Case Study: Biales Waste Disposal, GmbH

Biales Waste Disposal, GmbH, headquartered in the industrial city of Dusseldorf, Germany, operates seven specially-constructed semi-trailers and cabs for commercial long-distance hauling of radioactive waste materials. Each truck averages one completed load per week, picking up the radioactive containers from chemical companies and other manufacturers in central Europe. The loads are carefully driven to a government site near Dresden, which until the reunification was a manufacturing center in East Germany. Currently, pickups are made in eight countries: Italy, Germany, Austria, France, Belgium, Netherlands, Denmark, and Poland.

Biales maintains an office in each country's capitol. Staffing includes not only a manager and a secretary at each national office, but a part-time lobbyist/attorney to assist in the many political, cross-cultural, border, and legal issues that arise in the nuclear waste disposal industry.

Sybil Biales, owner of the firm, is seriously considering dropping Italy as source of business. Last year, only 25 truckloads of wastes were handled there. Since textile manufacturers in northern Italy are the primary source of trucking for Biales, the size and revenues from their shipments will determine if it is profitable to retain an office and do business in that country.

To analyze the Italian market, Biales gathers data on last year's shipments and revenues, as shown below. Each of the 25 trucks that were loaded in Italy last year carried between 30 and 50 barrels of waste. The income generated per barrel differed significantly (ranging from 60 to 90 Euros) based on the type of radioactive material being loaded and the weight of the barrels to be shipped.

Barrels Probability Revenue Probability

30 0.10 60 0.12

35 0.18 70 0.26

40 0.32 80 0.42

45 0.24 90 0.20

50 0.16

(by the way, you can type the Euro symbol () by holding down the ALT key and typing 0128)

Biales decided that if she were to simulate 25 truckloads out of Italy she could determine if it would be profitable to continue to operate there next year. She estimates that each shipment to the Dresden dump site costs 1150 Euros, including driver, gasoline, and truck expenses; other cargo and loading and unloading costs average 220 Euros per shipment. In addition, it costs 45,000 Euros per year to operate the Italian office, including salaries and indirect overhead costs from the home office in Dusseldorf.

Will the shipments in Italy next year generate enough revenues to cover Biales' costs there?