After graduation you are hired by Engineering Economists Inc (EEI). EEI is an engineering and management consulting firm that provides financial advice for engineering and business problems. A corporate client, Delivery By Water (DBW), recently asked EEI for advice about whether to purchase diesel- or gasoline-powered boats. DBW delivers packages by using inland waterways and coastal waters. DBW has several independently run branches operating in several large port areas. Each branch has between 5 and 15 boats in its fleet. Each branch manager currently determines the type and brand of boat that its branch will purchase. Consequently, each branch has a mix of brands and models, and some branches operate both diesel- and gasoline-units. Maintenance for this mixed fleet is a major headache, and costs seem out of control. It is frequently necessary to move boats from one branch to another branch, but not all branches are prepared to maintain boats of different brands and types. Branch managers inevitably find major faults with the boats transferred to their site. Since both gasoline and diesel boats are in operation, branches need to ensure they have both diesel and gasoline refueling facilities. Employees sometimes make mistakes by filling diesel boats with gasoline and vice versa. The different brands of boats also make it difficult to maintain a consistent level of service across the company. DBW executives have decided to centralize procurement of boats and to standardize brands and fuel types in order to reduce its overall costs. A team of DBW executives lead by the chief operating officer has identified the size and configuration of boat that best meets the needs of the different branches except for one detail: the type of power unit. Most branch managers prefer the diesel option due to its cheaper fuel, a few managers prefer the gasoline option due to its higher speed, and some are indifferent. Marketing has expressed a preference for gasoline powered units. They claim that the customers appreciate that the gasoline units have a higher speed and are more environmentally friendly. Marketing cannot show, however, that the power unit choice impacts customer demand. Insurance premiums are also $600 more per year for gasoline-powered boats because they are more flammable. EEI has been tasked with recommending the appropriate power unit. To support this task, you have constructed Table 1 based on the specifications of the two boats under consideration. The only difference between the two boats is the type of engine.Table 1: Boat. Eicaons Gasoline Diesel Purchase price $35,333 $13tl,221 Engine size {horsepower} 35!} hp Still} hp Average speed (manufacurrer's estimate] Knots [namical miles per hour] 23.4 11.4 Fuel consumption (gallons per hour} 13 21 Fuel ea i lens EDD 30'!) As shown in Table 1. the boat manufacturer has provided an estimate of the average speed of each unit and the fuel consumption based on this average speed. Since the boats deliver packages over fairly short distances. the higher speed of the gasoline engine is only valued at $53 per day. When not in use. the gasoline engines will be turned off. while the diesel units would idle and burn fuel at the rate of 1 gallon per hour. Both units can meet the schedules and requirements of DEW. The diesel unit requires substantially more maintenance than the gasoline engine unit due to the diesel unit's cooling system. Annual maintenance costs are $1 [LEW for the diesel engine and only $5.1m} for the gasoline engine. The cost of oil changes is $50 for the diesel unit and $23 for the gasoline unit. Dil changes occur every III} hours of engine use for both types of engines. Idling hours do NOT count towards the 12D hours of engine use. Diesel is estimated to mm 53.3] per gallon while gasoline runs $3.45 per gallon. The boats will typically travel 22D nautical miles in the course of the day. Each branch office is located adjacent to a fueling dock run by another business unit of DEW's parent company. Refueling costs more during the day. and DEW prefers to refuel each boat every evening. The boats are docked at the fueling facility overnight and each evening the tanks are refilled to capacity whether or not the boat was refueled during the day. Since a boat's fuel capacity is capped at see gallons, if a boat uses more than roe gallons during the day. then the boat will need to be refueled during the day. In addition to the price of the fuel, refueling during the evening costs $18. lfrereling must he done during the day {i.e.. while the delivery service is in operation). it costs $55. The delivery service operates 18 hours per day. 365 days per year. The diesel units, if purchased. will be Irept in service for 5 years before salvaged for $41000 each. The gasoline units will be sold after 4 years of service fbr $42.Dll. You can assume that each type of unit can be purchased at the same costs in the funne. DB'W's minimum attractive rate of return (MARE) is 18%. DEW suspects that the number ofnautical miles per day may change" In the future and' is interested' in knowing how many nautical miles per day must he traveled to change the preferred alternative