5) Wolfe Transport wants to expand operations to offer transcontinental service. They are looking at two...

 

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5) Wolfe Transport wants to expand operations to offer transcontinental service. They are looking at two options: The first is to use their existing 53 foot trailers and buy new sleeper truckers to pull them. The other option is to use railroads to take the trailers cross-country. The average trailer can hold 25 tons and the average trip takes 5 days door to door by truck or 8 days by rail. Expected freight is 25000 tons per year and it is 3000 miles coast to coast. A truck can move a maximum of 6 trailers per day if using rail option. If they charge $0.10/ton-mile, which option should they choose? Assume that product is shipped Monday - Friday (250 days/year) Costs: Trucks $2/mile Includes capital costs Includes capital costs and when on rail Trailers $0.30/mile Access to railroad 30 mile round trip each end Railroad $0.05/ton mile a) What is the projected revenue? b) What is the profit for the truck only option? c) How many truck/trailer units will they need? d) How many trucks would be needed using the rail option? e) What is the profit for the rail option? f) Which should they choose? 5) Wolfe Transport wants to expand operations to offer transcontinental service. They are looking at two options: The first is to use their existing 53 foot trailers and buy new sleeper truckers to pull them. The other option is to use railroads to take the trailers cross-country. The average trailer can hold 25 tons and the average trip takes 5 days door to door by truck or 8 days by rail. Expected freight is 25000 tons per year and it is 3000 miles coast to coast. A truck can move a maximum of 6 trailers per day if using rail option. If they charge $0.10/ton-mile, which option should they choose? Assume that product is shipped Monday - Friday (250 days/year) Costs: Trucks $2/mile Includes capital costs Includes capital costs and when on rail Trailers $0.30/mile Access to railroad 30 mile round trip each end Railroad $0.05/ton mile a) What is the projected revenue? b) What is the profit for the truck only option? c) How many truck/trailer units will they need? d) How many trucks would be needed using the rail option? e) What is the profit for the rail option? f) Which should they choose?

Answer rating: 100% (QA)

a If they choose to use trucks they will need to purchase new sleeper trucks to pull the trailers Th... View the full answer