GROUP MEMBERS: HESHAM AL-IKHWAN DANIEL LEON ZEYNEP OZCAN ALBERTO PEREZ AYE AYE PWINT

COMPANY BACKGROUND Joint venture owned by Shell ( 35%), Texaco (32.5%), and Saudi Aramco (32.5%). Headquarters in Houston, Texas Major business - refine and market gasoline and petroleum products under the Shell and Texaco brand names in 26 Eastern and Gulf Coast States and Washington D.C. It is the third largest retail gasoline marketer in the U.S. and the sixth largest refinery Its refineries are capable of refining approximately 825,000 barrel per day Financial –Revenue of $12.2 billion, Net Income for 1999 $69 million Atlanta Branch –Supply Atlanta for 100 miles in radius

Supply Chain of Motiva Facility at Atlanta

Motiva and its Refineries Port Arthur, TX Refinery Delaware City Refinery Norco Refining Company Convent Refinery

Colonial Pipeline Extends from Houston, TX to Linden, NJ Total Length of Pipeline is 2889 miles 2,271 miles of stub lines serve major cities and airports Capacity of 2,148,000 barrels per day 89% total utilization

Colonial Pipeline Product move in the mainline at 3 to 5 mph Slower in Stub lines due to thickness differences Transported in batches of a minimum of 75,000 barrels Complex Separation of Products through interfaces and pigs Mixed products at interface are sold for rerefining

Pipeline as a Mode of Transportation Reasons for using a Pipeline: Cheaper than any other mode of transportation Transporting twelve 6.4 gallons of gasoline through a pipeline from Houston to New York is cheaper than to mail a one ounce first class letter this same distance Reduced number of tanker trucks in highways (safety) Dependable mode with steady throughput Fewer breakdowns than other modes

OPERATIONS AT ATLANTA PLANT Located in Doraville, GA Plant carries four gasoline products: regular, mid-grade, premium, and diesel Refine products are transported via the Colonial Pipeline from Convent Total capacity of 302,000 barrels of product Working capacity is 50% of the entire capacity Three stations at the loading rack 10 to 12 minutes service time in the loading rack

Inventory at the Facility 21 day lead time from Louisiana to Doraville Order cycle of 5 days Safety Stock of up to 2.5 days 35,000 barrels of Regular 11,250 barrels of Premium 15,000 barrels of Diesel 2 Tanks per product type Mr. George Marlatt (Facility Manager)

Inventory at the Facility Marketing Department: up to 2.5 days of safety stock Facility Manager: would like to keep more than 2.5 days of inventory “High inventory levels promote growth” Our perception: Not even close to Stockout in 3 years High inventory levels tie up space and capital Studied Reduction of inventory levels

Blending Process Process of adding additives to unblended products Takes place at the loading rack Where? When? Right before the product is loaded to a truck Two types of blend: Texaco Blend: used in all Texaco branded products Generic Blend: used for unbranded products

Advantages of Blending at the Rack Postponement of product differentiation until last step Lower levels of inventory Ability to forecast aggregately Better space utilization

Type of Customers Motiva Inventory Customers 25% of total business Retail Account 10% of total business Wholesale Account 50% of business Commercial Business 15% of total business

Transportation from Motiva Motiva Eagle TransportationMansfield Oil Inventory Customers Motiva is only responsible for transportation of inventory customer’s products Transportation split equally by volume Total of 74 Gas Stations 60 Texaco 14 Independent Less than 5 stock outs per quarter get bonus 10 or more stock outs carriers get penalized

Eagle Transportation Ben Hall - Operations Manager Located 1/2 mile from Motiva Facility Capacity: 100 truckloads/day with 20 tractors and 20 trailers 20 drivers working double shifts Drivers are paid by trips Operating at 70% capacity

Procedure at Eagle Transportation Receives daily s from Texaco headquarters with inventory levels at gas stations Operators enter received data into software Determine which gas stations have low levels of inventory and require service Assign driver and truck to fulfill specific order Driver’s procedure at Motiva

Inventory at Gas Stations Two types of Gas Stations: Texaco owned and operated Independent gas stations with Texaco name Inventory difference: Texaco owned stations like to keep high levels of inventory Texaco already owns this product and is paying for it Independent gas station searching for optimal inventory levels

ANY QUESTIONS?