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W6_Nasser_ Selecting the best 3 Optional Methodologies for Calculating Fuel Oil Price (FOP) of an Invoice

1.     Problem Definition

http://pmpopwp.blogspot.com/2017/12/w5nassergetting-fop-inrogj-required-to.html

In W5 Blog, visit above link titled “W5_Nasser_Getting FOP in RO/GJ required to calculate FC under a PPA”, I conducted Multi Attributes Decision Making (MADM) for comparing between 2 options for getting the FOP in RO/GJ. Accordingly, the 2nd Option was selected.

The preferred option, 2nd Option, is finding a methodology to convert the FOP from RO/letter, as submitted in FO supplier bill, to RO/GJ, as required for calculating the Fuel Charge (FC).

For converting the FOP from RO/letter to RO/GJ, the following 3 main elements are required:
  1. Diesel Price in RO/Letter
  2. FO Density in kg/m3 (depending on FO temperature at filling)
  3. Lower Heating Value (LHV) in kj/kg

This time, I am looking for the best proposal for selecting which methodology is the best for calculating the FOP using Multi Attributes Decision Making (MADM).

2.     Identify the Feasible Alternative

1- Option 1: Diesel Price Billed in RO/GJ
2- Option 2: Diesel Price Billed in RO/MMBTU
3- Option 3: Diesel Price Billed in RO/Litter with (LHV & Density) at Act filled FO temp is available
4- Option 4: Diesel Price Billed in RO/Litter with (LHV & Density) at 15◦C of filled FO temp)
5- Option 5: Diesel Price Billed in RO/Litter without (LHV & Density) at Act filled FO temp available
6- Option 6: Diesel Price Billed in RO/Litter without (LHV & Density) at 15◦C of filled FO temp

3.     Development of the Outcome for Alternatives:

Sr.N
Attributes
Option 1

Diesel Price Billed in RO/GJ
Option 2

Diesel Price
Billed in RO/MMBTU
Option 3

Diesel Price
Billed in RO/Litter with (LHV & Density)

at Act filled FO temp
Option 4

Diesel Price
Billed in RO/Litter with (LHV & Density

at 15◦C of filled FO temp)
Option 5

Diesel Price
Billed in RO/Litter without (LHV & Density)

At Act filled FO temp
Option 6

Diesel Price
Billed in RO/Litter without (LHV & Density)


at 15◦C of filled FO temp
1
FOP in RO/GJ comes From FO Supplier
Yes
Energy conversion from MMBTU to GJ is required 1MMBTU=0.947817 GJ
calculated directly from a given LHV & Density
Calculated from a given LHV & corrected Density
Calculated from Lab Test result of LHV & given density
Calculated from Lab Test result LHV & corrected Density
2
Time Consumed Generator & OPWP to get the FOP in RO/GJ
Strongly None
Strongly None
Almost None
Requires much time
Requires some time
Requires much time
3
Cost incurred by OPWP to get the FOP in RO/GJ
(estimated by time lost = 30$/rh )
None
None
None
30 $
15 $
30 $
4
Cost incurred by Generator to get the FOP in RO/GJ
None
None
None
Cost of time required to get actual temp of fuel filled
Cost for Lab test per fill

Cost for Lab test per fill
+
Cost of time required to get actual temp of fuel
5
3rd Party Cost for Lab Test to find out LHV & Density
Not required
Not required
Not required
Not required
Cost for Lab test per fill

Cost for Lab test per fill

6
Quality & accuracy of results
much Accurate
Much Accurate
Much Accurate
Less accurate
accurate
Less accurate
7
Frequency of repeating the process
Every fill
Every fill
Every fill
Every fill
Every fill
Every fill
8
Process complication
ZERO complication
ZERO complication
ZERO complication
High complication
complicated
High complication
9
Easy Tracking & Documentation
Strongly Yes
Strongly Yes
Strongly Yes
May lead for poor tracking
Can be tracked
May lead for poor tracking
10
Risk of Error to happen
Negligible
Negligible
Negligible
High risky
Medium risk
High risky
Table1: Development of the Outcome for the Alternatives (by the author)


