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Mallipeddi Waste Disposal, G m b H , headquartered in the industrial city of Heidleheim, Germany, operates seven specially constructed semi - trailers and cabs

Mallipeddi Waste Disposal, GmbH, headquartered in the industrial city of Heidleheim, 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 Flenzheim a manufacturing
center in Germany. Currently, pickups are made in eight countries: Italy, Germany, Austria, France, Belgium, Netherlands,
Denmark, and Poland.
Mallipeddi maintains an office in each country's capital. Staffing includes a manager and a secretary at each national
office and 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.
Victoria Mallipeddi, owner of the company, is seriously considering dropping Italy as a source of business. Last year, only
25 truckloads of waste were handled there. Since textile manufacturers in northern Italy are the primary source of trucking
for Mallipeddi, 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, Mallipeddi gathered data on last year's shipments and revenues from Italy. The results are
summarized 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 500 to 800 Euros, (symbol "**) based on the type of
radioactive material being loaded and the weight of the barrels to be shipped. The number of barrels hauled and the
revenue per barrel are independent of each other.
Victoria theorizes that if she simulates 25 truckloads out of Italy she could determine if it is profitable to continue to
operate there next year. She estimates that each shipment to the Flenzheim dump site costs 8750, including driver,
gasoline, and truck expenses. Other cargo and loading and unloading costs average 1250 per shipment. The costs to
operate the office in Italy is 420,000 per year, including salaries and indirect overhead costs from the home office in
Heidleheim. Develop a simulation model to help Victoria decide whether to maintain a business presence in Italy. Will the
shipments in Italy next year generate enough revenues to cover Mallipeddi's costs there?
Requirements:
Develop a simulation model to solve the problem. Answers all questions completely.
Victoria wonders what changes to the baseline economics (operational revenue/expenses, fixed costs) would be
the best to improve the chances of making money in Italy. She decides to study the effects of seeking new
business or decreasing office costs. Using Scenario Manager, determine the profit margin for the combinations
listed below, then recommend the best path to achieve an operational "break-even" scenario to Victoria (pursue
extra business or reduce overhead costs).
a. Run the model for 23,25,27,29, and 31 truckloads per year.
b. By adjusting staff and office space, Victoria can alter overhead. Overhead costs can be 350,000,
375,000,400,000 or 420,000.
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