Palmetto Paper

12 Pages Posted: 21 Oct 2008

See all articles by Samuel E. Bodily

Samuel E. Bodily

University of Virginia - Darden School of Business

Phillip E. Pfeifer

University of Virginia - Darden School of Business

Raiford Smith

University of Virginia - Darden School of Business

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Abstract

The manager of a paper plant must decide whether to buy a new electrode boiler to replace a natural gas boiler. The challenge is to cut through complexities, such as uncertainty in boiler efficiency, energy prices, financing alternatives, and supplier/competitor relationships to arrive at a first-cut analysis and decision. Although the case is rich with issues, a considered decision can be made without using the sophisticated methods available to treat these complexities. The case is designed as an introductory class in which an agenda for a course in decision analysis/management science is established.

Excerpt

UVA-QA-0657

Rev. Feb. 24, 2014

PALMETTO PAPER

Jim Carpenter, plant manager of Palmetto Paper's Spartanburg, South Carolina, plant, anxiously skimmed Southern Power's electrode boiler pricing proposal. As a former NASCAR driver, Carpenter had a reputation for occasionally making business decisions “by the seat of his pants.” With respect to spending $ 900,000 on a new boiler, however, he knew he would have to run some numbers.

His instincts told him that the time was right to replace his old, dirty natural gas boiler with this new, 99.5% efficient electrode boiler. Natural gas prices were projected to rise, and his current natural gas boiler was costing him a lot of money to operate. He hoped Southern Power's electricity prices were low enough to justify the new boiler.

Palmetto Paper

. . .

Keywords: decision analysis

Suggested Citation

Bodily, Samuel E. and Pfeifer, Phillip E. and Smith, Raiford, Palmetto Paper. Darden Case No. UVA-QA-0657. Available at SSRN: https://ssrn.com/abstract=912057

Samuel E. Bodily (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924-4813 (Phone)
434-293-7677 (Fax)

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

Phillip E. Pfeifer

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924-4803 (Phone)

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

Raiford Smith

University of Virginia - Darden School of Business

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

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