A company finds that , on the average, two of its engineers, always travelling together, spend 60 hours each month of flying time on commercial airlines in making service calls to customer’s plants. Also, the cost for airline tickets, buses, car rental, and so on is approximately P100,000 per person per month. An air service offers to supply a small business jet and pilot on a 24-hour notice at P60,000 per month plus P6,250.00 per hour of flying time, and P1,250 per hour of waiting time on the ground at the destination. It states that experience on similar situation has shown that using the charter service will reduce total travel time by 50% . The company estimates that the cost of rental at destinations will probably amount to P12,500 per month if the charter service is used, and the average waiting time will be about 40 hours per month. It also estimates that the engineer’s time is worth P2,000 per hour to the company. Should the charter service be used?
A company finds that , on the average, two of its engineers, always travelling together, spend 60 hours each month of flying time on commercial airlines in making service calls to customer’s plants. Also, the cost for airline tickets, buses, car rental, and so on is approximately P100,000 per person per month. An air service offers to supply a small business jet and pilot on a 24-hour notice at P60,000 per month plus P6,250.00 per hour of flying time, and P1,250 per hour of waiting time on the ground at the destination. It states that experience on similar situation has shown that using the charter service will reduce total travel time by 50% . The company estimates that the cost of rental at destinations will probably amount to P12,500 per month if the charter service is used, and the average waiting time will be about 40 hours per month. It also estimates that the engineer’s time is worth P2,000 per hour to the company. Should the charter service be used?
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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A company finds that , on the average, two of its engineers, always travelling together, spend 60 hours each month of flying time on commercial airlines in making service calls to customer’s plants. Also, the cost for airline tickets, buses, car rental, and so on is approximately P100,000 per person per month. An air service offers to supply a small business jet and pilot on a 24-hour notice at P60,000 per month plus P6,250.00 per hour of flying time, and P1,250 per hour of waiting time on the ground at the destination. It states that experience on similar situation has shown that using the charter service will reduce total travel time by 50% . The company estimates that the cost of rental at destinations will probably amount to P12,500 per month if the charter service is used, and the average waiting time will be about 40 hours per month. It also estimates that the engineer’s time is worth P2,000 per hour to the company. Should the charter service be used?
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