| 1 |
| The pick-up costs are costs that are associated with the preparation of and loading of the products onto the delivery vehicle. This could include any number of general prep fees including moving, sorting, waiting, and loading of the product onto the delivery vehicle. When it comes to cost-analysis, the focus should be on items like fuel, labor costs for the loaders and drivers, maintenance fees, insurance fees, depreciation, and billing fees. As for sort costs, thoses costs have to do with the breaking down, sorting, and organizing if the freight products at the docks. Line-haul costs are the expenses incurred after the delivery vehicle is dispatched to the point where the delivery arrives at its destination. Cost analysis for this should include depreciation and interest, labor, fuel, maintenance, and insurance costs. Finally, delivery costs are costs that have to do with the unloading process after delivery is complete and to return of the delivery vehicle. When conducting a cost analysis, fuel, labor, depreciation, interest, maintenance, and insurance should be included in the analysis. |
| Tractor Depreciation - straight line depreciation of tractor over 5 years with zero salvage value on a per hour basis | $1.83 |
| Trailor Depreciation - straight line depreciation of trailor over 5 years with zero salvage value on a per hour basis | $0.34 |
| Total Tractor & Trailor Depreciation | $2.17 |
| Tractor Loan Total Interest - interest earned per year on an hourly basis |
| Trailor Loan Total Interest - interest earned per year on an hourly basis |
| Pick-up Costs |
| Depreciation | $8.68 |
| Interest |
| Fuel |
| Labor |
| Insurance & maintenance | $8.00 |
| Billing | $5.00 |
| Total Pick-up Costs | $21.68 |
| Sorting Costs |
| Sorting |
| Labor | $400.00 |
| Dock Fee | $120.00 |
| Total Sorting Costs | $520.00 |
| Line-haul Costs |
| Depreciation | $103.62 |
| Interest |
| Fuel |
| Labor |
| Insurance & Maintenance | $249.80 |
| Total Line-haul Costs | $353.42 |
| Delivery Costs |
| Depreciation | $5.43 |
| Interest |
| Fuel |
| Labor |
| Insurance & Maintenance | $3.00 |
| Total Delivery Costs | $8.43 |
| Total Overall Costs | $903.52 |
| 2. A.) |
| 3. If Hardee adds a second driver into the mix then no rest would be needed and the total hours for the line-haul phase would be 27.75. The total costs would be changed due to the changes in the line-haul phase with specific effects on depreciation, interest, and labor during line-haul and delivery. While some parts of the line-haul phase like equipment depreciation will be reduced, other factors like labor costs will rise. Ultimately, the rise in costs for factors like labor outweigh the benefits of adding a second driver. |
| 4. The way that you account for empty backhaul costs is through adjusting your headhaul costs. If you don't account for these costs then you should look at your pricing strategy because you would be taking a loss on the backend making it important to have the right pricing strategy in place. |
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TransportationManagementHardeeTransportation.xlsx
