S.A. Shipping

UPS has recently acquired a small start up in Cape Town, South Africa that receives packages every day by mid afternoon, sorts them until the evening, loads them onto a truck for overnight storage, and then delivers them the next day 8AM-7PM, with a 60 minute lunch break. This start up is rather small and currently has an insufficient amount of trucks to complete the increased load. UPS has asked our help in determining how many new trucks they should lease, as well as the specific model type. They will scrap all existing trucks.

UPS has recently acquired a small start up in Cape Town, South Africa that receives packages every day by mid afternoon, sorts them until the evening, loads them onto a truck for overnight storage, and then delivers them the next day 8AM 7PM, with a 60 minute lunch break. This start up is rather small and currently has an insufficient amount of trucks to complete the increased load. UPS has asked our help in determining how many new trucks they should lease, as well as the specific model type. They will scrap all existing trucks.

Make sure the candidate calculates the number of drivers needed regardless of truck type: Demand load:10K/ day - 10K cubic feet a day; 60/10 = 6 packages/hour, * 10 = 60 packages a day per driver. Thus, a minimum of 167 drivers and trucks (candidate should note this as a bottleneck) Dimensions: 80 cu. Ft. for A, 32 cu. Ft. for B, and 320 cu. Ft. for C (note it was double the dimensions, not volume, of A). Thus, the minimum number of trucks required are 125, 313, and 33. Total minimum costs for each option are 167*$300 = $50,100/day for A, 313*$180 = $56,340/day for B, and 167*$500 = $83,500/day for C. The candidate should realise Truck A is optimal once all costs are considered. A strong candidate will note the impact variability of package size and demand may have on the required fleet size.