When the financial status of Waylan Industries was being discussed by top management, it was clear that thing were not looking good. The discussion was not free from emotion and concern. The question was how were they going to improve the bottom line. The latest figures had shown that profits were down in spite of increased sales. After analysis of the financial data at hand, it was determined that 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.
Everyone in the meeting room then turned their attention to Erin. Erin had a simple plan - to reduce production costs by reducing energy costs. Erin had in fact had collected data on energy consumption, energy requirements and energy demands. Purchase data, as well as purchase options, were also gathered.
Erin had created a table to show the previous year's energy demands in British Thermal Units (BTU), per quarter, by the millions. In the spring, demand was at 1500 million BTUs. During the summer and fall, demand was constant at 5,000 million BTUs and in winter demand peaked at 10,000 million BTUs.
The company's stipulated environmental air standards must be kept and maintained in line with state and government clean-air regulations. Coal was determined as the cheapest source of energy at $8 per million BTU ($8/1,000,000 BTUs). And to stay within the company's own environmental standards, when using coal as a primary energy source, production processes can only burn as much 500,000,000 BTUs per quarter. On the other hand, natural gas costs $32 per million BTUs ($32/1,000,000 BTUs) while petroleum is at $46 per million BTUs - the company's environmental air standards for natural gas and petroleum being 1,000 million BTUs per quarter.
Coal, natural gas and petroleum stored for future use...