Necessary expansion of its fleet of gasoline tank trucks

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Reference no: EM13962016

The Two-Rivers Oil Company near Pittsburgh transports gasoline to its distributors by trucks. The company has recently received a contract to begin supplying gasoline distributors in southern Ohio and has $300,000 available to spend on the necessary expansion of its fleet of gasoline tank trucks. Three models of gasoline tank truck are available: Monthly Operating Capacity Purchase Cost, Including Truck Model (gallons) Cost Depreciation Super Tanker 5000 $37,000 $550 Regular Line 2500 $25,000 $425 Econo-Tanker 1000 $16,000 $350 The company estimates that the monthly demand for the region will be 550,000 gallons of gasoline. Due to the size and speed differences of the trucks, the different truck models will vary in terms of the number of deliveries or round trips possible per month. Trip capacities are estimated at 15 trips per month for the Super Tanker, 20 trips per month for the Regular Line, and 25 trips per month for the Econo-Tanker. Based on maintenance and driver availability, the firm does not want to add more than 15 new vehicles to its fleet. In addition, the company has decided to purchase at least three of the new Econo-Tankers to use on the short-run low-demand routes. As a final constraint, the company does not want more than half of the new models to be Super Tankers. a) If the company wishes to satisfy the gasoline demand with a minimum monthly cost, operating expenses, how many models of each truck should by purchased? b) If the company did not require at least three Econo-Tankers and allowed as many Super tankers as needed, what would the company strategy be? Note: These Values must be INTERGERS

Number of Super Tankers Purchased = =

Number of Regular Line Purchased = =

Number of Econo-Tanker Purchased =

Monthly Operating Cost =

Reference no: EM13962016

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