Question

Two manufacturinf firm, located in cities 100 miles apart, both send their trucks four times a week to the other city full of cargo and return empty. Each driver costs $275 per day with benefits(the round trip takes all day) and each firm has truck, operating costs of $1.30 a mile.

(a) how much could each firm save weekly if each sent it's truck twice a week and hauled the other firm's cargo on the return trip?

(b) What would the savings be if there was a $0.30 per mile emissions tax on all business truck travel?

Answer 1

1) Total trip made by each truck per week = 4,

Distance between two firms = 100, Distance covered by each truck on every trip = 100 *2 = 200 miles

Each firm truck's operating cost = $1.30/mile

Each truck driver cost = $275 per day Therefore, truck driver cost per week = $275 *4 = 1100

Therefore, total cost of sending truck per week = 100 *2*4*1.30 + 1100 = 2140

If each firm truck makes only two trips per week and haul other's firm cargo on return trip then each firm truck operating cost = $100 *1.30 = $130

total cost of each firm for sending truck per week = 130*2 + 275*2 = 810

Therefore, each firm will save = 2140-810 = $1330 per week

b) If there is emission tax of $.30/mile on all business truck travel then total emission cost of each firm truck = 100*2*0.30 =$60

Therefore, each firm's savings = $1330-$60 = $1270 per week