The wheat harvesting season-utilization rate for bin area

Assignment Help Financial Management

Reference no: EM131499630

The wheat harvesting season in the American Midwest is short, and most farmers deliver their truckloads of wheat to a giant central storage bin within a two-week span. Because of this, wheat-filled trucks waiting to unload and return to the fields have been known to back up for a block at the receiving bin. The central bin is owned cooperatively, and it is to every farmer’s benefit to make the unloading/storage process as efficient as possible. The cost of grain deterioration caused by unloading delays, the cost of truck rental, and idle driver time are significant concerns to the cooperative members. Although farmers have difficulty quantifying crop damage, it is easy to assign a waiting and unloading cost for truck and driver of $18 per hour. The storage bin is open and operated 16 hours per day, 7 days per week, during the harvest season and is capable of unloading 35 trucks per hour according to an exponential distribution. Full trucks arrive all day long (during the hours the bin is open) at a rate of about 30 per hour, following a Poisson pattern.

The cooperative, as mentioned, uses the storage bin only two weeks per year. Farmers estimate that enlarging the bin would cut unloading costs by 50% next year. It will cost $9,000 to do so during the off season.

1) The average number of trucks in the system is ____ trucks

2) The average time per truck spent in the system is____minutes

3) The utilization rate for the bin area is____ (Please round it to two decimal points.)

4) The probability that there are more than 3 trucks in the system is about____ (Please round it to two decimal points.)

5) The total daily cost in the unloading process is____per day (Please round it to two decimal points.)

6) Based on the above calculation, the net saving/loss of enlarging the bin is____dollars, hence the cooperative____proceed to enlarge the bin. (Please round to an integer and include no units. Use a "-" sign in front the number to indicate a net loss, if there is a loss. Also, enter only "should" or "should not" in the second blanket.)

Reference no: EM131499630

Questions Cloud

Considered money market securities : Which of the following are not considered money market securities?

What will be the current market price of the firms bonds : Assuming semiannual coupon payments, what will be the current market price of the firm’s bonds?

What is the required return of cash-marts shareholders : Pay-Day Banks Inc. is a short-term lender. What is the required return of Cash-Mart's shareholders?

It is indifferent to the two forms of payment : what final payment will the bank require you to make so that it is indifferent to the two forms of payment?

The wheat harvesting season-utilization rate for bin area : The wheat harvesting season in the American Midwest is short and farmers deliver their truckloads of wheat to giant central storage bin within two-week span.

Making semiannual interest payments : A loan of 5,000 is repaid by making semiannual interest payments to the lender at a nominal rate of interest of 10% per annum compounded semiannually;

Investment project is estimated to have after-tax cash flows : A capital investment project is estimated to have the following after-tax cash flows, by year:

Arithmetic and geometric returns for the stock : what are the arithmetic and geometric returns for the stock?

Level monthly payments at an effective annual interest rate : Elaine will repay the mortgage over 20 years with level monthly payments at an effective annual interest rate of 8%.

User Account

All Pages