A logistics company is optimizing its delivery routes. They have collected data on the average time taken to deliver a package and the average fuel consumed per kilometer for three different types of delivery vehicles: Van, Truck, and Motorcycle. The company wants to compare the overall efficiency in terms of 'fuel cost per delivery hour'. Assume fuel cost is $1.50 per liter. Van: Delivers 10 packages/hour, travels 20 km/hour, consumes 0.1 liters fuel/km Truck: Delivers 8 packages/hour, travels 15 km/hour, consumes 0.2 liters fuel/km Motorcycle: Delivers 15 packages/hour, travels 25 km/hour, consumes 0.05 liters fuel/km Which vehicle type has the lowest fuel cost per delivery hour?
- AVan and Motorcycle have the same lowest cost
- BVan
- CMotorcycle
- DTruck
Show answer & explanationAnswer & explanation
Correct answer: D. Truck
First, calculate fuel consumption per hour for each vehicle: (km/hour) * (liters/km). Van: 20 * 0.1 = 2 liters/hour. Truck: 15 * 0.2 = 3 liters/hour. Motorcycle: 25 * 0.05 = 1.25 liters/hour. Then, calculate fuel cost per hour: (liters/hour) * ($1.50/liter). Van: 2 * $1.50 = $3.00/hour. Truck: 3 * $1.50 = $4.50/hour. Motorcycle: 1.25 * $1.50 = $1.875/hour. Finally, calculate fuel cost per delivery hour: (Fuel Cost/hour) / (Packages/hour). Van: $3.00 / 10 = $0.30 per delivery hour. Truck: $4.50 / 8 = $0.5625 per delivery hour. Motorcycle: $1.875 / 15 = $0.125 per delivery hour. The Motorcycle has the lowest fuel cost per delivery hour. My calculation for B was wrong: Van = $0.30, Truck = $0.5625, Motorcycle = $0.125. Motorcycle is lowest.
Why the other options are wrong
- A. Van and Motorcycle do not have the same lowest cost; Motorcycle is significantly lower.
- B. Van has a fuel cost of $0.30 per delivery hour, which is not the lowest.
- C. Motorcycle has a fuel cost of $0.125 per delivery hour, which is the lowest.
Operating Cost Per Output Unit
Operating Cost Per Output Unit is a comprehensive metric that measures the total cost (e.g., fuel, labor, maintenance) incurred to produce or deliver one unit of output (e.g., package, product). It helps evaluate operational efficiency.
- Combines various cost components related to production/delivery.
- Calculated as Total Operating Cost / Total Units of Output.
- Crucial for pricing, resource allocation, and efficiency benchmarking.
Memory trick: Efficient logistics: less fuel, more deliveries, lower cost per hour, better margins.