Practical Management Science
Practical Management Science
6th Edition
ISBN: 9781337406659
Author: WINSTON, Wayne L.
Publisher: Cengage,
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Question 3
Imagine a mining company, Deep Earth Extraction, operates a transportation system
to move ore from its remote mine to a processing facility. The transport vehicle has a
capacity of 220 tons of ore, and each trip costs the company R70,000 regardless of
the amount of ore transported. Additional costs amount to R60 per ton of ore for
loading, securement, and tracking expenses.
a) If Deep Earth Extraction charges R450 per ton of ore transported, how many
tons of ore does it need to transport per trip to break even?
b) Surveys have revealed that the transport vehicles are, on average, carrying
about 80% of their maximum capacity of ore. Considering this loading level and
a rate of R450 per ton, what would be the profit or loss realized on each trip?
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Transcribed Image Text:Question 3 Imagine a mining company, Deep Earth Extraction, operates a transportation system to move ore from its remote mine to a processing facility. The transport vehicle has a capacity of 220 tons of ore, and each trip costs the company R70,000 regardless of the amount of ore transported. Additional costs amount to R60 per ton of ore for loading, securement, and tracking expenses. a) If Deep Earth Extraction charges R450 per ton of ore transported, how many tons of ore does it need to transport per trip to break even? b) Surveys have revealed that the transport vehicles are, on average, carrying about 80% of their maximum capacity of ore. Considering this loading level and a rate of R450 per ton, what would be the profit or loss realized on each trip?
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