DQCKET SECTION
BEFORE THE
POSTAL RATE COMMISSION
WASHINGTON, D.C. 202680001
‘RECEIVED
OCT 1
4 41 Pfi ‘97
POSTAL PATC Cljl~itil::;~~
OFFICE OF THE SCCRETARY
POSTAL RATE AND FEE CHANGES,
RESPONSES
Docket No. R97-1
1997
OF UNITED STATES POSTAL SERVICE WITNESS SCHENK
TO INTERROGATORIES
OF
MAGAZINE PUBLISHERS OF AMERICA
(MPAIUSPS-T27-1
- 8)
The United States Postal Service hereby files the responses of Leslie Schenk to
the following interrogatories
1997: MPAIUSPS-T27-1
The interrogatories
of Magazine Publishers of America, filed September
through 6.
are stated verbatim and are followed by the responses.
Respectfully submitted,
UNITED STATES POSTAL SERVICE
By its attorneys:
Daniel J. Foucheaux, Jr.
Chief Counsel, Ratemaking
J&/f
r~~&--JJg
Michael T. Tidwell
475 L’Enfant Plaza West, SW.
Washington, D.C. 20260-l 137
October 1, 1997
17,
RESPONSE
OF THE UNITED STATES POSTAL
TO THE INTERROGATORIES
SERVICE WITNESS
OF MPA
SCHENK
MPAIUSPS-T27-1.
Please refer to Page 13 of your testimony
where you state, “[IIf
there is migration
of BRMAS-qualified
volumes to PRM, the BRMAS coverage factor
would change, which would affect the cost of BRMAS-qualified
BRM. According
to
witness Fronk’s testimony,
66 percent of BRMAS-qualified
volume is projected
to
migrate to PRM. Multiplying
the volume of BRMAS-qualified
mail counted and rated
in the BRMAS operation
by 34 percent, determining
the percentage
of all BRMAS
qualified mail, and weighting
across strata by total BRMAS-qualified
volume (after
66 percent has migrated to PRM), the resulting BRMAS coverage factor after this
migration
is 5.87 percent.”
a.
b.
Please provide all underlying
data and calculations
used to derive the “resulting
BRMAS coverage factor after this migration
is 5.87 percent.”
If you use a
spreadsheet
in the calculations,
please also provide the data and calculations
in
electronic
form.
Please confirm,
ceteris parabis [sic], that if (1 I 66 percent of BRMAS- qualified
BRM that is counted and rated in the BRMAS operation
migrates to PRM, and (2)
66 percent of BRMAS-qualified
BRM that is not counted and rated in the BRMAS
operation
migrates to PRM, then the BRMAS coverage factor will remain at
14.24 percent.
RESPONSE:
a.
The following
migration
by the volume
counting
and rating
weighted
average
the result
that the BRMAS
Confirmed.
for.
and rated in the BRMAS
then divided
The following
b.
was used to estimate
to PRM was accounted
mail counted
and
process
table
was known
of these
shows
strata
the BRMAS
By strata,
operation
coverage
the volume
of BRMAS-rated
for which
(after
has migrated
BRMAS
coverage
factor
this calculation.
coverage
factors
after
of BRMAS-rated
was multiplied
66 percent
factor
by 34 percent,
the method
of
to PRM).
A
was then taken,
after this migration
is 5.87
with
percent.
RESPONSE OF THE UNITED STATES POSTAL SERVICE WITNESS
TO THE INTERROGATORIES
OF MPA
MPAIUSPS-T27-la
Estimated ERMAS Coverags Factor After Mlomtion to PRM
(All volumes @an am average dally volumer; from the BRM Ractkea
Ill
..
.I
:I
!
