Dofasco Fuel Management
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Table of Contents
Table of Contents ………………………………………………………………………………………………………………………………. 1 List of Tables ………………………………………………………………………………………………………………………………………… 1 List of Exhibits……………………………………………………………………………………………………………………………………… 1 Abbreviations used ……………………………………………………………………………………………………………………………….. 1
Assumptions……………………………………………………………………………………………………………………………………………. 12 Exhibits…………………………………………………………………………………………………13
List of Tables
Table 1: optimal fuel allocation …………………………………………………………………………………………………………………. 5 Table 2: fuel prices per mio BTU ……………………………………………………………………………………………………………… 5 Table 3: optimal allocation………………………………………………………………………………………………………………………… 6 Table 4: screenshot of model: input ………………………………………………………………………………………………………….. 8 Table 5: screenshot of model: output 1………………………………………………………………….9 Table 6: screenshot of model: output 2: Internal costs…………………………………………………10 Table 7: screenshot of model: output 2: Purchases required……………………………………………10 Table 8: screenshot of model: output 2: Total fuel cost…………………………………………………10
List of Exhibits
Exhibit 1: current fuel allocation …………………………………………………………………………………………………………….. 13 Exhibit 2: possible fuel allocation ……………………………………………………………………………………………………………. 13
Abbreviations used
BFG Blast Furnace Gas COG Coke Oven Gas FO Fuel Oil
NG Natural Gas
Executive Summary
Objective
* Optimize the allocation of fuels for the different plants in the light of the complexity of the company and the expected rocketing of external fuel prices.
Results
* Final costs for your company can be reduced with 2.2mio$ annually, by balancing the cost of internally produced BFG and COG with the cost of external purchase of FO and NG.
* Modification of machines can reduce the final costs with an additional 114k$ annually
Future
With the model we constructed, your company is able to just give in the forecasted production data for any given month, as well as the fuel prices. With this input, the model will
* generate the allocation of all fuels
* signal the quantities of external fuels that need to be bought
* determine the final total fuel cost will be for your company for any given month.
Additionally
We have calculated the optimal fuel allocation for DOFASCO at this moment. In doing so, we can eradicate the need for external oil and reduce the need for Natural Gasses tremendously at the same time. Finally, a sensitivity analysis discusses the impact of certain future decisions by your company and some long-term strategic recommendations are provided.
Improved monthly cost
Monthly savings
Annual savings without further modifications
Extra potential modifications
Extra monthly cost reductions Extra potential annual savings
Total potential annual savings
$57,362 $185,006 $2,220,072
$9,528 $114,342
$2,334,414
15 January Decision Sciences
Group 1 2
”Contentment consist not in adding more fuel, but in taking away some fire.”
– Thomas Fuller
15 January Decision Sciences Group 1 3