Reference no: EM13950245

Derby Chips is an international producer of corn chips. At the end of 2006, Mary Hahn, president of Derby, appointed a task force to focus on the packaging and product use segments of its product's life cycle. Since customers consumed the con- tents of the package (if not consumed, the contents are biodegradable), the main concern was on the ability to conserve, recycle, and dispose of packaging materials. A new packaging proposal was being considered. A partial inventory analysis of the current packaging and the new packaging is given below.
Current New

Delivery boxes:
Recycle potential Low High
Times used before disposal 1 5
Paper bags:
Average package weight (ounces) 2 1.5
Ink with heavy metals Yes No Ultimate disposal:
Safe for incineration No Yes

Upon seeing the inventory analysis, Mary was pleased to see the apparent environmental benefits of the new packaging. However, she wanted a more detailed analysis of the impact of the new packaging. In response to this request, environmental engineers and cost accounting provided the following estimates:

Annual packages produced and sold 250,000,000 Current demand for delivery boxes 375,000,000 pounds Recycle forecast 90% of delivery boxes used Cost per ounce (package) $0.025
Cost per pound (delivery boxes) $0.75

The company's environmental engineers also indicated that in Europe and Japan, about 75 percent of the packaging will participate in waste-to-energy combus- tion programs for the generation of steam or electricity. In the United States, only about 25 percent of the packaging will participate in such programs. As a footnote, environmental engineering also noted that saving 300 pounds of paperboard is equivalent to saving one tree.

Required

1. Calculate the total pounds of delivery boxes saved because of the new packaging. How much does this save in dollars? How many trees are saved because of recycling and reduction in demand for boxes? Because of recycling, how many pounds of cardboard are diverted from landfills?

2. Calculate the total pounds of materials saved by reducing packaging (bag) weight. What are the dollar savings? Now assume that a design engineer has indicated that by reducing the packaging seal from the industry standard one- half inch to one-fourth inch, an additional 5 percent reduction in bag packaging can be achieved. How many pounds of materials are saved? Dollars saved?

3. Explain why the ultimate disposal qualities of packaging are important environmental considerations.

4. Why emphasize saving a material that comes from a renewable resource (trees)?