1
strats
1
2
3
4
5
11
121
I31
BRMAS
Volume
341,154
0
221,229
131,123
321.150
677,542
BRMASrated volume
for which
method to
Count and
rate am
known
341,154
0
221.229
131.123
321.144
677.148
BRMAS-reted
V&Ill9
counted end
rstsd in
BRMAS
op-atetion
69
0
0
13.287
27,265
200,172
1.692.198
1.691.798
240.813
Explanation of data used or calculation made:
BRM Practice Survey. controlled to 1996
Ill
ERM Practice Survey. controlled to 1996
I21
BRM Pmctice Survey. controlled to 1996
\3l
I41
I31 I I21
Weighted average of strata percentages.
151
121.
I31 - 0.66
161
I31
0,34
I71
I71
/
I61
I81
Weighted average of strata percentages.
I91
14.24%
151
Suve~b
161
171
I81
ERMASrated
volume for
which
method to
count end
rem me
known
341.106
0
221,229
122,354
303,136
545,034
BRMAS-rated
volume
counted and
rated in
BRMAS
operation
23
0
0
4.518
9.277
66.058
Percent of
BRMAS-rated
pieces counted
and rated in a
BRMAS
operation
1.532.861
81.876
4.04%
I91
141
Percent of
BRMAS-rated
pieces
counted and
rated in B
BRMAS
operation
0.02%
0.00%
0.00%
10.13%
8.50%
29.56%
SCHENK
RPW totals
RPW totals
RPW totals
using I1 I as wwghts
using I1 I as weights
0.01%
0.00%
0.00%
3.69%
3.06%
12.49%
69
0
0
13267
27266
200266
23.46
0
0
4517.6
9276.9
66056
RESPONSE
OF THE UNITED STATES POSTAL
TO THE INTERROGATORIES
MPA/USPS-T27-2.
a.
b.
c.
d.
e.
Please refer to Exhibit
SERVICE WITNESS
OF MPA
USPS27A
and Exhibit
SCHENK
USPS27C.
Please confirm that Exhibit USPS27A
shows that after the incoming
primary
sort, there are three alternative
sorting options for BRMAS mail: (1) BRMAS
Operation,
(2) Other Barcode Sorter, and 131 Manual Sort.
Please confirm that the weighted
cost per piece of s.0785 shown in Exhibit
USPS27C
is a weighted
average of (1) the cost for BRMAS mail sorted in the
BRMAS operation
and (2) the cost of manually sorted BRMAS mail.
If subpart b is confirmed,
please explain why the weight cost per piece is not a
weighted
average of (1) the cost for BRMAS mail sorted in the BRMAS
operation,
(2) the cost for manually sorted BRMAS mail, and (3) the cost for
BRMAS mail sorted on another Barcode Sorter.
If subpart b is confirmed,
please explain fully why you assumed that all BRMAS
mail that is not counted and rated in the BRMAS operation
is manually sorted.
Please confirm that the Weighted
Cost Per Piece [141 on Exhibit USPS-27C
is
actually equal to ~I11”~~111+112)~~+~~131’~1-~11~l,
not
([11*([111+[12)ll+f[131’~1-[21))
as is stated on Exhibit USPS27C.
RESPONSE:
a.
Confirmed
b.
Confirmed
c.
The unit cost model
program
would
program,
BRMAS
sorter
be in place during
it was assumed
operation,
operation
BRMAS
include
program
information,
unit costs
when
it was assumed
the test year.
automatable
was not studied.
With
that
BMR in a non-BRMAS
Given that
it is now known
BRM in a barcode
I do not know
and the only study
I am aware
of is that addressed
to a handwritten
to include
of pre-barcoded
of that analysis
sortation
sorter
of any special
is limited
reply mail piece.
that
studies
barcode
a new
if costs
piece First-Class
Miller’s
Therefore,
sorter
to
could
done to obtain
testimony
to the cost avoidance
of BRM in a barcode
in the
be appropriate
operation,
single
in witness
BRMAS
be processed
will not be in place in the test year, it would
However,
a new BRMAS
an improved
BRM would
so the cost of processing
23), and the scope
available
that
the cost of processing
be developed.
compared
was developed
this
mailpiece
(USPS-T-
for PRM
the data are not
operation
in my model.
