We manufacture refrigerators in Nashville, TN. The petroleum crisis has raised the price of gasoline to $3.75 for regular and diesel to $4.35 per gallon. In January, they were $3.00 and $3.50 respectively. Diesel engines get about 30% better mileage than gasoline engines. We are considering acquiring and running our own trucks to deliver our refrigerators to the wholesalers in the future.
- What factors should we consider in evaluating the cost of this option over the next year?
- How do they affect the overall cost of shipping our refrigerators?
- Is this a breakeven question? Why or Why not?
- Is this an accounting question? Why or Why not?
- Is it a forecasting question? Why or why not?
- Is it a simulation question? Why or why not?
- Is it an optimization question? Why or why not?
- Which approach would you recommend? Why or why not?