4. A water spring is located 47 miles from a bottling plant. The spring runs at

Question

4. A water spring is located 47 miles from a bottling plant. The spring runs at a continuous 12 cuft/min. The entire production from the well is to be transported to the bottling plant by tractor trailers, each capable of carrying 8,000 gallons of water. The average time for a tractor trailer to make a round trip to the well is 3.0 hours. The trucks can be filled from the well or from a storage tank which can fill a tank truck in 30 minutes (including the time to empty the tank at the bottling plant). Tractor trailers cost $ 175,000 and have a salvage value of $35,000 after 5 years. Drivers are compensated with a wage and benefit package of $30 per hour of which the wages represent $18. The trucks have a fuel economy of 5MPG and fuel costs $2.70 per gallon. For a company MARR of 15%, calculate the transportation cost per gallon of water. Driver time in excess of 8 hours per day or 40 hours per week earns time and a half per hour applied to the wages, not the benefits. The benefit cost is allocated only to the 40 hours of straight time. Storage tanks are available at $18 per cuft and are expected to have a useful life of 25 years with no salvage. How much could the company afford to pay for a pipeline from the well to the bottling plant?

Explanation / Answer

Six trucks will be required to ensure continuos operation (3 hours divided by thirty minutes).

The trucks depreciate $140,000 in five years, i.e., $28,000 per year. For six trucks this works out to $168,000.

Storage Tanks will need a

A year has 8766 hours.

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