RENTAL RATE You have been approached by a contractor who has been running a newly purchased harvest system for the past year. The new contractor has kept the information required to calculate a rental rate for their equipment listed below. The contract is for 35,000 m of wood (all on 1 block) and the rate paid is $30/m' delivered to the mill. Equipment Ultimate Harvester Grapple Skidder 1-Truck Purchase Price CRD ($/SMH) $350,000 $215,000 $225,000 18.75 17.25 17.25 Live Expect (PMH) Utilization ($) 20000 15000 20000 65% 75% Insurance (%) 1.0 % 1.4% 2.8% License (Annual cost) 2500 Accounting (Annual cost) 1000 1000 2500 Normal Repairs (Annual cost) $105,000 $80,000 $55.000 Fuel consumption (L/pmh) 20 28 45 Fuel cost (S/L) 1.2 1.2 1.39 Oil and Lube (Annual cost) $8.500 $8,000 Travel Cost (Annual cost) 45.000 45.000 $7,500 Productivity (m/pmh) 17.5 19.5 40 m/load Wage Labor ($/smh) Payroll levies $15.00 18% All wood is sold to the same mill. Distance to mill is given in 3 road classes. Travel time empty is 25% faster than loaded time. Loading and unloading time is 1 hour per trip. $19.50 $15.50 18% 18% In block Main haul road (gravel) Paved (class 1) 4 km Avg loaded speed 25 km/hr 20 km Avg loaded speed 65 km Avg loaded speed 45 km/hr 65 km/hr A. 4 What kind of system is this (ultimate harvester fells and delimbs only)? 12 B. 6 Is this system balanced (input-output)? If yes, explain how, if not, how would you balance this and what would the impact be on the unit cost? (Use logic and reasoning, I do not expect you to demonstrate with calculations. Example: if utilization goes up on 1 machine, what happens to unit cost?). 15 C. 7 Calculate the rental rates for both the single grip harvester and the forwarder. CRD is given for your calculations. /10 D. S Calculate the unit cost for the truck. Assume 210 days of trucking and 16 SMH per day. For this question, you need to calculate utilization given trucking parameters. /10 E. S Is the new contractor being compensated fairly for his delivered wood cost based on unit cost? (I do realize the contractor is missing a loader.) (3 F. 2 What advice would you offer the contractor to offset or decrease their delivered wood cost? Explain the impact of your recommendations. /5