Assume you were recently hired as the director of the Solid Waste Department for Murky County. Your department operates both a solid waste collection system (a fleet of garbage trucks) and a landfill where garbage is disposed of. Only garbage from the county is disposed of at the landfill, and all county garbage is now collected by your department.

Your budget has been funded by user charges paid by county residents based on the volume of garbage. The charge is $1.3 per bag of garbage collected. The county provides the bags free of charge to residents, and only garbage in these bags is collected. (You can assume that garbage collection for business is handled separately.) Unfortunately, recent increases in the cost of fuel, salaries, and chemicals have led to deficits in the Solid Waste Fund and have had to be subsidized by county property taxes. The County Administrator is looking for recommendations on how this deficit can be eliminated.

Before undertaking this analysis, you have collected the following information on the present operation:

1. 1. Overhead costs: $500,000
2. 2. The present demand for service: 100,000 bags per week. You can assume that there will be a demand for the collection of 100,000 bags per week for 52 weeks per year. (You can assume that the demand is the same for both collection and disposal.)

Solid Waste Disposal Division: The waste landfill is operated 6 days per week, 10 hours per day, 52 weeks per year.

1. Facility costs, including debt service and insurance cost of $1,000,000 per year. The landfill is considered to be large enough to handle any volume of garbage in the near future.

2. Supplies to operate the landfill cost $416,000 last year to service 80,000 bags of garbage per week (52 weeks per year). You can assume for simplicity no inflation this year.

3. Landfill operators work full-time. They make $40,000 per year (which includes fringe benefits). The department has 17 landfill operators.