The Two-Rivers Oil Company near Pittsburg transports gasoline to its distributors by truck. The company recently contracted to supply gasoline distributors in southern Ohio, and it has $600,000 available to spend on the necessary expansion of its fleet of gasoline tank trucks. Three models of gasoline tank trucks are available.
Purchase Cost Monthly Operating Cost, Including Depreciation
Super Tanker 5000 $67,000 $550
Regular Line 2500 $55,000 $425
Econo-Tanker 1000 $46,000 $350
The company estimates that the monthly demand for the region will be 550,000 gallons of gasoline. Because of the size and speed differences of the trucks, the number of deliveries or round trips possible per month for each truck model will vary. Trip capacities are estimated at 15 trips per month for the Super Tanker, 20 trips per month for the Regular Line, and 25 trips per month for the Econo-Tankers. Based on maintenance and driver availability, the firm does not want to add more than 15 new vehicles to its fleet. In addition, the company has decided to purchase at least 3 of the new Econo-Tankers for use on short-run, low-demand routes. As a final constraint, the company does not want more than half the new models to be Super Tankers.
a. If the company wishes to satisfy the gasoline demand with a minimum monthly operating expense, how many models of each truck should be purchased?
c. If the company did not require at least three Econo-Tankers and did not limit the number of Super Tankers to at most half the new models, how many models of each truck should be purchased?
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