Reference no: EM131900222

Question: The wheat harvesting season in the AmericanMidwest is short, and most farmers deliver theirtruckloads of wheat to a giant central storage bin within atwo-week span. Because of this, wheat-filled truckswaiting to unload and return to the fields have beenknown to back up at the receiving bin. The central bin isowned cooperatively, and it is to every farmer's benefit tomake the loading/storage process as efficient as possible.The cost of grain deterioration caused by unloading delays, the cost of truck rental, andidle driver time are significant concerns to the cooperative members.

Although farmershave difficulty quantifying crop damage, it is easy to assign the waiting and unloadingcosts for truck and driver of $28 per hour. The storage bin is open and operated 18 hoursper day, 7 days per week, during the harvest season and is capable of unloading 18 trucksper hour. Full trucks arrive all day long (during the hours the bin is open) at a rate of 16per hour. The cooperative uses the storage bin only two weeks per year. Farmersestimate that enlarging the bin would cut average service time by 35% next year. It willcost $500,000 to enlarge the bin during off-season. How long will it take the farmers torecoup those costs cooperatively through waiting cost savings?