Question 1

Question 1



Pickup cost incorporate the total cost incurred prior to the dispatch ofthe driver or the consignment. In this case, pick up cost includesthe cost of dock workers which is 8 hours and the number of hoursthat the driver has to wait which is 12 hours and the cost of 40miles fuel. Line-haul cost includes the cost of 45.8 hours, the timetaken from dispatching at Pittsburgh to Miami, the fuel cost for 1249miles. The delivery process includes the cost of the 2.5 hours and15miles.


Pickup cost

Dockworkers + fuel +tractor’s depreciation + tractor’s interest +pick-up driver’s labour + maintenance + insurance

=+ +++++= $834

Linehaul 45.8hours, 1249 miles

1249milesfuel +tractor’s depreciation +trailer’s depreciation+ tractor’sinterest +trailer’s interest+ labour + maintenance + insurance

+ +++++= $1,377.32

Delivery2.5hours, 15 miles

15milesfuel +tractor’s depreciation +trailer’s depreciation+ tractor’sinterest +trailer’s interest+ labour + maintenance + insurance

+ +++++= $76.77


Thecost of the move = pick-up cost + delivery + line-haul + overheads

=834 + 76.77 + 1377.32 + 228.81 = $2,516.9 And the cost per CWTis equals to $6.99 while the cost per revenue mile = total cost/milesloaded =2516.9/1269 = $1.98 Cost per cwt is $6.99


Puttingtwo drivers in the tractor will imply that the time spent for rest is18 hours. The line-haul time will be 27.8. Therefore, adding anotherdriver would increase the total cost due to the additional labour.The cost per revenue miles the cost per cwt will also increase.


IfHardee had no loaded backhaul returning back the driver and vehicleto Pittsburgh, it means that the vehicle would return with emptybackhaul which implies an extra cost. This cost is thereforeaccounted as operating expenses and its first impact will be toincrease the prices. Pricing strategy is therefore affectedespecially if the firm is applying lifecycle costing.In attempt to address this, the firm can reduce other operationalcost such as labour to compensate for this expense.


CaseStudy: Costing and Pricing For Transportation.