Marketing has expressed a preference for diesel power units. They claim that the
ID: 1185334 • Letter: M
Question
Marketing has expressed a preference for diesel power units. They claim that the customers perceive diesel units as less flammable and support this preference with data that shows that insurance premiums are $500 more per year for gasoline-powered boats. Marketing cannot show that demand has been impacted by power unit choice.
You have been tasked with recommending the appropriate power unit. To support this task, you have constructed the following table (Table 11-1) based on the specifications of the two boats under consideration.
The boat manufacturer (the only difference in the two boats is the engine) has supplied an estimate of the average speed of each unit and the fuel consumption based on this average speed. Since the boats are used in harbors and for fairly short runs, the higher speed of the gasoline engine is valued at only $50 per day. When not in use, the gasoline engines will be turned off, while the diesel units would idle and burn fuel at the rate of 1 gal per hour. Both units are seen as adequate to meet the delivery schedules/requirements of HDS.
Your investigations into maintenance costs have determined that the diesel unit requires $9000 in annual maintenance (mainly for the cooling system), while the gasoline engine unit has an annual cost of $6000. Oil changes are $25 for the gasoline unit and $57 for the diesel unit. Oil changes occur every 100 hours of engine use.
Diesel is estimated to run $2.95 per gallon while gasoline runs $3.15 per gallon. The branch offices are located adjacent to a fueling/service dock ran by another business unit of HDS
Explanation / Answer
hmmmm may be around 235 nautical miles per day.