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  • Study Case 6 - Erin's Energy Plan (New)

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    Marsha Maharani
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    Waylan Industries is facing financial difficulties due to high production costs driven by a 250% increase in energy prices. To address this, they want to develop an energy procurement plan to minimize costs across four sales periods (spring, summer, fall, winter). Data on energy demand, supply capacity, energy types (coal, natural gas, etc.), and costs are provided. The total energy demand is 28 million BTUs and the total cost of production using the different energy sources across all periods would be $692,800.

    Original Description:

    Russel - Operation Management

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    Waylan Industries is facing financial difficulties due to high production costs driven by a 250% increase in energy prices. To address this, they want to develop an energy procurement plan to minimize costs across four sales periods (spring, summer, fall, winter). Data on energy demand, supply capacity, energy types (coal, natural gas, etc.), and costs are provided. The total energy demand is 28 million BTUs and the total cost of production using the different energy sources across all periods would be $692,800.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    174 views3 pages

    Study Case 6 - Erin's Energy Plan (New)

    Uploaded by

    Marsha Maharani
    Waylan Industries is facing financial difficulties due to high production costs driven by a 250% increase in energy prices. To address this, they want to develop an energy procurement plan to minimize costs across four sales periods (spring, summer, fall, winter). Data on energy demand, supply capacity, energy types (coal, natural gas, etc.), and costs are provided. The total energy demand is 28 million BTUs and the total cost of production using the different energy sources across all periods would be $692,800.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 3

    Study Case 6 : Operations Management

    Erins Energy plan


    Group 6:
    1. Amelia Nurunnisa (1106059865)
    2. Marsha Maharani (1106059732)

    I.

    Overview
    The financial status of Waylan Industries were not looking good. The latest figures
    had shown that profits were down inspite of increased sales because the cost of
    production was to high and it had consequently reduced profitability by a huge margin.
    It was also determined that the exponential jump in energy prices by as much as 250
    percent had resulted in the high energy costs the company had incurred.
    Waylan Industries want to develop an aggregate plan. Data that relate to
    production, demand, capacity, and cost are shown in table below.

    Spring
    1.500

    Demand
    Capacity:
    Coal
    Natural Gas
    Petroleum
    Electricity (Local Utility)
    Electricity (Nearby Utility)

    Type of Energy
    Coal
    Natural Gas
    Petroleum
    Electricity (Local Utility):
    Spring
    Summer
    Fall
    Winter
    Electricity (Nearby Utility):
    Spring
    Summer

    500
    1.000
    1.000
    2.000
    2.000

    Sales Period
    Summer
    Fall
    5.000
    5.000
    500
    1.000
    1.000
    2.000
    2.000

    Cost per Million BTUs


    $
    8
    $
    32
    $
    46

    Winter
    10.000

    500
    1.000
    1.000
    2.500
    2.500

    500
    1.000
    1.000
    2.500
    2.500

    Holding Cost
    $
    2,4
    $
    9,6
    $
    9,2

    $
    $
    $
    $

    20
    40
    24
    70

    0
    0
    0
    0

    $
    $

    22
    44

    0
    0
    1

    Fall
    Winter

    II.

    $
    $

    26
    75

    0
    0

    Analysis
    Demand For
    Supply From
    Spring

    Coal
    Natural Gas

    Spring

    Petroleum
    Electricity
    (Local
    Utility)
    Electricity
    (Nearby
    Utility)
    Coal
    Natural Gas

    Summer

    Petroleum
    Electricity
    (Local
    Utility)
    Electricity
    (Nearby
    Utility)
    Coal
    Natural Gas

    Fall

    Petroleum
    Electricity
    (Local
    Utility)
    Electricity
    (Nearby
    Utility)

    Summer
    8

    10,4

    Fall
    $

    Winter

    12,8

    15,2

    Unused
    Capacity
    0

    500
    $
    $
    $

    500
    32
    46
    20

    $
    $

    22

    41,6
    55,2

    1.000
    $

    Total
    Capacity
    Available
    (supply)

    20

    $
    $

    51,2
    64,4

    20

    60,8
    1.000
    $
    73,6
    $

    20

    0
    1.000
    1.000
    0

    1.000
    $

    2.000

    22

    22

    22

    2.000
    $

    2.000
    8

    10,4

    12,8

    500

    500

    32
    1.000
    $
    46
    $

    40

    41,6

    51,2

    0
    1.000

    55,2

    40

    64,4
    500
    $
    40

    500
    $

    1.000

    0
    500
    0

    1.500
    44

    44

    44

    2.000
    0

    2.000
    $

    10,4

    2.000
    0

    500
    $
    $
    $

    500
    32
    46
    24

    41,6
    1.000
    $
    55,2
    1.000
    $
    24

    0
    1.000
    0
    1.000
    0

    2.500
    $

    1.000

    26
    2.000

    2.500
    $

    26
    500

    0
    2.500
    2

    Coal

    Cost of production

    500

    32
    1.000
    $
    46
    1.000
    $
    70

    Petroleum

    Electricity
    (Local
    Utility)
    Electricity
    (Nearby
    Utility)
    Total Demand

    500

    Natural Gas

    Winter

    0
    1.000
    0
    1.000
    0
    2.500

    75

    2.500

    0
    2.500

    2.500
    28.000
    $
    692.800

    1.500

    5.000

    5.000

    10.000

    6.500

    $ 24.000

    $120.000

    $ 116.000

    $ 432.800

    So, the cost of production of Waylan Industries for 4 seasons is $692,800.

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