When you select ‘Take the Quiz’ you will receive your problem. Work out the problem in an Excel® spreadsheet and show your work. Make sure to clearly state the price per cwt to complete the move.
Note, your problem has a specific code identifier listed at the bottom of the problem. Important! Add the code to the top of your Excel® document before submission.
Reminder to clearly state the price per cwt to complete the move.
Don’t forget to add the identifier code listed in your problem to the top of your answer sheet.
1. Costing Models
You work for XYZ trucking and your boss has asked you to figure out how much the firm should charge a new customer to make a full Truckload delivery and make a 15% profit. The firm knows that it will find a backhaul customer, so you only need to worry about the cost for the move.
The shipment consist of 450 boxes weighing 85 pounds each, and measuring 4 cubic feet each. The trailers that your company uses can carry 46,000 pounds and have a volume of 3,600 cubic feet.
You calculate that it will take 3.5 hours to drive from your terminal to the customer’s factory, wait for the truck to be loaded and return to your terminal. The distance between your terminal and your customer’s factory is 25 miles.
Your line haul driver will then take the truck to the consignee and deliver the boxes. The total distance from your terminal to the consignee is 1000 miles and will take the driver 32 hours. Once at the consignees it will take 4 hours to offload the truck. Then the driver will go to the XYZ trucking terminal in the same city, which is 20 miles away.
What would you recommend to your boss that the price should be set per cwt to complete this move?
(Make sure to show your calculations)
The equipment cost data is as follows:
| Equipment Cost Data | |||
| Equipment Purchase Price | |||
| Line-haul tractors | $110,000 | ||
| Trailers | $ 35,000 | 53-foot dry van | |
| Depreciation | |||
| Tractors | 4 year straight line | ||
| Trailers | 7 year straight line | ||
| Interest | |||
| Tractors | 5% APR for 4 years | ||
| Trailers | 5% APR for 7 years | ||
| Fuel | |||
| Per Gallon | $ 3.56 | ||
| Line-haul tractors | 7 miles per gallon | ||
| Labor Cost | |||
| Line-haul drivers | $ 0.47 | per mile | |
| PUD operation drivers | $ 21.00 | per hour | |
| Miscellaneous | |||
| Insurance cost | $ 0.057 | per mile | |
| Maintenance cost | $ 0.146 | per mile | |
| Billing cost | $ 2.50 | per freight bill | |
| Administrative overhead | 15% | of total cost |
Equipment available for use 365 days, 24 hours per day = 8,760 hours per year.
