amount from successful ones.

Constraints:
Additional charge per foot on successful wells should be greater
than zero( i.e. x>0).

The two options available are with survey digging and without
survey digging, we need to find the cost implication in both the
cases. Considering we have a total of 800 sites to be dug.
A.WITH SURVEY:
Considering recommended wells are 560 out of the 800 for
drilling (average depth of 200 feet).
Success rate is 80%, for 560 it will be 448.
A.1 SUCCESS CASE:
Cost for 448 wells: 448 *50*200 + 448*490(survey cost) +
additional.
Additional for 448 is x*448*200.
490 is per well cost of survey.
A.2 UNSUCCESSFUL CASE:
Cost for unsuccessful 112 wells:
Cost for 112 wells: 112*50*200 + 112*490(survey cost).
B.WITHOUT SURVEY:
For 200 feet:
For 800 wells 60% chance of success gives 480 well striking
water.
B.1 SUCCESS CASE:
Cost for 480 wells: 480 *50*200 + additional.
Additional for 480 is x*480*200.
B.2 UNSUCCESSFUL CASE at 200 feet(320 left wells):
Amount will be 320*200*50.
We can dig to 250 feet depending on soil condition

That is another 50 extra foot. As 20% soil condition is

favourable for digging which gives us 64 wells.
Out of the 64, 30% i.e. 19 wells are success and remaining 45
are failures.
B2.1 Cost of digging in 19 wells: 19*50*50 + additional.
Additional is 19*50*x.
B2.2 Cost of digging for unsuccessful 45 wells: 45*50*50.

FUNCTION FOR BASIS OF DECISION:

Additional amount gained from successful scenarios should be
>= 20% or 50%(subsidy in special cases is 50%) of cost in
unsuccessful cases.
There are many uncontrollable outcomes which can have
impact like soil condition not being favourable for drilling, cost
per foot for drilling is also variable which can increase or
decrease the cost.
We have not taken into account water table going up or down in
the region. Charging of water table will reduce cost and vice
versa if it goes down.
A rise and fall in government subsidy can change the risk
associated dramatically. A rise will reduce the risk and a fall will
increase it.