The Alloy Furnace is used to smelt multiple ingredients and combine them into single items, primarily the Red Alloy Ingot, which is used in Red Alloy Wire and other RedPower2 items. It can also smelt metal equipment into ingots. This allows you gain iron from rail tracks and items found in abandoned mineshafts. The Alloy Furnace can be powered with any fuel that would power a normal Furnace. In addition to Vanilla Minecraft fuels, this includes items such as Scaffolds, Coal Coke and Fuel Cans.
On servers without Equivalent Exchange, you can use the Alloy Furnace to convert tin into iron: make buckets of tin, then smelt the buckets in the Alloy Furnace. By doing so you gain 4 times the amount of iron from UU-Matter.
When accessing with Pneumatic Tubes, fuel is inserted through the LEFT face, materials to smelt through the TOP face, and output is the RIGHT face when the furnace faces the player.
Filters and a redstone pulse such as a Timer can be used to make sure the furnace gets materials in the right proportion, preventing its inventory getting filled up with only one material leaving no space for the other, thus jamming it. Alternatively, a Sorting Machine can be used for the same purpose.
When right clicking on a placed Alloy Furnace you are given a GUI. Inside you can place fuel into the fuel cell at the left and put the necessary items in the smelting grid to make the desired items you wish for.