Reference no: EM132581335

McTavish Transportation loads Intermodal containers onto railcars. Each railcar can accommodate a maximum size load of 60 feet long x 8 feet wide x 8 feet high. McTavish only loads three sized of intermodal containers:

                                                    Short                     Standard                  Long

Container size (L x W x H) (in feet)        10 x 8 x 8            20 x 8 x 8     60 x 8 x 8

Price charged to customer:                     $520                  $900                 $2,100

Variable cost per container:                     280                      300                     400

McTavish currently has space available on 10,000 railcars. No additional railcars are available.

Fixed costs related to loading the railcars is $80,000. This is allocated at $8 per foot of length. (For example, a Short container would be allocated $80 in fixed costs)

Various customers have the following containers to be loaded. Total demand is as follows:

Short: 36,000 containers

Standard: 18,000 containers

Long: 3,000 containers

McTavish can pick and choose which containers are loaded and which customers to accept.

Required

Question 1: How many rail cars would be required to satisfy all of the current demand?

Question 2: How many of each container type should McTavish load?