4.     Selection Criteria:


Criteria 1
Criteria 2
FOP in RO/GJ comes From FO Supplier
Time Consumed Generator & OPWP to get the FOP in RO/GJ
Yes
5
Strongly None
4
Energy conversion from MMBTU to GJ is required 1MMBTU=0.947817 GJ
4
Almost None
3
calculated directly from a given LHV & Density
4
Requires much time
1
Calculated from a given LHV & corrected Density
2
Requires some time
2
Calculated from Lab Test result of LHV & given LHV
3
                  
Calculated from Lab Test result LHV & corrected Density
1





Criteria 3
Criteria 4
Cost incurred by OPWP to get the FOP in RO/GJ (estimated by time lost = 30$/rh )
Cost incurred by Generator to get the FOP in RO/GJ
None
3
None
4
30 $
1
Cost of time required to get actual temp of fuel filled
3
15 $
2
Cost for Lab test per fill
2
Cost for Lab test per fill
+
Cost of time required to get actual temp of fuel
1

Criteria 5
Criteria 6
3rd Party Cost for Lab Test to find out LHV & Density
Quality & accuracy of results
Not required
2
much Accurate
3
Cost for Lab test per fill
1
Less accurate
1
accurate
2

Criteria 7
Criteria 8
Frequency of repeating the process
Process complication
Every fill
1
ZERO complication
3
High complication
1
complicated
2

Criteria 9
Criteria 10
Easy Tracking & Documentation
Risk of Error to happen
Strongly Yes
3
Negligible
3
May lead for poor tracking
1
High risky
1
Can be tracked
2
Medium risk
2

Tables: Compensatory Model – Relative weighting (by the author)

5.     Analysis and Comparison of the Alternative:

Using Grid Analysis, which is a useful technique for deciding and it is most effective where you have many good alternatives and many factors to consider. The comparison of the above criteria is ranked as following:

Option 1
Option 2
Option 3
Option 4
Option 5
Option 6
Criteria 1
5
4
4
2
3
1
Criteria 2
4
4
3
1
2
1
Criteria 3
3
3
3
1
2
1
Criteria 4
4
4
4
3
2
1
Criteria 5
2
2
2
2
1
1
Criteria 6
3
3
3
1
2
1
Criteria 7
1
1
1
1
1
1
Criteria 8
3
3
3
1
2
1
Criteria 9
3
3
3
1
2
1
Criteria 10
3
3
3
1
2
1
Total
31
30
29
14
19
10
Table: Weight Assessment


6.     Selection of the Preferred Alternative

From above analysis, the best 3 options are ranked in order as following:

a. Option 1: Diesel Price Billed in RO/GJ
b. Option 2: Diesel Price Billed in RO/MMBTU
c. Option 3: Diesel Price Billed in RO/Litter with (LHV & Density) at Act filled FO temp is available

7. Performance Monitoring and the Post Evaluation of Result

Since the best Options 1,2, & 3 ,as ranked in order, are the 3 best options for calculating the FOP in RO/GJ, we may ask the Generator if it is possible to provide the same. 

8.     References:

o   The Engineering Toolbox. (n.d.). Density of fuel oils as function of temperature. Retrieved from https://www.engineeringtoolbox.com/fuel-oil-density-temperature-gravity-volume-correction-ASTM-D1250-d_1942.html
o   Hindawi, & Mathematical Problems in Engineering. (2016, April 27). Multiple Attribute Decision Making Based on Cross-Evaluation with Uncertain Decision Parameters. Retrieved from https://www.hindawi.com/journals/mpe/2016/4313247/
o   Mba tools. (n.d.). Grid Analysis. Retrieved from http://www.mbatools.co.uk/Toolbox/DecisionMaking/gridanalysis.htm
o   Planning Planet. (2014, July 2). | Project Controls - planning, scheduling, cost management and forensic analysis (Planning Planet). Retrieved from http://www.planningplanet.com/guild/gpccar/managing-change-the-owners-perspective%20Figures%208-14
o   Terence Holmes. (2015, September 1). Fishbein Models [Video file]. Retrieved from https://www.youtube.com/watch?v=JL1UFF-HJlQ&feature=youtu.be

Comments

  1. Dr. PDGDecember 20, 2017 at 3:36 PM

    EXCELLENT!!! Nice job this week Nasser!!

    Doesn't get much better than this!!!

    Keep up the good work....

    BR,
    Dr. PDG, Jakarta

    ReplyDelete

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