Fulton Logistics must purchase land to locate a new freight container yard. This yard will be a
Question:
Fulton Logistics must purchase land to locate a new freight container yard. This yard will be a satellite location to relieve overcrowding at Fulton's existing yard next to the Port of Endover. Fulton is considering four loca- tions that are at different distances from the port, because real estate costs are the highest near the port and decline with distance. However, the cost of handling containers that arrive and leave again through the port are opposite: costs increase with the distance containers need to be carried if stored in the satellite yard. Fulton has gathered the following information on each of the four possible locations:
A container "visit" refers to a freight container arriving at the Port of Endover and being sent to the satellite yard for storage, until another ship or a truck arrives to carry it away again.
Questions
1. If Fulton Logistics expects the satellite yard to handle 12,000 container visits a month, where should they locate it? How much lower is the monthly cost of this location when compared to the second best location at this same level of volume?
2. What is the point of indifference between Chiefland Industrial Park and 6700 Endo- ver Road?
3. Graph the total monthly cost of the four locations over a range of 0 to 25,000 con- tainer visits a month, creating an illustration similar to Figure 8.4 in this chapter. Label the ranges over which each location would be preferable for the satellite yard.
4. Fulton complains that it cannot forecast a single number for monthly container vis- its at the satellite yard, because container traffic fluctuates with the season. Instead they estimate that volume at the satellite yard will range from 1,000 up to 10,000 container visits a month, depending on the time of year. Where should Fulton Logis- tics locate the satellite yard?
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