Dresden Mining Company $($DMC$)$ mines coal, puts it through a one$-$step crushing process, and loads the bulk raw coal onto river barges for shipment to customers. DMC$\text{'}$s management is currently

evaluating the possibility of further processing the raw coal by sizing and cleaning it and selling it to an expanded set of customers at higher prices. The option of building a new sizing and cleaning plant is

ruled out as being financially infeasible. Instead, Sabrina Darbox, a mining engineer, is asked to explore outside contracting arrangements for the cleaning and sizing process. Darbox puts together the

following summary:

$($Click the icon to view the summary.$)$

$($Click the icon to view the additional information.$)$

Required

Prepare an analysis to show whether it is more profitable for DMC to continue selling raw

bulk coal or to process it further through sizing and cleaning. $($Ignore coal fines in

your analysis.$)$

How would your analysis be affected if the cost of producing raw coal could be held down to

$$18$ per tonne?

Additional information

Darbox also learns that $75\%$ of the material loss that occurs in the cleaning and

sizing process can be salvaged as coal fines, which can be sold to steel

manufacturers for their furnaces. The sale of coal fines is erratic and DMC may

need to stockpile it in a protected area for up to one year. The selling price of coal

fine ranges from $$15$ to $$24$ per tonne and costs of preparing coal fines for sale

range from $$2$ to $$5$ per tonne.

Now consider the potential value of the coal fines and prepare an addendum that shows

how their value affects the results of your analysis prepared in requirement $1.$

Done

Summary