RESPONSE
d.
See my response
be sorted
those
Confirmed.
to part c. above.
to mail recipient
pieces
Postage
e.
OF THE UNITED STATES POSTAL
TO THE INTERROGATORIES
must
Due Unit.
or account
It should
SERVICE WITNESS
OF MPA
be noted that
in a non-BRMAS
still be rated and billed (accounted
SCHENK
even though
barcode
sorter
for) manually
BRM can
operation,
in the
RESPONSE
OF THE UNITED STATES POSTAL
TO THE INTERROGATORIES
MPAIUSPS-T27-3.
a.
b.
c.
d.
e.
Please refer to Table
LR-H-179,
SERVICE WITNESS
OF MPA
Table
SCHENK
13 and Exhibit
USPS27A.
Please confirm that Table 13 shows that 19.3 percent of “2 cent” volume was
counted using “EOR counts from Barcode Sorter.”
If subpart a is confirmed,
does this imply that 19.3 percent of “2 cent” pieces
were sorted on ‘Other Barcode Sorter Operations.”
If not confirmed,
please
explain fully.
What is the direct and indirect cost of a ‘2 cent” piece that is sorted on an
“Other Barcode Sorter Operation”?
Are all “2 cent” pieces, which were counted by “Weighing
of identical piece,”
“Special Counting Machines,”
and “Bulk Weighing,”
sorted manually?
Please
explain.
If subpart d is not confirmed,
what percentage
of “2 cent” pieces that are
counted by “Weighing
of identical piece,” “Bulk Weighing,”
and “Special
Counting
Machines”
are sorted manually?
What percent are sorted in automated
operations?
RESPONSE:
a.
Confirmed.
b.
Confirmed
c.
See my response
d.
“2 cent”
pieces
manually
or in automation
to MPAIUSPS-T27-2c
which
are counted
and d.
by these three
These are methods
operations.
BRM, not to sort BRM to mail recipient
pieces
counted
sorted
in an automation
so these
alternative
one of these
nonletter-size
e.
by these
methods,
to be manually
operation
then machine
of counting
“Bulk
BRM, which
The data needed
or account.
methods
methods
to address
Weighing,
methods
to count
In general,
sorted,
counts
BRM would
” is generally
and rate
we would
since if they
would
used to count
are not available.
expect
were
be available,
not be needed.
is not automatable.
this question
can be sorted
and
In addition,
and rate
RESPONSE
OF THE UNITED STATES POSTAL
TO THE INTERROGATORIES
MPA/USPS-T27-4.
Please refer to Exhibit
SERVICE WITNESS
OF MPA
SCHENK
USPS27C.
a.
Please confirm that the marginal processing
and Postage Due Unit cost per piece
for BRMAS-qualified
BRM that is counted and rated in the BRMAS operation
is
1.04 cents.
b. Please confirm that BRMAS-qualified
BRM that is counted and rated in the
BRMAS operation
avoids the 2.31 cent cost for an incoming secondary
sort for
automation
compatible
First-Class
Mail pieces.
c. Please confirm that the marginal cost for BRMAS-qualified
BRM that is counted
and rated in the BRMAS operation is less than the cost for Prepaid Reply Mail
that does not avoid the incoming secondary
sort. If not confirmed,
please
explain fully.
d. Please confirm that when a piece of BRMAS-qualified
BRM that is counted and
rated in the BRMAS operation
migrates to PRM, the cost to the Postal Service
increases.
If not confirmed,
please explain fully.
RESPONSE:
a.
Confirmed.
b.
Confirmed
c.
