Wingman Distributing Company is expanding its supply chain to include a new distribution hub in South Bend. A key decision involves the number of trucks for the facility. The particular model of truck Wingman is considering can be used 8,000 miles a month and will cost $1,500 a month in capital costs. In addition, each mile a truck is used costs $0.90 for maintenance. A local truck rental firm will rent trucks at a cost of $1.40 per mile. Given the distribution of likely requirements for trucks, management has come up with three alternatives to consider as shown in the table: Monthly requirements (miles) 40,000 80,000 120,000 Probability 0.30 0.40 0.30 Fleet size (trucks) 5 10 15 Which fleet size will yield the lowest expected monthly costs for Wingman?
Wingman Distributing Company is expanding its supply chain to include a new distribution hub in South Bend. A key decision involves the number of trucks for the facility. The particular model of truck Wingman is considering can be used 8,000 miles a month and will cost $1,500 a month in capital costs. In addition, each mile a truck is used costs $0.90 for maintenance. A local truck rental firm will rent trucks at a cost of $1.40 per mile. Given the distribution of likely requirements for trucks, management has come up with three alternatives to consider as shown in the table: Monthly requirements (miles) 40,000 80,000 120,000 Probability 0.30 0.40 0.30 Fleet size (trucks) 5 10 15 Which fleet size will yield the lowest expected monthly costs for Wingman?
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 33P: Assume the demand for a companys drug Wozac during the current year is 50,000, and assume demand...
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Wingman Distributing Company is expanding its supply chain to include a new distribution hub in South Bend. A key decision involves the number of trucks for the facility. The particular model of truck Wingman is considering can be used 8,000 miles a month and will cost $1,500 a month in capital costs. In addition, each mile a truck is used costs $0.90 for maintenance. A local truck rental firm will rent trucks at a cost of $1.40 per mile. Given the distribution of likely requirements for trucks, management has come up with three alternatives to consider as shown in the table:
Monthly requirements (miles) | 40,000 | 80,000 | 120,000 |
Probability | 0.30 | 0.40 | 0.30 |
Fleet size (trucks) | 5 | 10 | 15 |
Which fleet size will yield the lowest expected monthly costs for Wingman?
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