Buckeye Power & Light Company

6 Pages Posted: 21 Oct 2008

See all articles by Sherwood C. Frey

Sherwood C. Frey

University of Virginia - Darden School of Business

Robert L. Carraway

University of Virginia - Darden School of Business

Multiple version iconThere are 2 versions of this paper

Abstract

This case describes the coal-procurement process of a small electric utility. The manager of the production fuel department must decide how much coal to purchase from each vendor and how to allocate the purchased coal among the utility's three coal-burning plants. The situation can be modeled and solved as a linear program. Sensitivity analysis can be used to help formulate a strategy for negotiating with the vendors and to address other special issues.

Excerpt

UVA-QA-0326

BUCKEYE POWER & LIGHT COMPANY

Don Peters was manager of the Production Fuels Department of Buckeye Power & Light Company (BP&L), a small utility in southeastern Ohio. BP&L had three steam electric power plants—located in Athens, Zanesville, and Steubenville—whose primary energy source was coal. Each month, coal for those plants was purchased from a heterogeneous collection of vendors in Ohio, Pennsylvania, and West Virginia, ranging in size from small father-and-son operations to large mining companies. Peters was responsible for the monthly coal-procurement process, including how much to purchase from each vendor and which specific plant (or plants) each vendor should supply.

In October 1986, Peters' immediate task was to determine November's coal-procurement schedule. BP&L had recently retained the services of a consulting firm to analyze aspects of its operations, including the coal-procurement process. Peters hoped to use the opportunity of the consultant's analysis to rethink the entire procurement process. He also hoped the report would shed some light on two related issues that had been a source of controversy within the department.

Coal

Compared with oil, natural gas, and nuclear energy, coal was a relatively cheap source of fuel during the 1980s. Coal is a combustible rock formed by the underground compression of partially decomposed plant matter over millions of years. There are four major types of coal, classified according to energy content: lignite (lowest energy content), sub-bituminous, bituminous (most widely used as a fuel source), and anthracite (highest energy content). Coal's energy content (or thermal value) is measured in British thermal units (Btus). (One Btu is the amount of heat needed to raise a pound of water one degree Fahrenheit.) Pure bituminous coal typically contains on the order of 15,000 Btu per pound (Btu/lb).

. . .

Keywords: decision theory, linear programming, negotiation, resource allocation, sensitivity analysis

Suggested Citation

Frey, Sherwood C. and Carraway, Robert L., Buckeye Power & Light Company. Darden Case No. UVA-QA-0326. Available at SSRN: https://ssrn.com/abstract=911843

Sherwood C. Frey (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

HOME PAGE: http://www.darden.virginia.edu/faculty/frey.htm

Robert L. Carraway

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

HOME PAGE: http://www.darden.virginia.edu/faculty/carraway.htm

Register to save articles to
your library

Register

Paper statistics

Downloads
170
Abstract Views
1,041
rank
105,994
PlumX Metrics