Question
Frigid-Transport is a small, refrigerated shipping company based in California.Currently they have 5 refrigerated trucks and planning to expand as market for their services is
Frigid-Transport is a small, refrigerated shipping company based in California.Currently they have 5 refrigerated trucks and planning to expand as market for their services is on the rise. The fixed cost of their operations is $1,200,000 per year covering managerial, administrative, insurance, and other related expenses at their headquarters. Every truck has approximately $100,000 annual expense for lease, maintenance, and insurance. The variable cost of operation for each truck is $3.50 per mile covering fuel and truck drivers pay. The maximum mileage capacity of each truck is 200,000 miles per year and current demand is 1,000,000 miles per year. The company charges $10.00 per mile for a fully loaded truck shipment. Construct an Excel cross tabulation table to find profit for this company using 6 to 14 trucks and mileage demand of 1,000,000, 1,500,000, 2,000,000, 2,500,000, 3,000,000, and 3,500,000 miles per year. Based on the table find the optimal number of trucks needed for above listed mileage demands.
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