A local U.S. Postal Service office is considering purchasing a 4,000-pound forklift truck, which will be used primarily for processing incoming as well as outgoing postal packages. Forklift trucks traditionally have been fueled by either gasoline, liquid propane gas (LPG), or diesel fuel. Battery-powered electric forklifts, however, are increasingly popular in many industrial sectors due to the economic and environmental benefits that accrue from their use. Therefore, the postal service is interested in comparing forklifts that use the four different types of fuel (Table P12.10). The purchase costs as well as annual
TABLE PI2.I0

operating and maintenance costs are provided by a local utility company and the Lead Industries Association. Annual fuel and maintenance costs are measured in terms of number of shifts per year, where one shift is equivalent to eight hours of operation. The postal service is unsure of the number of shifts per year, but it expects it should be somewhere between 200 and 260 shifts. Since the U.S. Postal Service does not pay income taxes, no depreciation or tax information is required. The U.S. government uses 10% as an interest rate for any project evaluation of this nature. Develop a sensitivity graph that shows how the choice of alternatives changes as a function of number of shifts per year.

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Electrical Power LPG Gasoline Diesel Fuel Life expectancy Initial cost Salvage value Maximum shifts per year Fuel consumption/shift Fuel cost/unit Fuel cost per shift Annual maintenance (fixed 7 years $29,739 $3,000 260 31.25 kWh $0.10/k Wh $3.125 7 years $21,200 $2,000 260 11 gal $3.50/gal $38.50 7 years $20.107 $2,000 260 11.1 gal s2.24/gal $24.86 7 years $22,263 $2,200 260 7.2 gal $2.45/gal $17.64 $500 $1,000 $1,000 $7 cost) $1,000 Variable cost/shift $4.5 $7 $7