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Category > Management Posted 11 Feb 2018 My Price 8.00

Two-Rivers Oil Company

18.              The Two-Rivers Oil Company near Pittsburgh transports gasoline to its distributors by truck. The company recently contracted to supply gasoline distributors in southern Ohio, and it has $600,000 available to spend on the necessary expansion of its fleet of gasoline tank trucks. Three models of gasoline tank trucks are available.

 

 

 

 

Truck Model

 

 

Capacity (gallons)

 

 

Purchase Cost

 

Monthly Operating Cost, Including Depreciation

Super Tanker

5000

$67,000

$550

Regular Line

2500

$55,000

$425

Econo-Tanker

1000

$46,000

$350

 

The company estimates that the monthly demand for the region will be 550,000 gallons of gasoline. Because of the size and speed differences of the trucks, the number of deliveries or round trips possible per month for each truck model will vary. Trip capacities are esti- mated at 15 trips per month for the Super Tanker, 20 trips per month for the Regular Line, and 25 trips per month for the Econo-Tanker. Based on maintenance and driver availabil- ity, the firm does not want to add more than 15 new vehicles to its fleet. In addition, the company has decided to purchase at least three of the new Econo-Tankers for use on short- run, low-demand routes. As a final constraint, the company does not want more than half the new models to be Super Tankers.

a.             If the company wishes to satisfy the gasoline demand with a minimum monthly oper- ating expense, how many models of each truck should be purchased?

b.             If the company did not require at least three Econo-Tankers and did not limit the num- ber of Super Tankers to at most half the new models, how many models of each truck should be purchased?

 

 

 

Answers

Maurice Tutor
(5)
Status NEW Posted 11 Feb 2018 12:02 AM My Price 8.00

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