LTL COSTING PROBLEM

Given the information provided, calculate the total cost and minimum revenue required per cwt for

the shipment.

A shipment consistent of $65$ cartons, each $7$ cubic feet and weighing $85$ lbs$,$ was picked up from a

manufacturer in Lexington, Kentucky. The shipment was one of

three

shipments being dispatched from the manufacturer$$s facility. The facility itself was one stop in a

route including $8$ others and covering a total of $155$ miles. The driver began at $5$:$30$ am and returned

to the facility at $4$:$30$ pm the same day. On arriving at the consolidation terminal, the shipment

required $36$ minutes to move from the pickup and delivery vehicle to the line$-$haul trailer.

The line$-$haul tractor$/$trailer departed from the Lexington, Kentucky terminal at $10$pm and arrived at a

breakbulk terminal in Atlanta, Georgia $(275$ miles away$)$ at $6$ am the following day. The shipment

then took $42$ minutes to move from the line$-$haul trailer to the delivery trailer.

From the breakbulk terminal, the shipment was delivered to the receiver in Atlanta. This was one of $4$

stops on the delivery route and the receiver accepted the shipment as one of

three total. The delivery route ran from $9$ am to $6$pm and covered a distance of $45$ miles.

All delivery vehicles and terminals are owned and operated by the LTL carrier. The tables below

provide shipment and equipment information.

Table $1$: Pickup and Delivery

Tractor Trailer

Purchase Price $ $70,000\mathrm{.}00$ Purchase Price $ $35,000\mathrm{.}00$

Depreciation $4$ years Depreciation $3$ years

Interest $($APR$)5\%$ Interest $($APR$)4\%$

Interest per day $ $53\mathrm{.}00$ Interest per day $ $33\mathrm{.}97$

Fuel $ $4\mathrm{.}34/$gal Weight Capacity $9000$ lbs

Fuel Economy $6$ mpg Volume Capacity $1700$ cubic ft

Labor Cost $($PUD$)$ $ $28/$hr

Table $2$: Line$-$Haul

Tractor Trailer

Purchase Price $ $160,000\mathrm{.}00$ Purchase Price $ $65,000\mathrm{.}00$

Depreciation $5$ years Depreciation $4$ years

Interest $($APR$)7\%$ Interest $($APR$)6\%$

Interest per hour $ $4\mathrm{.}34$ Interest per hour $ $0\mathrm{.}83$

Fuel $ $4\mathrm{.}34/$gal Weight Capacity $42000$ lbs

Fuel Economy $5$ mpg Volume Capacity $3600$ cubic ft

Labor Cost $($PUD$)$ $ $35/$hr

Table $3$: Additional Information

Administrative

Overhead

$5\%$ of total

cost of move

Billing $ $1\mathrm{.}25$ per freight

bill

Terminal Variable Cost

$($per shipment$)$

$ $1\mathrm{.}85$ Terminal Fixed Cost attributed

to shipment

$ $2\mathrm{.}45$

PUD Maintenance $ $0\mathrm{.}13/$mile PUD Insurance $ $0\mathrm{.}065/$mile

LH Maintenance $ $0\mathrm{.}15/$mile LH Insurance $ $0\mathrm{.}072/$mile

Dock Handler Labor $ $18/$h