Not cionfirmed.
both QBRM
difference
As stated
(currently,
avoid
cost”
the incoming
operation
that
is not finalized
cover
the costs
costs
First-Class
BRM piece avoids
its “marginal
between
secondary
sort.
reply mail piece.”
secondary
The BRMAS
in a sense acts as a “secondary
in the incoming
primary
of this “secondary
counting
Due LJnit.
The cost avoidance
sort,”
and rating
for BRMAS-qualified
the cost avoidance
a prebarcoded
reply mail
a BRMAS-
Reply Mail that does not
operation
sort,”
operation.
is a sortation
i.e., BRMAS-qualified
The BRMAS
BRMAS-qualified
BRM
fee is designed
as well as any additional
for the incoming
as the
First-Class
Even though
for
sort, this does not mean that
is less than the cost for Prepaid
with
model
testimony,
BRM) and PRM is “calculated
the incoming
associated
cost
Miller’s
BRMAS-qualified
in mail processing
piece and a handwritten
qualified
in witness
to
workload
BRM done in the Postage
secondary
sort is included
BRM so that the cost of sortation
of these
in my
RESPONSE
pieces
OF THE UNITED STATES POSTAL
TO THE INTERROGATORIES
beyond
the incoming
primary
sortation
case of PRM, the cost model developed
analyze
incoming
secondary
of PRM, but rather
mail pieces
d.
Postal
from
Service
The costs
Miller
that results
because
SCHENK
twice.
In the
did not explicitly
he was not developing
the full cost
prebarcoded
reply
RBCS.
to the Postal Service
being processed
would
through
are not included
by witness
because
the cost avoidance
are not processed
Not confirmed.
migrates
costs
SERVICE WITNESS
OF MPA
on the BRMAS
would
operation,
not have to incur the costs
decrease
when
a piece
to PRM, since the
RESPONSE
OF THE UNITED STATES POSTAL
TO THE INTERROGATORIES
MPAAJSPS-T27-5.
SERVICE WITNESS
OF MPA
Please refer to Page 13, Lines 4 through
SCHENK
14.
a.
Please confirm that the “PRM service would be advantageous
for some highvolume BRM recipients.”
b. Please confirm that the BRMAS coverage factor is higher for “high volume BRM
recipients”
than for low volume BRM recipients.
c. Please confirm that a higher percentage
of BRMAS-qualified
BRM that is counted
and rated in the BRMAS operation than of BRMAS-qualified
mail that is not
counted and rated in the BRMAS operation
will migrate to PRM.
d. What percentage
of BRMAS-qualified
mail that the Postal Service estimates
will
migrate to PRM was counted and rated on a BRMAS operation?
e. Ceteris parabis [sicl, do you think that the BRMAS coverage factor would
decrease if the volume of BRMAS-qualified
BRM decreases?
If no, please
explain fully.
f. Please confirm that charging a 6 cent fee for BRMAS-qualified
BRM will drive
low-cost
BRM that is counted and rated in the BRMAS operation to more
expensive
PRM.
g. Please explain why the Postal Service is proposing a 200 percent increase in the
BRM,AS-qualified
BRM fee in light of the fact that BRMAS-qualified
BRM that is
counted in the BRMAS operation is very low cost mail.
RESPONSE:
a.
Confirmed.
from
As witness
two
Fronk says on page 42 in his testimony:
sources...Second,
prebarcode
their
pieces
may qualify
for PRM.”
certain
high-volume
and currently
Also,
qualify
Business
This is likely to be the case.
c.
Not confirmed.
As witness
Fronk states
an organization
is interested
in QBRM or PRM will depend
d.
including
monthly
fee or a per-piece
It was assumed
its willingness
that
to PRM was counted
e.
