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Buckeye Power & Light Co.

Buckeye Power & Light Co. Arash Bayatmakou Leila Dunning Luisa Elkins Daniel Stepchew Haydon Young. Today’s Agenda. Introduction of SCOPE consulting Business Overview Introduction of POW Analysis Immediate Planning Vendor Supply Price Sensitivity Long-Term Contracts

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Buckeye Power & Light Co.

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  1. Buckeye Power & Light Co. ArashBayatmakou Leila Dunning Luisa Elkins Daniel Stepchew Haydon Young

  2. Today’s Agenda • Introduction of SCOPE consulting • Business Overview • Introduction of POW • Analysis • Immediate Planning • Vendor Supply • Price Sensitivity • Long-Term Contracts • How POW works • Conclusion

  3. SCOPE Consulting Team, LLM • Collaborative consulting team • Specialize in the coal industry • Proven track record - i.e. Powell Products case of helping companies identify procurement plans that will be the most cost effective and improve efficiency.

  4. Business Overview • Production Fuels Department, Buckeye Power & Light Company • Don Peters tasked to optimize procurement • Long-term contracts • Safety-stock levels • Minimizing costs

  5. POW Overview • Procurement OptimizationWizard • Customized application for Buckeye Power & Light Company

  6. Immediate Planning • Based on assumptions given from Buckeye Power and Light Company: • The lowest cost procurement plan is: 25,240 total tons shipped toAthens 32,721 total tons shipped toSteubenville 20,228 total tons shipped toZanesville • This amounts to a total cost of $3,165,119.70

  7. Price Sensitivity

  8. Vendor Supply $64,556.93 Change From Base $64,600.00 Change From Base $64,007.30 Change From Base $64,050.00 Change From Base $44,700.18 Change $44,730.00 Change

  9. Long-Term (LT) Contracts • Original optimal procurement plan • 83% all coal purchased on LT contracts • Total cost $ 3,165,119.70 • Optimal procurement plan without LT contracts: • 75% all coal purchased from LT contracts suppliers • Total Cost $ 3,129,223.02 • Cost of maintaining LT contracts is $35,896.68

  10. LT Contracts Adjustment to 65% 65% coal purchased on LT contracts

  11. Cost Variation LT Contracts

  12. LT Contracts Optimal Plan

  13. LT contracts Optimal Plan

  14. POW – Procurement Optimization Wizard

  15. POW Features • POW uses an embedded program (called Solver) to calculate optimal outcome • User does not have to change anything in Solver • Easy “one-button” design makes it user-friendly • POW includes slots to add more vendors or change parameters

  16. How POW works POW considers the following factors to calculate an optimal procurement plan: • Quantity, Quality and Price of vendors (i.e. available tons, BTU’s of energy content, etc.) • Minimum shipment amounts • Required percentage of Long-Term contracts • Constraints  User can change any of these factors to reflect current conditions

  17. Conclusion • Our team took on a problem and developed a user-friendly application that will allow you to test results yourself and minimize costs based on different constraints. • Our dedication, commitment to high quality, and proven track record managing high revenue firms are the reasons why Buckeye Power & Light, Co. should consider Scope Consulting in its ongoing strategic planning efforts.

  18. Questions

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