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Fred looked at the numbers again. He had to tell his boss which type of shipping he would recommend for the linerboard. He wanted to recommend the least expensive option to his boss. He thought about what he knew about each shipping option. Trucking. When linerboard was trucked out of the mill, it had to be loaded into cargo containers. The cargo containers were then trucked to Seattle where they could be loaded directly on to container ships. Each container could hold 25 MT of linerboard. The mill had two people employed as paper loaders. Each of them was paid $25/hour and each of them could load a cargo container in one and one-half hours. Then, it cost $405 to hire a trucking company to take the cargo container to Seattle. Barging. When linerboard was barged out of the mill, it was first loaded onto a flat barge. The barge was towed to Seattle where the linerboard would then be loaded into cargo containers, which were then loaded onto a container ship. The mill’s two paper loaders, working together, could load a barge with 2,000 MT of linerboard in 12 hours. (A barge could not be shipped with less than 2,000 MT.) It then cost $12/MT to tow the barge to Seattle and $6/MT to load the linerboard into cargo containers. Fred decided to figure out the cost of each shipping option for 1,000 MT. Then he could decide which was cheapest. Click to continue previewing the student version on screen. |
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