Reference no: EM13570522

A contractor operates a rock crusher and stores the material until needed in an adjacent stockpile area. The stockpile area is unpaved, and some of the produced material is contaminated by the sub-grade and cannot be used. The estimated stockpile losses are shownin Table 15-1. This equates to a combined loss of 8% each year.

Table 15-1 Current Stockpile Losses

Material Size Loss

¼" minus 12%-20%

¾" minus & ¾" x # 4 8%-15%

1 ½" minus & 1 ½" x ¾" 4%-10%

The contractor is considering paving the stockpile area to reduce the loss of material.

Paving the stockpile area would reduce the losses due to contamination to about 2%. The crusher produces 250,000 tons/year at a cost of $1.50/ton. The new paving should last 10 years, and there is no salvage value.

The paving will cover 4.56 acres. The previous stockpile losses will serve as sub-grade and base course for the new surfacing. A 3" thick surface will require 3700 tons of asphaltic Case 15 Pave the Stockpile Area?

95 concrete, which costs $20/ton installed since he can supply the material at his cost. The engineering and site work involve a one-time cost of about $5000. The surface requires routine maintenance costing about $1000/year.

The contractor has estimated lower and upper limits for the data as shown in Table 15-2.

Table 15-2 Lower and Upper Limits on Estimated Data

Economic life -50% +100%

Price/ton -20% +40%

Tons/year -40% +20%

Loss with paving -20% +20%

Design cost for paving -10% +10%

Maintenance -10% +20%

First cost for paving -5% +10%

1. Determine the rate of return on the repaving, and recommend whether the contractor should pave the area?

2. Use breakeven charts or a spider plot to analyze which uncertainties could change your recommendation.

3. Construct a tornado diagram to summarize your results for management.