Question
1 African Waste Disposal Institute, headquartered in the industrial city of Johannesburg, South Africa, operates seven specially-constructed semitrailers and cabs for commercial long-distance hauling of
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African Waste Disposal Institute, headquartered in the industrial city of Johannesburg, South Africa, operates seven specially-constructed semitrailers 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 Southern African countries. The loads are carefully driven to a government site near Germiston, which until the reunification was a manufacturing center in the country. Currently, pickups are made in nine countries: Zambia, Angola, Botswana, Lesotho, Mozambique, Namibia,
Zimbabwe, South Africa and Swaziland.
African Waste Disposal Institute maintains an office in each country's capital. 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.
The board of directors African Waste Disposal Institute is seriously considering dropping Zambia as source of business. Last year, only 25 truckloads of wastes were handled there. To analyze the Zambian market, the board of directors African Waste Disposal Institute gathers data on last year's shipments and revenues. Each of the 25 trucks that were loaded in Zambia last year carried between 26 and 50 barrels of waste. The income generated per barrel differed significantly (ranging from $400 to $600) based on the type of radioactive material being loaded and the weight of the barrels to be shipped. (See the accompanying table for details). The board of directors African Waste Disposal Institute decided that if they were to simulate 45 truckloads out of Zambia, they could could determine if it would be profitable to continue to operate there next year. She estimates that each shipment to the Dresden dumpsite costs $3500, including driver, gasoline, and truck
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expenses; other cargo and loading and unloading costs average $1100 per shipment. In addition, it costs $300000 per year to operate the Zambia office, including salaries and indirect overhead costs.
NUMBER OF BARRELS LOADED PER TRUCK 26–30(28)
31–35(33)
36–40(38) 41–45(43) 46–60(48)
PROBABILITY
0.12
0.16
0.24
0.36
0.12
Total = 1.00
REVENUE PER BARREL ($)
400
450
500
550
600
PROBABILITY
0.15
0.44
0.28
0.10
0.03
Total = 1.00
Based on your simulation result, will the shipments in Zambia next year generate enough revenues to cover African Waste Disposal Institute costs there?
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