The BRMAS
coverage
BRMAS-qualified
on page 7 of his testimony.
to prepay
might
BRM decreases,
change
depending
“Whether
it finds
of
a
financially.”
operation
from
BRM fee
on a number
and whether
of the BRMAS-qualified
and rated in a BRMAS
factor
postage
fee more advantageous
100 percent
per-piece
he states
b.
factors,
will come
Reply Mail users who
for the 2-cent
on page 7 of his testimony,
“PRM
volume
that
migrates
in the base year.
its current
level if the volume
on how this decline
is achieved.
of
RESPONSE
Without
were
OF THE UNITED STATES POSTAL
TO THE INTERROGATORIES
further
affected,
information
it is impossible
on what
caused
to know
SERVICE WITNESS
OF MPA
this decline,
the exact
effect
factor.
f.
Not confirmed.
g.
Redirected
See my response
to USPS witness
to MPAAJSPS-T27-4c.
Needham.
and which
SCHENK
volumes
on the BRMAS
coverage
RESPONSE
OF THE UNITED STATES POSTAL
TO THE INTERROGATORIES
SERVICE WITNESS
OF MPA
SCHENK
MPAAJSPS-T27-6.
Please refer to Page 12, Line 15 to Page 13, Line 1. Please
explain in as much detail as possible why only 14 percent of BRMAS-qualified
BRM
is counted and rated in the BRMAS operation.
RESPONSE:
See the response
of the USPS to NDMSIUSPS-T27-4(b),
filed g/30/97.
RESPONSE
OF THE UNITED STATES POSTAL
TO THE INTERROGATORIES
SERVICE WITNESS
OF MPA
MPA/USPS-T27-7.
Please refer to Page 4, Lines 14 and 15 where
“[tlhese
pieces IBRMAS-Qualified
BRM Pieces] avoid the Incoming
distribution
that other FCM pieces receive.”
a.
b.
c.
d.
e.
Please
avoid
What
What
What
What
SCHENK
it states,
Secondary
confirm that BRMAS-qualified
BRM pieces which receive caller service,
delivery costs as well as the cost for an incoming secondary
sort?
percentage
of BRMAS-qualified
BRM pieces receive caller service?
is the unit attributable
cost for caller service?
is the unit attributable
cost for First-Class
Mail city delivery?
is the unit attributable
cost for First-Class
Mail rural delivery?
RESPONSE:
a.
Confirmed
b.
As shown
in LR-H-179,
mail recipient
collected
percentage
Table 4, 75 percent
in the box section
in the survey
on which
of BRMAS-qualified
or through
that
of all BRM volume
caller service.
library
reference
BRM that receives
c.
See USPS-LR-H-107,
d.
and e. The test year unit costs
is delivered
to
No data were
is based that
show
the
caller service.
page 11.
by shape and rate category
of city carrier
are provided
and rural carrier
in witness
Hume’s
181.
----
___
delivery
testimony
functions
(USPS-T-
RESPONSE
OF THE UNITED STATES POSTAL
TO THE INTERROGATORIES
MPA/USPS-T27-8.
Please refer to LR-H-179,
final BRMI piece counts for “two cent mail.”
a.
b.
c.
d.
SERVICE WITNESS
OF MPA
Table
13 which
shows
SCHENK
the source
of
Please confirm that the data collected in the BRM Counting/Billing
survey in LRH-l 79 were used to derive Table 13.
Please confirm that the survey used to derive Table 13 collects the percentage
breakdown
of counts by source (e.g., BRMAS operation,
EOR counts).
Please confirm that the survey used to derive Table 13 does not collect volume
information.
Please explain fully how you derived Table 13 from the survey information
and
show all calculations.
RESPONSE:
a.
Confirmed.
b.
Confirmed.
c.
Not confirmed.
d.
The process
given
by which
in the tables
the survey
in LR-H-179
results
were rolled up to obtain
are described
in that document,
the estimates
pages
10-l 1.
CERTIFICATE
OF SERVICE
I hereby certify that I have this date served the foregoing document upon all
participants of record in this proceeding in accordance with section 12 of the Rules of
Practice.
475 L’Enfant Plaza West, S.W.
Washington, D.C. 20260-l 145
October 1, 1997